Creating a Non-Profit Business Plan
Believe it or not, designing a non-profit organisation strategic plan isn't that different from managing a conventional corporation.
Non-profits often shy away from using the words "business planning," preferring to use terminology such as "strategic plan" or "operating plan." However, the truth is that creating a strategy for a for-profit corporation and a non-profit organisation is really very similar. Both types of organisations need to build sales projections and prepare how they will invest their money. They will need to handle their cash to ensure they remain afloat to reach their goals.
In this guide, I will discuss how to build a strategy for your organisation that will inspire your board of directors, encourage fundraising, and ensure you accomplish your purpose.
Who needs a non-profit business plan?
Effective business planning includes setting targets, keeping everyone on the same page, monitoring success metrics, and optimising over time. Even if your goal isn't to maximise income, you still need to be able to operate a tax-safe company.
Business planning provides an opportunity to analyse the essence of your goal, the resources you need to achieve the task, and your strategy to support your future operations.
Nonprofits are also responsible for meeting periodically with a board and reporting on the finances of your organisation is a vital part of the meeting. As part of the daily board financial analysis, you will correlate the actual performance with the business plan estimate. Can you achieve fundraising targets and keep spending track? Is the organisation's financial status where you wanted it?
A good strategic plan will help you attract potential donors who are interested in getting a better understanding of how your company functions and your fiscal health and transparency. And you'll certainly need a detailed business plan if you're going to pursue outsourcing for capital expenses — it's needed by lenders.
Creating a strategic plan for your company is a fantastic way to align your management team or board with your vision, priorities and roadmap. Even going through the preparation process with your colleagues will help you step back and gain some high-level perspective.
A non-profit business strategy
Know, creating a business plan is an ongoing task. It's not only about writing a static written text, but an ever-evolving strategy and action plan as the company evolves over time. To monitor your progress towards your plan, daily plan review meetings are necessary. For most non-profits, this coincides with daily reports and board meetings.
A non-profit business plan will contain much of the same business plan outline pieces. You can download our free business plan template as a Word document and change it according to the non-profit plan outline below.
Executive brief
A non-profit business plan's executive summary is usually the first section to be read, but the last to be written. That's because this segment is a general summary of everything else in the business plan — the overall snapshot of what the organisation's vision is.
Write it down as if you could share it with a potential donor or someone unfamiliar with your organisation: avoid internal jargon or acronyms and write it so that someone who has never heard of you can understand what you're doing.
Your executive summary should provide a brief overview of your organisation's mission. It should explain how you represent, how you deliver the services you deliver, and how you fundraise.
If you want to share with potential supporters, you should provide an explanation of what you are asking for and how you hope to use the funds raised.
Possibility
Start this portion of your non-profit strategy by explaining your concern for your customers or the community at large. Then tell how your organisation tackles the problem.
With a positioning comment, a perfect way to address the chance. Here's a method to describe your positioning:
For [target market description] who [target market need], [this product] [how needs are met]. Unlike [key competition], [main distinguishing feature].
And here's an example of a sentence using the formula:
For children aged 5 to 12 (target market) who struggle with reading (their need), Tutors Transforming Lives (your organisation or programme name) helps them get up to grade-level reading through a once-a-week (your solution) class.
Unlike the general after-school homework lab in the school district (your state-funded competition), our curriculum specifically helps kids learn to read within six months (how you 're different).
Your company is unique, otherwise you wouldn't waste so much time. Layout some of the nuts and bolts in this opening portion of your business plan. Your non-profit can change lives, change your society, or maybe change the world. Explain how this works.
That's where you go through the specifics of the services you 're providing. You'll explain how many people you support and how you support them.
Objective audience
In a business plan, this segment will be used to describe the target market. For non-profit organisations, it's exactly the same, just defined as how you represent in your organisation. Who likes your services?
Not all organisations have clients they represent directly, so if that's the case, you may exclude this portion. For example, an environmental preservation organisation may seek to purchase land to preserve natural ecosystems. The company does not represent individual groups of citizens specifically, but aims to support the whole society.
Organizations similar to those
All has competition — non-profits. You compete for donor interest and funding with other non-profits, and compete with other organisations serving your target community. Even if your company is the only service provider in your region, you still have competition.
Think of what your prospective clients did with their dilemma (the one your company solves) before you came to this scene. If you run an after-school tutoring organization, you can compete with clients' after-school sports programs. Your organisations have radically different goals.
Competition for funding is critical for many non-profit organisations. Use this portion of your strategy to clarify why donors will prefer your organisation for their contributions instead of similar organisations.
Existing programmes and facilities
If you run a regional non-profit, want to be national in five years? If you are currently serving children aged two to four, would you like to extend to ages five to 12? Use this segment to address long-term objectives.
Like a conventional company, you'll benefit from a long-term strategy. It not only helps steer the non-profit, it also offers a roadmap for the board and potential donors.
Strategies for marketing and outreach
In a business plan, this segment will be about marketing and sales strategies. For non-profits, you'll talk about how to meet your target audience.
You'll probably do a mix of:
-- Advertising: newspaper, e-mail, television , radio, etc.
-- Public relations: news releases, awareness-raising events, etc.
-- Digital marketing: website, email, forum, etc.
Like the "target audience" section above, if you don't promote your organisation to clients and those using your services, you can delete this section.
Costs and charges
Instead of a selling section, a non-profit business plan may include an expense or charge section.
Speak about how the service is financed, and whether the clients' expenses are the same for everyone, or dependent on income, or anything else. If your customers pay less for your service, how can you make up the difference?
If you don't charge your services and programmes, this section can be mentioned here or omitted.
Financing sources
Fundraising for several non-profit organisations. This section of the business plan outlines the main sources of fundraising.
Like knowing who your target audience is for your programmes, you'll want to know who your target market is for fundraising. Who's your supporters? What kind of person gives your organisation? Creating a "donor image" may be a useful exercise to help you represent and streamline your fundraising strategy.
You'll also want to identify various levels of prospective donors and how to interact with them. You 're likely to provide specifics about your annual donation scheme (usually lower-level donors) and your big gift scheme (folk giving larger amounts).
For example, if you're a private school, you might think of your main target market as an alumni who graduated at a certain income level over a year. If you're building a legacy programme to develop your endowment, your target group could be a particular demographic interested in your retirement-age cause.
Make some research. The trick here is not to track your target donors in a 3,000-mile radius with a wallet. The more detailed you can be about your prospective donors — their demographics, jobs, and interests, the more focused (and less expensive) your outreach will be.
Financing operations
How can your message reach your donors? Use this portion of your business plan to illustrate how to sell your company to potential donors and produce profits.
Using a mix of direct mail, ads, and fundraising activities. List main events and services to meet the supporters and raise funds.
Strategic collaborations and alliances
Use this segment to explore ways to collaborate with other organisations. You may need a space in the local public library to run your first year programme. Maybe your company offers local school mental health services, so you're working with your school district.
In certain cases, you can still rely on services like Medicaid to cover your programme costs. Mention all these strategic partnerships here, particularly if your programme exists without partnership.
Milestones, metrics
Without your charity goals and metrics, delivering on your mission would be harder. Milestones and metrics are signs that your programme works and that your company is stable.
They can include elements of your fundraising goals — like monthly or quarterly contribution goals, or information about your participation metrics. As most non-profits working with grant foundations do nuanced reporting on some of these, don't feel like rewriting every single target and metric for your organisation here. Think about your bigger goals and, if necessary, add more detail in your business plan appendix.
If you review your plan on a monthly basis and we suggest that you do so, the items here will specifically answer the questions your board may ask at your monthly trustee meeting. The idea is to avoid surprises by looking at your organisation's results. Having these targets and being prepared to change direction if you don't achieve them will help the company prevent a budget deficit.
Main assumptions / risks
Your non-profit operates to support a society or purpose. Before designing your main products or facilities, you've already done some testing to verify what you're offering.
But you will still take some calculated risks. Talk about the unknowns about the organisation. You will answer them if you call them.
For example, if you think a children's literacy programme is needed, you might have surveyed teachers or parents in your area to validate the need. But because you haven't launched the programme yet, one of your unknowns might be whether the kids actually appear.
Team and business executives
Who and what are their responsibilities? What do these people bring to the table?
Include both the charity day-to-day aspects management team and board members, and note those that can overlap between the two positions. Titles, degrees, related past achievements and assigned obligations should be included in this section. It adds a personal touch to include team members who are exceptionally eligible because they are loyal to the cause, or have unique first-hand experience or knowledge of the community you represent.
Perhaps your team has some outstanding, committed people with stellar qualifications — this is the place to highlight them (and don't forget to include yourself!).
Economic preparation
The financial plan is important to any company seeking support, but also extremely useful internally to keep track of what you have done so far financially and where you expect the company to go in the future.
Your business plan 's financial portion should include a long-term budget and cash flow statement with 3-5 year forecast. This will allow you to see the organisation's core financial needs protected. Any non-profit has its normal amount of funding needed to remain operating, so it's important to make sure your organisation has at least as much in the coffers.
From that point on, it's all about strategic planning: if you meet your fundraising targets, what is the surplus? What if you don't achieve your fundraising goals? Can you budget for sufficient payroll and operating expenses over time? Thinking about your financial strategy for the next few years will help ensure the company is sustainable.
In a non-profit, money management skills are just as critical as in a for-profit sector. Knowing the organisation's financial data is extremely relevant in a world where the public rates charities' reputation based on what proportion of contributions make it to programmes and services. As a non-profit, people are interested in the specifics of how money is distributed within organisations, with this information also shared online on platforms such as Charity Navigator, so that the public can make educated decisions about donations.
Potential participants will do their research — so make sure you 're doing it. Whoever your supporters are, they'll want to know that their money can trust your organisation. A comprehensive financial plan is a good framework for your non-profit on the right track.
Company planning continues
Know that a business strategy doesn't have to be set in stone. It acts as a reference, something you can come back to as a guide, then revise and edit your aim at a given time.
I suggest you review your financial plan once a month to see if your company is on track and review your plan if needed.
Believe it or not, designing a non-profit organisation strategic plan isn't that different from managing a conventional corporation.
Non-profits often shy away from using the words "business planning," preferring to use terminology such as "strategic plan" or "operating plan." However, the truth is that creating a strategy for a for-profit corporation and a non-profit organisation is really very similar. Both types of organisations need to build sales projections and prepare how they will invest their money. They will need to handle their cash to ensure they remain afloat to reach their goals.
In this guide, I will discuss how to build a strategy for your organisation that will inspire your board of directors, encourage fundraising, and ensure you accomplish your purpose.
Who needs a non-profit business plan?
Effective business planning includes setting targets, keeping everyone on the same page, monitoring success metrics, and optimising over time. Even if your goal isn't to maximise income, you still need to be able to operate a tax-safe company.
Business planning provides an opportunity to analyse the essence of your goal, the resources you need to achieve the task, and your strategy to support your future operations.
Nonprofits are also responsible for meeting periodically with a board and reporting on the finances of your organisation is a vital part of the meeting. As part of the daily board financial analysis, you will correlate the actual performance with the business plan estimate. Can you achieve fundraising targets and keep spending track? Is the organisation's financial status where you wanted it?
A good strategic plan will help you attract potential donors who are interested in getting a better understanding of how your company functions and your fiscal health and transparency. And you'll certainly need a detailed business plan if you're going to pursue outsourcing for capital expenses — it's needed by lenders.
Creating a strategic plan for your company is a fantastic way to align your management team or board with your vision, priorities and roadmap. Even going through the preparation process with your colleagues will help you step back and gain some high-level perspective.
A non-profit business strategy
Know, creating a business plan is an ongoing task. It's not only about writing a static written text, but an ever-evolving strategy and action plan as the company evolves over time. To monitor your progress towards your plan, daily plan review meetings are necessary. For most non-profits, this coincides with daily reports and board meetings.
A non-profit business plan will contain much of the same business plan outline pieces. You can download our free business plan template as a Word document and change it according to the non-profit plan outline below.
Executive brief
A non-profit business plan's executive summary is usually the first section to be read, but the last to be written. That's because this segment is a general summary of everything else in the business plan — the overall snapshot of what the organisation's vision is.
Write it down as if you could share it with a potential donor or someone unfamiliar with your organisation: avoid internal jargon or acronyms and write it so that someone who has never heard of you can understand what you're doing.
Your executive summary should provide a brief overview of your organisation's mission. It should explain how you represent, how you deliver the services you deliver, and how you fundraise.
If you want to share with potential supporters, you should provide an explanation of what you are asking for and how you hope to use the funds raised.
Possibility
Start this portion of your non-profit strategy by explaining your concern for your customers or the community at large. Then tell how your organisation tackles the problem.
With a positioning comment, a perfect way to address the chance. Here's a method to describe your positioning:
For [target market description] who [target market need], [this product] [how needs are met]. Unlike [key competition], [main distinguishing feature].
And here's an example of a sentence using the formula:
For children aged 5 to 12 (target market) who struggle with reading (their need), Tutors Transforming Lives (your organisation or programme name) helps them get up to grade-level reading through a once-a-week (your solution) class.
Unlike the general after-school homework lab in the school district (your state-funded competition), our curriculum specifically helps kids learn to read within six months (how you 're different).
Your company is unique, otherwise you wouldn't waste so much time. Layout some of the nuts and bolts in this opening portion of your business plan. Your non-profit can change lives, change your society, or maybe change the world. Explain how this works.
That's where you go through the specifics of the services you 're providing. You'll explain how many people you support and how you support them.
Objective audience
In a business plan, this segment will be used to describe the target market. For non-profit organisations, it's exactly the same, just defined as how you represent in your organisation. Who likes your services?
Not all organisations have clients they represent directly, so if that's the case, you may exclude this portion. For example, an environmental preservation organisation may seek to purchase land to preserve natural ecosystems. The company does not represent individual groups of citizens specifically, but aims to support the whole society.
Organizations similar to those
All has competition — non-profits. You compete for donor interest and funding with other non-profits, and compete with other organisations serving your target community. Even if your company is the only service provider in your region, you still have competition.
Think of what your prospective clients did with their dilemma (the one your company solves) before you came to this scene. If you run an after-school tutoring organization, you can compete with clients' after-school sports programs. Your organisations have radically different goals.
Competition for funding is critical for many non-profit organisations. Use this portion of your strategy to clarify why donors will prefer your organisation for their contributions instead of similar organisations.
Existing programmes and facilities
If you run a regional non-profit, want to be national in five years? If you are currently serving children aged two to four, would you like to extend to ages five to 12? Use this segment to address long-term objectives.
Like a conventional company, you'll benefit from a long-term strategy. It not only helps steer the non-profit, it also offers a roadmap for the board and potential donors.
Strategies for marketing and outreach
In a business plan, this segment will be about marketing and sales strategies. For non-profits, you'll talk about how to meet your target audience.
You'll probably do a mix of:
-- Advertising: newspaper, e-mail, television , radio, etc.
-- Public relations: news releases, awareness-raising events, etc.
-- Digital marketing: website, email, forum, etc.
Like the "target audience" section above, if you don't promote your organisation to clients and those using your services, you can delete this section.
Costs and charges
Instead of a selling section, a non-profit business plan may include an expense or charge section.
Speak about how the service is financed, and whether the clients' expenses are the same for everyone, or dependent on income, or anything else. If your customers pay less for your service, how can you make up the difference?
If you don't charge your services and programmes, this section can be mentioned here or omitted.
Financing sources
Fundraising for several non-profit organisations. This section of the business plan outlines the main sources of fundraising.
Like knowing who your target audience is for your programmes, you'll want to know who your target market is for fundraising. Who's your supporters? What kind of person gives your organisation? Creating a "donor image" may be a useful exercise to help you represent and streamline your fundraising strategy.
You'll also want to identify various levels of prospective donors and how to interact with them. You 're likely to provide specifics about your annual donation scheme (usually lower-level donors) and your big gift scheme (folk giving larger amounts).
For example, if you're a private school, you might think of your main target market as an alumni who graduated at a certain income level over a year. If you're building a legacy programme to develop your endowment, your target group could be a particular demographic interested in your retirement-age cause.
Make some research. The trick here is not to track your target donors in a 3,000-mile radius with a wallet. The more detailed you can be about your prospective donors — their demographics, jobs, and interests, the more focused (and less expensive) your outreach will be.
Financing operations
How can your message reach your donors? Use this portion of your business plan to illustrate how to sell your company to potential donors and produce profits.
Using a mix of direct mail, ads, and fundraising activities. List main events and services to meet the supporters and raise funds.
Strategic collaborations and alliances
Use this segment to explore ways to collaborate with other organisations. You may need a space in the local public library to run your first year programme. Maybe your company offers local school mental health services, so you're working with your school district.
In certain cases, you can still rely on services like Medicaid to cover your programme costs. Mention all these strategic partnerships here, particularly if your programme exists without partnership.
Milestones, metrics
Without your charity goals and metrics, delivering on your mission would be harder. Milestones and metrics are signs that your programme works and that your company is stable.
They can include elements of your fundraising goals — like monthly or quarterly contribution goals, or information about your participation metrics. As most non-profits working with grant foundations do nuanced reporting on some of these, don't feel like rewriting every single target and metric for your organisation here. Think about your bigger goals and, if necessary, add more detail in your business plan appendix.
If you review your plan on a monthly basis and we suggest that you do so, the items here will specifically answer the questions your board may ask at your monthly trustee meeting. The idea is to avoid surprises by looking at your organisation's results. Having these targets and being prepared to change direction if you don't achieve them will help the company prevent a budget deficit.
Main assumptions / risks
Your non-profit operates to support a society or purpose. Before designing your main products or facilities, you've already done some testing to verify what you're offering.
But you will still take some calculated risks. Talk about the unknowns about the organisation. You will answer them if you call them.
For example, if you think a children's literacy programme is needed, you might have surveyed teachers or parents in your area to validate the need. But because you haven't launched the programme yet, one of your unknowns might be whether the kids actually appear.
Team and business executives
Who and what are their responsibilities? What do these people bring to the table?
Include both the charity day-to-day aspects management team and board members, and note those that can overlap between the two positions. Titles, degrees, related past achievements and assigned obligations should be included in this section. It adds a personal touch to include team members who are exceptionally eligible because they are loyal to the cause, or have unique first-hand experience or knowledge of the community you represent.
Perhaps your team has some outstanding, committed people with stellar qualifications — this is the place to highlight them (and don't forget to include yourself!).
Economic preparation
The financial plan is important to any company seeking support, but also extremely useful internally to keep track of what you have done so far financially and where you expect the company to go in the future.
Your business plan 's financial portion should include a long-term budget and cash flow statement with 3-5 year forecast. This will allow you to see the organisation's core financial needs protected. Any non-profit has its normal amount of funding needed to remain operating, so it's important to make sure your organisation has at least as much in the coffers.
From that point on, it's all about strategic planning: if you meet your fundraising targets, what is the surplus? What if you don't achieve your fundraising goals? Can you budget for sufficient payroll and operating expenses over time? Thinking about your financial strategy for the next few years will help ensure the company is sustainable.
In a non-profit, money management skills are just as critical as in a for-profit sector. Knowing the organisation's financial data is extremely relevant in a world where the public rates charities' reputation based on what proportion of contributions make it to programmes and services. As a non-profit, people are interested in the specifics of how money is distributed within organisations, with this information also shared online on platforms such as Charity Navigator, so that the public can make educated decisions about donations.
Potential participants will do their research — so make sure you 're doing it. Whoever your supporters are, they'll want to know that their money can trust your organisation. A comprehensive financial plan is a good framework for your non-profit on the right track.
Company planning continues
Know that a business strategy doesn't have to be set in stone. It acts as a reference, something you can come back to as a guide, then revise and edit your aim at a given time.
I suggest you review your financial plan once a month to see if your company is on track and review your plan if needed.
