Soapbox Engage Blog

Some people may say that business plans are a thing of the past--outdated, unnecessary, and a waste of time. Other nonprofits consider business plans something to create just for the sake of donors who demand it.

These opinions could not be further from the truth! Even for the modern nonprofit, a business plan can be an invaluable tool to help you maintain a strong purpose statement and clear messaging. Nonprofits who don't have a purpose statement often have a hard time getting loans, grants, or even corporate donors. Business plans can also help you attract quality board members.

Needless to say, business plans are definitely not a thing of the past and shouldn't be glossed over. Still, it can feel daunting or be challenging to know exactly how to write an effective nonprofit business plan. Have no fear! This blog will walk you through the basic steps to creating your own helpful business plan for your nonprofit.

Table of Contents

1. A mission statement
2. Include relevant financial data
3. Create an executive summary
4. Outline your organizational structure
5. Outline your programs and services
6. Outline your marketing plan
7. The operational plan should outline day-to-day operations
8. An evaluation plan
9. Outline your financial plan
10. Organizational charts and appendix

Nonprofit Business Plan Basics

A nonprofit business plan serves the same purpose as a for-profit business plan. It should offer a clear, organized plan for your goals and what you hope to accomplish. At the very least, a reader should understand the purposes of your nonprofit.

Once you've outlined your goals, it's time to start building out what it all will look like for you to successfully accomplish them.

• What activities, actions, or services will you offer to accomplish those goals?
• How will you raise (or receive) the money needed for all those projects?
• What are the estimated operating costs for your organization, and how will you cover those costs?

Benefits of a nonprofit business plan

For new organizations and nonprofits, creating a business plan can help you understand all the aspects and feasibility of your vision and whether you'll be able to raise the support needed to accomplish your goals.

Even if your nonprofit has been around for years, a good business plan can help you identify funding and growth opportunities.

Once you've got a great business plan for your nonprofit, you can put it to work for you! Major donors and foundations often want to review nonprofit business plans before making significant or ongoing donations. You can also use the document to recruit highly qualified board members and help them understand exactly what they're getting into.

Internally, your business plan can serve as a guide to keep your entire team on track and focused on your organization's specific goals. Very practically, your organization will likely need to present a business plan if you ever apply for a loan, grant, or start any kind of store or gift shop.

A nonprofit business plan vs. a strategic plan

It's important to note that, while there is a lot of overlap between a strategic plan and a business plan, these really are two different things. A strategic plan (unlike the name implies) is more of a vision for why your nonprofit exists, like solving childhood hunger in schools or ending homelessness in a specific location.

A business plan, on the other hand, is far more specific and action-oriented. It should look a lot like a roadmap and offer as much detail as possible about how you'll accomplish your plan for the next three to five years.

Your nonprofit business plan should tell a story

One effective strategy is to think of your nonprofit business plan as a story written to someone on the "outside" (who doesn't work in your organization) about how you will thrive and accomplish your goals.

It doesn't need to be a long, tedious document. Only include as much information as necessary to describe your nonprofit's current state and establish a roadmap for the next few years. However, it's a living document that you should adapt, update, and grow to reflect the current situations and your evolving goals.

10 Essential Ingredients of A Nonprofit Business Plan

Consider the time and energy required to create a business plan for your nonprofit to be a wise investment. This document can serve your organization well for many years, growing and adapting with your nonprofit. So, don't be surprised if a new organization's business plan is short and simple, growing and becoming more detailed over the years.

While the format or structure might change from one nonprofit to another, every business plan should include some key elements.

1) A mission statement

A mission statement is essential for nonprofits because it tells people who you are, why you exist, and what you're working to accomplish. A good mission statement clarifies why your nonprofit exists, which helps direct all your activities and choices.

Fundamentally, your mission statement should be just one sentence that describes your vision and what or whom your organization serves.

The Human Rights Watch mission statement is, "Defend the rights of people worldwide." It's short, simple, and defines exactly what they do and whom they serve.

Kiva's mission statement is, "To expand financial access to help underserved communities thrive." Even if you aren't familiar with Kiva's great work, you can get a glimpse of what they do and the people they serve.

2) Include relevant financial data

The kind of data you need varies from one organization to the next. Still, every nonprofit business plan should include financial and operational data.

For more mature nonprofits, consider including financial statements, operating expenses, and other updated data about your current funding.

New nonprofits don't have all that data. Still, you should include information about projected operating costs, potential funding sources, and other anticipated costs and revenue sources.

3) Create an executive summary

This is the section of your nonprofit business plan that any potential donor or partner will read first. It should introduce people to the overview of your organization. It should summarize all the other details in the rest of the document and tell the reader how you're planning to change the world for the better.

Because this part of your business plan is a summary, many people write this part last. You can also customize the executive summary depending on who you're sending it to. For example, you might customize this section one way when you're applying for a grant and frame it entirely differently if you're recruiting someone to serve on your board.

4) Outline your organizational structure

This may be surprising, but there are many different types of nonprofits. 501(c)3 is the most common type of nonprofit organization, but there are actually other types of nonprofits! Use this section to describe the kind of nonprofit you have and how everything is organized.

Be sure to include details like whether you have employees, own (or hope to own) a facility, and other critical information. Help your reader understand how your nonprofit operates day-to-day and who makes what happen.

If you're just getting started, paint a picture of how you'd like everything to look. Include details about the problems or injustices you see in the world and how you plan to solve them.

5) Outline your programs and services

Dedicate a section of your business plan to describe how you plan to meet a specific need or solve a particular problem. This is where you outline the problem or injustice and who will benefit from your programs and services. Be clear about how your organization will positively impact lives and make the world a better place.

Don't be afraid to go into detail here. How many people need your services? How many people can you currently serve, and how many more people are still unreached?

For example, if your goal is to abolish childhood hunger in school, include statistics about how many kids currently experience food insecurity in the school district and how many children you're currently serving. Outline exactly what services you provide to kids and families. Share how many meals you currently serve each school year. You get the idea.

The goal of this part of your business plan is to convince potential donors and partners that your organization is making a valuable impact measurably.

If other organizations are working to address the same injustices or needs, address how your organization will be different. Donors are rightfully wary of nonprofits offering duplicate services. If you can't identify how your organization is unique, it might be difficult to obtain grants or corporate partners.

6) Outline your marketing plan

Your marketing plan should include details about outreach activities, marketing plans, and other ways you get the word out about your organization. Existing nonprofits should add specific information about outcomes and costs.

New organizations should include projected costs based on your market research.

Start this section by describing your target audience, donors, beneficiaries, and potential partners. Include any research, market analysis, or tests you've done.

What marketing strategies do you plan to use, and how much will they cost? What methods worked in the past, and how do you plan to build on those successes?

7) The operational plan should outline day-to-day operations

What do you and your team do day in and day out to run the programs and services you offer? Be as specific as possible--who provides the services? When, where, and how frequently does it happen? How much does each "unit" of service cost?

For example, if you provide lunches for food-insecure children, how much does each lunch cost? Who makes sure each kid receives lunch? How often do you distribute the meals? Does your nonprofit have any equipment or inventory?

You should also include details about how you plan to maintain or grow your programs in the coming years.

8) An evaluation plan

How do you measure the impact and effectiveness of your services and programs? It will be difficult to attract grants or major investments unless you can prove that your nonprofit is making a difference. Many nonprofits do evaluate themselves, and others choose to hire outside professionals.

Major donors and foundations have made it very clear how much they value measurements and concrete results. They want to make sure they're getting a good return on their investment--whether it's financial, time, or resources.

If you don't intend to have a separate section for your evaluation plan, you can include your evaluation methods (and results) throughout your business plan.

9) Outline your financial plan

The financial plan section of your Business plan is where all the numbers go. Outline exactly how you'll fund your projects and services and exactly how you plan to spend the money.

Include revenue projections and where you anticipate the money will come from (grants, donations, subscriptions, etc.). Be sure to include an outline of your fundraising plan to demonstrate how you plan to raise money.

Potential donors will also want to see a breakdown of your anticipated expenses and how much of each dollar donated goes directly to the actual projects or services. How much goes to employee salaries, funding, overhead, and other costs?

This section of your business plan is really where your accounting practices can help you soar or really weigh you down. Going through the process of writing a detailed financial plan can be a helpful exercise for your entire team and your donors and supporters. It can help you identify gaps in your funding or spending and even help you plan with better clarity.

10) Organizational charts and appendix

Many nonprofits include a section with management and organizational charts in their business plan. These help explain your organization's hierarchy and how you've gathered the right people to accomplish the tasks at hand.

Organizational charts help potential partners understand who does what and feel confident that you're attracting highly qualified people for each position.

The appendix is where you can include any information or extra details that might make the business plan too long or overly detailed. For example, many nonprofits choose to add their current fiscal year budget and a list of the current board members in the appendix. It's helpful information, but better left in the appendix where a reader can look at it if they're interested.

This all might seem like a very cumbersome and overwhelming process, but we promise it's a worthwhile project. It will help you attract more donors, get excellent board members, apply for grants and loans, and much more!

Just take the process one step (and even one section) at a time. Before you know it, you'll have a high-quality and valuable business plan that can grow and mature with your nonprofit!

Now that you’re on top of developing your nonprofit business plan, here are three more resources to help you continue building your nonprofit.

• Create a Powerful Branding Strategy for Your Nonprofit: Branding isn’t just for big businesses or international nonprofits. Developing a trusted brand is possible--and necessary--for every nonprofit. And you don’t need the branding budget of Nike to make it happen. This blog has some tips and tricks to help you develop a brand strategy for your nonprofit.
• Email Marketing Tools for Nonprofit Success: Email remains a popular and cost-effective form for businesses and charitable organizations alike. You can do everything from update donors about your accomplishments and needs to invite people to upcoming events and engage new prospective donors. This blog includes a quick guide to help you find the best email marketing tool for your nonprofit.
• The Online Fundraising Software Buyer’s Guide: Are you noticing that your database isn’t quite as automated as you’d like or you’re paying more fees than you’d prefer. If you’ve been thinking of upgrading your fundraising software, we know it can be a daunting process. It can be challenging to know which option will fit your needs best. No need to fear! This blog will help you choose the best fundraising software in three easy steps!