Once a funding agency gives you money, you can expect that they will want to see how it's being spent. It will be necessary to provide progress reports, and it's a good idea to make sure that you address this in the initial proposal. Define what information is important, and demonstrate how you will show your sponsors that you are making progress. Success must be measurable, so define up front how you plan to measure it.
Once this task is completed, reporting is simply a matter of filling in the blanks. Provide the information promised in the proposal. Your funding agency may have special requirements for reporting, including special forms you may have to fill out. If no forms exist, a report in a letter format is fine, as long as it includes a summary of the measurable goals you have identified.