Nonprofit business plans are dead — or are they?
For many nonprofit organizations, business plans represent outdated and cumbersome documents that get created “just for the sake of it” or because donators demand it.
However, a business plan can still be an invaluable tool for your nonprofit. Even a short nonprofit business plan pushes you to do research, crystallize your purpose, and polish your messaging.
Furthermore, without a nonprofit business plan, you’ll have a harder time obtaining loans and grants, attracting corporate donors, meeting qualified board members, and keeping your nonprofit on track.
Even excellent ideas can be totally useless if you cannot formulate, execute and implement a strategic plan to make your idea work.
So let’s dive into it…
A nonprofit business plan describes your nonprofit as it currently is and sets up a roadmap for the next three to five years. It also lays out your goals and plans for meeting your goals. Your nonprofit business plan is a living document that should be updated frequently to reflect your evolving goals and circumstances.
A business plan is the foundation of your organization — the who, what, when, where, and how you’re going to make a positive impact.
The best nonprofit business plans aren’t unnecessarily long. They include as much information as necessary. They may be as short as seven pages long, one for each of the essential sections you will read about below and see in our template, or up to 30 pages long if your organization grows.
Regardless of your nonprofit is small and barely making it or if your nonprofit has been successfully running for years, you need a nonprofit business plan. Why?
Regardless of your size or financial status, when you create a nonprofit business plan, you are effectively creating a blueprint for how your nonprofit will be run, who will be responsible for what, and how you plan to achieve your goals.
Your nonprofit organization also needs a business plan if you plan to secure support of any kind, be it monetary, in-kind, or even just support from volunteers. You need a business plan in order to convey your nonprofit’s purpose and goals.
It sometimes also happens that the board, or the administration under which a nonprofit operates, requires a nonprofit business plan.
To sum it all up, write a nonprofit business plan to:
Before starting on your nonprofit business plan, it is important to consider the following:
Note: Steps 1, 2, and 3 are in preparation for writing your nonprofit business plan.
Before even getting started with the writing collect financial, operating, and other relevant data. If your nonprofit is already in operation, this should at the very least include financial statements detailing operating expense reports and a spreadsheet that indicates funding sources.
If your nonprofit is new, compile materials related to any secured funding sources and operational funding projections, including anticipated costs.
You are a nonprofit after all! Your nonprofit business plan should start off with an articulation of the core values and your mission statement. Outline your vision, your guiding philosophy, and any other principles that provide the purpose behind the work. This will help you to refine and communicate your nonprofit message clearly.
The United Nations Children’s Fund’s (UNICEF) mission statement is just shy of 300 words and states:
“UNICEF insists that the survival, protection, and development of children are universal development imperatives that are integral to human progress.”
Your nonprofit mission statement can also help establish your milestones, the problems your organization seeks to solve, who your organization serves, and its future goals.
Create an outline of your nonprofit business plan. Write out everything you want your plan to include (e.g sections such as marketing, fundraising, human resources, and budgets).
An outline helps you focus your attention. It gives you a roadmap from start, through the middle, and to the end. Outlining actually helps us write more quickly and more effectively.
In this section, provide more information on exactly what your non-profit organization does.
E.g. The American Red Cross carries out their mission to prevent and relieve suffering with five key services: disaster relief, supporting America’s military families, lifesaving blood, health and safety services, and international service.
Don’t skimp out on program details, including the functions and beneficiaries. This is generally what most readers will care most about.
A marketing plan is essential for a nonprofit to reach its goals. If your nonprofit is already in operation, describe in detail all current marketing activities: any outreach activities, campaigns, and other initiatives. Be specific about outcomes, activities, and costs.
If your nonprofit is new, outline projections based on specific data you gathered about your market.
This will frequently be your most detailed section because it spells out precisely how you intend to carry out your business plan.
An operational plan describes how your nonprofit plans to deliver activities. In the operational plan, it is important to explain how you plan to maintain your operations and how you will evaluate the impact of your programs.
The operational plan should give an overview of the day-to-day operations of your organisation such as the people and organisations you work with (e.g partners and suppliers), any legal requirements that your organisation needs to meet (e.g if you distribute food, you’ll need appropriate licenses and certifications), any insurance you have or will need etc.
In the operational plan, also include a section on people/team. Describe the people who are crucial to your organizations and any staff changes you plan as part of your business plan.
For a nonprofit, an impact plan is as important as the financial plan. A nonprofit seeks to create social change and social return on investment, not just a financial return on investment.
Your impact plan should be precise about how your nonprofit will achieve the “Step 2: Heart of the Matter”. It should include details on what change you’re seeking to make, how you’re going to make it, and how you’re going to measure it.
This section turns your purpose and motivation into concrete accomplishments your nonprofit wants to make and sets specific goals and objectives.
These define the real bottom line of your nonprofit, so they’re the key to unlocking support. Funders want to know for whom, in what way, and exactly how you’ll measure your impact.
Answer these in the Impact plan section of your business plan:
E.g. “Finding jobs for an additional 200 unemployed youth in the coming year”
This is one of the most important parts of your nonprofit business plan. Creating a financial plan will allow you to make sure that your nonprofit has its basic financial needs covered.
Every nonprofit need a certain level of funding to stay operational, so it’s essential to make sure your organization will meet at least that threshold.
To craft your financial plan:
If your nonprofit is already operational, use established accounting records to complete this section of the business plan.
Knowing the financial details of your organization is incredibly important in a world where the public demands transparency about where their donations are going.
Pro Tip: Leverage startup accelerators dedicated to nonprofits that can help you in funding, sponsorship, networking, and much more.
Normally written last but placed first in your business plan, your nonprofit executive summary provides an introduction to your entire business plan. The first page should describe your non-profit’s mission and purpose, summarize your market analysis that proves an identifiable need, and explain how your non-profit will meet that need.
The Executive Summary is where you sell your nonprofit and its ideas. Here you need to describe your organization clearly and concisely.
Make sure to customize your executive summary depending on your audience (i.e. your executive summary page will look different if your main goal is to win a grant or hire a board member).
Include extra documents in the section that are pertinent to your nonprofit: organizational flow chart, current fiscal year budget, a list of the board of directors, your IRS status letter, balance sheets, and so forth.
The appendix contains helpful additional information that might not be suitable for the format of your business plan (i.e. it might unnecessarily make it less readable or more lengthy).
To help you get started we’ve created a nonprofit business plan template. It will work as a framework regardless of your nonprofit’s area of focus. Click here to gain access to the document.
Bonus:- Check out the 15 Minute Business Model Canvas by Founderjar for further validation of your plan
Many nonprofits start out with passion and enthusiasm, but without a proper business plan. It’s a common misconception that just because an organization is labeled a “nonprofit,” it does not need to operate in any way like a business.
However, a nonprofit is a type of business, and many of the same rules that apply to a for-profit company also apply to a nonprofit organization.
As outlined above, your nonprofit business plan is a combination of your marketing plan, strategic plan, operational plan, impact plan, and financial plan.
It’s important to note that your nonprofit should not be set in stone—it can and should change and evolve. It’s a living organism. While your vision, values, and mission will likely remain the same, your nonprofit business plan may need to be revised from time to time. Keep your audience in mind and adjust your plan as needed.
Finally, don’t let your plan gather dust on a shelf! Print it out, put up posters on your office walls, read from it during your team meetings. Use all the research, data, and ideas you’ve gathered and put them into action!