Considering the charitable nature of a nonprofit, people often shy away from developing a business plan, but rather focus on the development of a strategic or Operations Plan.
In order to achieve impact as a nonprofit, you must work to develop a business plan which outlines not only the strategic and operational statutes of the organization, but equally as importantly, the financial plan which will govern those efforts.
When executed properly, a nonprofit business plan will define the mission of the organization, the capital required to meet those objectives, and an Operations Plan to deliver impact to your target audience.
If you intend to provide lasting impact as a nonprofit organization, you must take the fundraising and financial portion of your business plan as seriously as a for-profit company would. Think about it this way: How can we support a cause if we don’t have the necessary resources?
Realize the Audience of a Nonprofit Business Plan
The first thing that goes into a successful business plan is understanding the audience who will be reading it. Who reads nonprofit business plans? The altruistic, the charitable, those who care about making an environmental, humanitarian or universal impact.
From there, understand the unique audience that will be reading your business plan. For example, let’s say your nonprofit is focused on providing environmental relief, then you would want to review the current state of our environment, and how a nonprofit can provide tangible impact to local ecology with the audience’s support.
Executive Summary
Unlike our competitors, at Bsbcon, we advise writing the executive summary first. Here’s why: an executive summary should outline the rest of the business plan, highlighting the operational, strategic, marketing, and financial objectives.
By writing your executive summary first you are equipped with a compass to guide the rest of the plan. With that being said, when the plan is complete the executive summary will need to be revised, as many of the original plans set out in the first copy will have been built upon.
We can understand our competitors’ logic in writing the executive summary last, as you can then take a point from each portion of the business plan and introduce it to the executive summary. Although in our opinion, having an original copy to guide the rest of the business plan far outweighs this option.
A second factor to keep in mind is the executive summary should intrigue your audience to read the rest of your plan. If your executive summary is boring, overly detailed, and makes the audience yawn then they will surely walk away from the opportunity.
Intrigue the audience by explaining what your nonprofit will do to create lasting impact. Explain who will assist in providing that impact, and which organizations will want to fund your nonprofit.
Organizational Overview
In this section of your business plan, you should explain the type of NPO (nonprofit organization) your organization will be. Check with your federal government on the different types of nonprofits available in your country.
Canadian Nonprofit Organizations
Click here to learn more about what separates a registered charity from a nonprofit organization in Canada.
UK Nonprofit Organizations
Click here to learn more about nonprofit legal structures in the United Kingdom.
US Nonprofit Organizations
There are several types of non profit organizations in the US. These are categorized by section 500(c) by the IRS for tax exempt purposes. Listed below, are some of the frequently filed sections:
501(c)(1)
Corporations formed under the Act of Congress. An example is Federal Credit Unions.
501(c)(2)
Holding corporations for tax exempt organizations. This group holds title to the property for the exempt group.
501(c)(3)
This is the most popular type of NPO. Examples include educational, literary, charitable, religious, public safety, international and national amateur sports competitions, organizations committed to the prevention of cruelty towards animals or children. Organizations that fall into this category are either a private foundation or a public charity.
501(c)(4)
Examples include social welfare groups, civil leagues, employee associations. This category promotes charity, community welfare and recreational/educational goals.
501(c)(5)
Horticultural, labor and agricultural organizations get classified under this section. These organizations are instructive or educational and work to improve products, working conditions and efficiency.
501(c)(6)
Examples include real estate boards, business leagues. They work to ameliorate business conditions.
501(c)(7)
Recreation and social clubs that promote pleasure and activities fall into this category.
501(c)(8)
Fraternal beneficiary associations and societies belong to this section.
501(c)(9)
Voluntary Employees’ beneficiary associations which provide benefits, accidents and life payments to members are a part of this section.
Mission Statement
The mission statement of a nonprofit is even more important than a for-profit business. That’s quite a statement, but hear me out:
At the end of the day a for-profit business will change its mission statement, business model, and even its brand to ensure the profitability of its shareholders. Whereas, a nonprofits highest priority is in providing impact to a specific people, environment, or cause.
The mission statement of a nonprofit is its moral spine, whereas a for-profits purpose is often to provide lasting profits to its shareholders.
You should pronounce your mission statement early in your nonprofit business plan, as it will clarify exactly what you’re focused on.
Products, Programs and Services
Before writing your Operations Plan you must first identify the products, programs and services your nonprofit will offer. If a nonprofits mission statement is its compass, then its programs are the vehicle that drives impact.
It helps to think of programs or services in terms of inputs, process, outputs and outcomes.
Inputs are the various resources needed to run the program like funding, facilities, clients, programs and staff.
Process is how the program is carried out: clients are counseled, children are cared for, art is created, association members are supported.
Outputs are the units of service: number of clients counseled, children cared for, artistic pieces produced, or members in the association.
Outcomes are the impacts on the clients receiving services: increased mental health, safe and secure development, richer artistic appreciation and perspectives in life, increased effectiveness among members.
Operations Plan
You can have a great idea for a nonprofit, all the funding in the world, but if you don’t have a clear plan on how it will operate, you will lack impact.
In order to maximize the impact of your nonprofit answer the following questions in your operations plan:
- Where it will be located
- Whether it will be operated virtually
- Daily operations and logistics
- Which companies will make up your supply-chain
- Your schedule
Impact
Define the impact of your nonprofit. Set targets for how many people you will help, environment you plan to save, disease you will prevent, or how much art you will defend. How does your impact look? Is it simple, or multi-layered? As your nonprofit evolves do you plan to increase your impact objectives, or programs? It’s also important to outline the effect of your impact on the wider community or cause.
If you’re getting lost just go back to your mission statement. Your impact should be in line with your mission. Now, utilizing SMART goals (specific, measurable, attainable, relevant, and timely) develop milestones to achieve in the next 1 – 3 years to accurately measure your impact.
Marketing Plan
In order for a nonprofit to succeed, it must have a steady stream of both donors and volunteers. Marketing plays an important role here much like a conventional business.
This section should outline: who your target audience is, and what channels they will be reached through. Remember, your target audience are the people that benefit from your products, programs or services.
Fundraising Strategy
Similar Organizations – Believe it or not, but nonprofits have competition too! The first part to developing a strong fundraising strategy is to know who your closest competitors are. You can learn a great deal by understanding how they position themselves in the community and with donors..
Strategic Partnerships – Now that you have a grasp on your competitors you can look at aligning yourself in a strategic partnership. Is there something your nonprofit can do to add value to a more mature organization? Are there any community organizations that can support your nonprofit in its earliest days? It’s time to build strategic partnerships with like-minded organizations.
Fundraising Sources – This is the downfall of most nonprofits – the inability to find effective donors. Much like your target audience in your marketing plan, you need to create one to three target audiences for fundraising sources. Here are three general examples: local companies, parents of kids suffering from an auto-immune disease, and donors of a local kids hospital.
Fundraising Activities – People that contribute to good causes often expect a level of recognition, and in providing that they are more likely to be repeat donors. Create customized events that keep your donors engaged, educated on where the money is going, and determined to continue progressing your cause. Ideas for fundraising activities are nearly endless, but be sure to review your ideas with your board of directors.
Financial Plan
Contrary to what you may hear from other business plan writers, your financial plan should be written last.
There is so much back and forth, between your day to day operations, impact, fundraising opportunities, and mission statement that it makes it much more efficient to develop a financial plan once the rest of your plan is complete.
To a nonprofit that’s seeking funding the financial plan is essential. Additionally, for a nonprofit that’s solely depending on fundraising, the financial plan is equally as vital for planning activities in the future.
The financial portion of your business plan should include a three year income statement, opening balance sheet, and cash flow projections. From there, you must plan for the unknowns: What if you don’t meet your fundraising targets? What if you exceed your fundraising targets? What if a major unexpected cost comes your way?
The biggest downfall of new nonprofits is the idea that impact can outweigh financial planning. When in reality, the most impactful nonprofits are the ones that take their financials the most seriously.
Your finances must be squeaky clean if you’re planning on attracting donors on a wide scale. So once again, ensure your accounting is done with complete integrity, and that your financial plans are up-to-date and realistic.
Key Personnel
Begin the key personnel portion with a snapshot of your field staff or middle management. Is there anyone who is currently a part of your team, and involved in the field operations? If so, list their name, title, duties, and experience.
Now, make a detailed list of all the positions you need to employ or contract out. In developing your list be sure to explain what the roles and responsibilities are for each team member.
Lastly, create a table with each key personnel position in the left column, and three other columns to the right representing the next three years. Create an annual income for each position, and feel free to leave a year or two empty if you won’t require a position for a few years.
Management Team
You likely only have a few people on your management team at this point in time. Give each of them a position, and write a professional bio that speaks to their unique professional journey.
It’s imperative to answer one crucial question in each management team member’s bio, “How is this person uniquely qualified for this opportunity?” People reading your nonprofit business plan will want to know this. Is there any relative business, or public sector experience in this field that qualifies them? You can even consider adding a personal experience that propelled a management team member into this opportunity.
In addition to your current management team, you should list the positions you will need to recruit individuals for. This should include a title, roles/responsibilities, and experience required.
Do:
- Write clearly, and be realistic
- Write your executive summary first, and then amend it when the rest of your plan is complete
- Take the fundraising portion seriously. Ask yourself why people will want to donate to this cause
- Develop products, programs and services that will deliver impact to your target audience
- Choose a nonprofit organization structure that is unique to your NPO’s model
Don’t:
- Start with the financial plan – that comes once the rest of your plan has been revised a few times over
- Lie, or exaggerate on any part of your business plan. Complete honesty will lead you to the answers you need to find.
- Create lofty goals. Be specific on what your nonprofit is trying to achieve.
- Forget to develop the roles and responsibilities for each team member.
- Forget to explain why each management team member is uniquely qualified for this opportunity.
Format:
1 Executive Summary
2 Organizational Overview
3 Mission Statement
4 Products, Programs and Services
5 Operations Plan
6 Impact
7 Marketing Plan
8 Fundraising Strategy
9 Financial Plan
10 Key Personnel
11 Management Team
Additional Help
Our Free Business Plan Samples are available for you to see what a professional business plan should look like. Of course, our business plan writing team is available to customize your business plan from start to finish. We look forward to partnering with you to create a nonprofit business plan that will deliver true impact to your target audience.
