What Is a Non Profit Business Plan?
A non profit business plan describes your organization as it currently exists (which could be just an idea if you are a startup) and presents a road map for the next three to five years. It lays out your goals, challenges, and plans for meeting your goals. It is a living document that should be updated frequently. It is particularly important to create/update your business plan annually to make sure your nonprofit remains on track towards successfully fulfilling its mission.
Below are the key sections to include in your nonprofit business plan.
Although it is normally written last, your executive summary provides an introduction to your entire business plan. The first page should describe your nonprofit’s mission and purpose, summarize your market analysis that proves an identifiable need, and explain how your nonprofit will meet that need.
With regards to your Mission Statement, this is particularly important for nonprofits. It helps to communicate your purpose, the community or group of people it benefits and how you will help them. Every action or decision you make in your nonprofit should further and relate to your mission statement.
Because it’s the first thing readers will review, take the time to make your Executive Summary compelling. Unlike a for-profit business which might earn readers financial returns, a nonprofit business needs to convince them to do the right thing in supporting the nonprofit; which is often a harder ask. So, as the typical nonprofit business plan format calls for the summary to come first, make sure it gets readers excited and compels them to delve into the subsequent sections.
In this section of your business plan, you should explain the type of NPO you are or will be. The types of NPOs are listed below. 501(c)(3) is the is the most popular type.
If you are a startup NPO, explain the history of your vision for starting the NPO in this section. Explain the issues that made you decide to start your nonprofit.
If you are established NPO, use this section of your plan to discuss your history. For example, when did you start the NPO? What milestones have you accomplished. Past accomplishments are the best indicator of future success. So, use this section to explain your past achievements. Doing so will excite readers of your plan.
There are several types of non profit organization. These are categorized by section 500(c) by the IRS for tax exempt purposes. Listed below, are some of the frequently filed sections:
Corporations formed under Act of Congress. An example is Federal Credit Unions.
Holding corporations for tax exempt organizations. This group holds title to the property for the exempt group.
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, etc.
Organizations that fall into this category are either a private foundation or a public charity. Examples include Getty Foundation, Red Cross, Easter Seals, etc.
Examples include social welfare groups, civil leagues, employee associations, etc. This category promotes charity, community welfare and recreational/educational goals.
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.
Examples include real estate boards, business leagues, etc. They work to ameliorate business conditions.
Recreation and social clubs that promote pleasure and activities fall into this category.
Fraternal beneficiary associations and societies belong to this section.
Voluntary Employees’ beneficiary associations which provide benefits, accidents and life payments to members are a part of this section.
Products, Programs, and Services
This section provides more detailed information on exactly what your nonprofit organization does. What services do you offers? What programs do you provide? How does your nonprofit benefit the community? What need does your organization meet and what are your specific plans for meeting that need in the future?
Document your offerings in this section of your plan.
The Industry Analysis is one of the key components of your nonprofit plan. This section of your nonprofit business plan discusses the industry in which you are operating. For example, if your nonprofit provides education to children, you should provide information on the education industry here. How big is the market? What segment of the market are you serving? Are there any industry trends that are changing the market? Document answers to these questions here.
Customer and Market Analysis
The customer analysis section of your plan must first identify the key customer segment your NPO serves. For example, do you serve underprivileged children? Or young mothers in crisis? Or neglected animals?
Whoever you serve, identify them and then provide details on them. How many of them are there in the geographic region you plan to serve? What are their needs? Is anyone currently satisfying these needs, and if so, what are they doing well and where are they lacking.
A nonprofit must have a strong marketing plan in order to reach its targeted customers. Base your marketing plan on the four P’s: Product, Price, Place, and Promotion. Your Product section includes every item, service, or program you provide. Price details the costs of everything you sell. Place is your physical location, web presence, and/or third-party distribution channels. Promotion is how you will get people to buy your products and services and donate to your cause.
With regards to promotions, document the promotional tactics you will use such as the following:
- distributing flyers
- email marketing
- advertising in print and online (specifying specific media outlets you will use)
- social media posting
- email marketing
- building, managing and promoting your website
- partnerships with other organizations
- hosting community events
Your operations plan explains how you will meet the goals detailed earlier in your business plan.
We suggest having two sub-sections here: 1) everyday/short-term processes and 2) long-term processes
Everyday/short-term processes are the day-to-day tasks involved in running your nonprofit. These often include running programs and offering services to your constituents.
Long-term processes are the ways you will meet your organization’s growth goals, such as expanding into new geographic areas or providing new services. Here we suggest creating a milestone chart showing your expansion plans over the next five years.
Management Team/Organizational Structure
The management team and organizational structure is extremely important for a nonprofit. Describe your team and board members’ backgrounds and expertise. Talk about your advisory board if you have one. Explain the different levels of management, financial sponsors, and other key players. Draw an organizational chart that shows the different chains of command and estimate your current and future staffing needs.
With regards to a Board of Directors or Board of Advisors, creating such a board is advisable for nonprofits. Board members can not only provide guidance and experience, but they are generally extremely helpful in the fundraising process.
Although you are not trying to make a profit, a financial plan is a crucial part of your business plan since you need to make sure you have enough capital to fund your expenses.
Delineate your different sources of funding. Explain any existing loans or other debts. Present your future Cash Flow Statements, Balance Sheets, and Income Statements. Describe your fundraising plans and identify gaps in your funding. Provide a clear explanation of how funds will be distributed amongst your various projects. Disclose any salaries that are drawn by members of the organization.
If you are a startup NPO, don’t forgot about any of the following costs:
- Registering the NPO
- Permits and licenses
- Accounting and legal services
- Marketing promotion expenses
- Insurance costs
- Rent and utilities
- Employee salaries
- Furniture and technology (computers, printers, etc.)
- Building and hosting a website
The appendix is where you will attach any documentation to better prove your claims. These documents will vary widely depending on the exact nature of your non-profit, but should always include your full financial projections, promotional materials, and your most current annual report if applicable.
Helpful Business Plan Video Tips
Below are tips to creating select sections of your non profit business plan:
Writing the Management Team Section of Your Nonprofit Business Plan
Writing the Operations Section of your Nonprofit Business Plan
Writing the Customer Analysis Section of Your Nonprofit Business Plan
Writing Your Nonprofit Business Plan’s Executive Summary
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