As noble and inspiring as they are, nonprofit businesses often don’t start out with much funding or acclaim.
The only thing they have in ample is passion regarding the vision. So how do they turn it into a business? Crafting a nonprofit business plan. There’s no better way to turn that vision into reality.
It provides the nonprofit’s idea a strong backing with how the business will work and where the money will be used.
So are ready with your passion and vision? Combine it with a business plan that we will guide you in writing through this detailed guide along with examples.
Shall we?
What is a nonprofit business plan?
A nonprofit business plan is a strategic document that outlines the mission, goals, and operational strategies of a nonprofit organization. It includes detailed sections on programs and services, market analysis, organizational structure, financial plans, and impact measurement.
This plan serves as a roadmap for the nonprofit’s activities, helping to align resources toward achieving its mission. Additionally, it also showcases the organization’s viability and strategic planning to potential donors and partners.
Why do you need a nonprofit business plan?
Creating nonprofit business plans is necessary to convey the purpose of your business. But that’s just one reason. Here are other reasons why you need a non-profit business plan:
- Serves as a strategic roadmap, outlining how to reach the goals.
- Proves to be essential for attracting potential donors or investors by proving the viability of your business idea.
- Helps in creating realistic financial projections and budgets.
- Supports in defining the roles and responsibilities of everyone in the organization.
- Helps you identify risks and prepare strategies around them.
- Supports you in monitoring progress and measuring success.
You see! There’s no way we can ignore the importance of a nonprofit business plan. Let’s move forward with the guide.
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How to Write a Nonprofit Business Plan?
There are nine steps to writing a nonprofit business plan. Each section will provide you with the necessary guidance to craft a robust and effective plan.
Let’s get started and get into the nonprofit business plan outline:
1. Create an executive summary
The executive summary provides a synopsis of the whole business plan. Business people prefer to write this section last, after gaining knowledge of every other section.
Here’s what to include in the executive summary:
- A brief introduction to your nonprofit, including the name and mission
- The primary objective and vision of your nonprofit
- Summarize the key programs and services you offer
- Briefly mention the impact of your nonprofit on society
- Define who you serve and your key stakeholders
- Introduce the key members of your business
- A brief of your current financial situation and future projections
- Very subtly you should even mention the ask for your nonprofit or what you want from your readers (the CTA slide)
This summary should be no longer than two pages maximum, clear, compelling, concise, and engaging for readers.
2. Provide organizational description
The organizational description section provides an in-depth look at what your nonprofit aims to achieve. It includes the nonprofit’s mission, vision, core values, and strategic goals.
So begin this section with the name of your nonprofit, and then identify the structure of your organization. But since it’s a nonprofit, exempted from tax, you still need to choose from the below structures for registration purposes:
Unincorporated association
This is the simplest structural form. It’s basically an s-corporation of nonprofit organizations. Unincorporated associations are easy to set up but provide limited liability protection.
Trust
Trust is managed by trustees who hold assets for the benefit of beneficiaries. It’s often used for charitable purposes.
Nonprofit corporation
This is a more formal structure that provides liability protection for directors. It can earn tax-exempt status so it has become the most common structure for nonprofits.
Cooperative
This is the structure of an organization owned and operated by its board members, who share the profits and decision-making responsibilities.
LLC
Though less common for nonprofits, an LLC can be used for nonprofit activities. It offers flexibility and liability protection but doesn’t automatically qualify for tax-exempt status.
Now, after deciding on the structure, move forward with the mission and vision statement (like you would in any business plan).
Mission and vision statement
Remember, your mission and vision statement will give the picture of what your nonprofit does and why it does that. So, don’t forget to keep it engaging and in storytelling form.
For example, Our Genetic Legacy (OGL) is an NGO dedicated to preserving and promoting the history and contributions of Blacks, Indigenous, and People of Color (BIPOC) in American history. So, their statement is clear and engaging:
3. Conduct market analysis
The market analysis section requires a lot more market research, but the first thing you need to do is clearly define your organization’s goals.
For example, STREAM Academy helps students apply classroom learning to real-world situations. Clearly defining this goal allows them to identify their target market effectively.
Without a defined goal, it’s difficult to understand and identify who actually needs your programs or services.
Once, you define your goals, it is time to differentiate them into various segments. You can do that by differentiating them through these behaviors:
- Demographic: age, gender, income, education level
- Geographic: location, region, urban vs. rural
- Psychographic: values, interests, lifestyles or
- Behavioral: donation habits, event attendance, volunteer participation
Now that you’ve segmented your audience, it’s time to get information about the market through:
Gathering data from government sources
Go to the official government websites and collect relevant statistics or data. Now, use the data to your nonprofit’s focus. For example, if your nonprofit supports homeless youth, find the number of homeless youth in your region.
Conducting competitive analysis
Identify similar nonprofits in your area. Study their services, target audience, and strategies. Include your findings to understand your position in the market and identify unique opportunities.
Performing SWOT analysis
Conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis keeping both internal and external factors in mind, to better understand your nonprofit business.
Researching industry trends
Stay informed about the latest trends in your industry by subscribing to newsletters, participating in forums, and attending events.
By following these steps, your nonprofit can better understand its environment, identify opportunities, and plan for future growth.
4. Mention programs, products, and services
Half of the revenue of nonprofit organizations comes from either selling products or rendering services. So, the next step is to mention your programs, products, and services here to clarify everything about how you earn money, where your money goes, and what you provide.
For example:
Recycling Breeze is earning revenue from selling various recycling products like reusable bags, water bottles, dishes, etc. They also accept donations. Besides, they support educational workshops for the underprivileged youth and finance beach-cleaning activities.
In short, this section should include:
- Detailed descriptions of each program and product.
- How each revenue source supports specific initiatives.
- The impact of your programs and services on your community.
Ensure you outline future plans for each program to show long-term commitment and viability.
5. Create marketing and outreach strategies
Creating effective marketing and outreach plans is essential for raising awareness, attracting donors, and achieving your nonprofit’s mission.
Before creating the marketing plan, understand your unique selling propositions (USPs). Just determine what sets your programs, products, and services apart from others.
Now, don’t forget to highlight these pointers in your marketing messages to gain more attention and differentiate your nonprofit.
Once you know the USPs and have crafted the marketing message, it’s time for you to select the channels where you should pose. You can use a website, various social media platforms, newsletters, local newspapers, host workshops or events, and a lot more.
Plan regular updates across all channels to actively engage with your audience. Partner with local businesses, schools, and other nonprofits to spread awareness.
Lastly, track key performance indicators like website traffic, social media engagement, funds raised, etc to know the effectiveness. You can also collect feedback from your audience to refine your strategies.
6. Make an operational plan
The operations plan section of your nonprofit business plan includes your daily operations regarding who will work on what. It includes information on:
Hiring plan & staffing
The nonprofit sector is considered the third-largest employer in the United States. Thereupon, the competition is high and ensuring that the right person is in the right role is crucial for your nonprofit’s success.
Develop a comprehensive staffing plan that includes effective recruitment, thorough training, and strong retention strategies.
Ignoring retention can lead to high staff turnover, significantly impacting your organization’s performance. Make a strong team by giving training and various perks.
Organizational structure
Describe the organizational hierarchy, including the board of directors, executive team, and staff. Mention the role of each team member of the organization.
Suppliers
This could refer to suppliers who provide your products, donors who offer financial contributions, and individuals or groups who organize fundraising events.
Processes and procedures
Describe the standard operating procedures (SOPs) for key activities and functions of your organization. Also, mention how you will ensure the quality and consistency of your product and services.
Equipment
List which tools and technology your nonprofit will use. You can include any software like donor management, fundraising platforms, etc. Remember to include everything else including computers, vehicles, and machinery.
Shipping
If your nonprofit sells products online or needs any shipping method, mention here the way you will ship the products or reach your customers.
In short, this section mentions everything that affects the daily operations of your non-profit business to give a clear idea of how your organization works and who works on what activities.
7. Write your impact plan
The impact plan should clearly define the changes your nonprofit will bring to society.
Outline specific goals, like your organization wants to reduce plastic waste by 10% in three years. Or increase recycling program participation by 10% in one year.
Include KPIs like the number of workshops, participants, and the volume of waste recycled. Describe data collection methods such as government data, surveys, program records, etc.
Then, detail how you will analyze this data and use feedback to continuously improve and adjust your programs.
Highlight the importance of adapting strategies based on data and feedback to ensure ongoing effectiveness and responsiveness to community needs. This approach ensures your nonprofit’s efforts make a positive difference in society.
8. Outline the financial plan
A financial plan is the base of how you will collect and utilize the funds. It generally includes:
Revenue forecasts
Identify all potential income sources, such as donations, grants, fundraising events, and product sales. Then provide a detailed revenue forecast for the next 3-5 years, using real data or practical assumptions.
Expense budget
List all operational expenses, including salaries, and rent. Also, detail the costs associated with your programs and services. Include significant purchases or investments needed for your nonprofit to function smoothly.
Financial statements
Provide all the necessary financial statements in this section such as:
- Cash flow statement: Detail your expected monthly cash flow, showing where funds are coming from and where it’s going.
- Income statement: Calculate total revenue and subtract total expenses to get the income.
- Balance sheet: List current and long-term assets and liabilities, such as cash, equipment, and investments to understand the business’s financial position.
9. Include an appendix section
The appendix of a nonprofit business plan includes additional information that supports the main content. Here is what you can include in nonprofit appendix section:
- Supporting documents like resumes of the key staff, legal documents, financial statements, etc.
- Detailed market analysis, demographics, and other market research.
- Important policies and procedures that govern your nonprofit’s operations.
- Include detailed job descriptions for key positions.
- Include copies or links to any significant media coverage.
- Provide a list of your board members with their bios.
- Attach partner agreements (if any).
By including these elements in your appendix, you provide comprehensive evidence and context, strengthening the credibility of nonprofit business plans.
Download the free nonprofit business plan template
Ready to write your nonprofit business plan, but not sure where to start? Here you go, download our free nonprofit business plan template PDF and start writing your plan. It’s easy. All you need to do is download and edit it to meet your nonprofit needs.
Prepare your nonprofit for the future using Upmetrics
In conclusion, writing a nonprofit business plan involves thorough research, clear goal-setting, and a detailed strategy for achieving your mission.
To smoothen your process, you can try Upmetrics! Like various other nonprofits have tried and trusted the tool for its excellent business plan writing features.
See what one of the nonprofit owners has to say about her experience with Upmetrics “Signing up for Upmetrics was game-changing for our business. It helped us increase our revenue and secure funds over $142,000—Shellie Baxter – Founder and CEO of Our Genetic Legacy.”
So, wait no more and get your nonprofit off the ground in no time!