How to Create a Nonprofit Business Plan

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There are approximately 1.54 million nonprofit organizations registered in America, but not all of these organizations succeed.

Whether you’re running an already-established nonprofit organization or are just about to start one up, learning how to create a business plan ensures its success. It lets you identify your competition, customers, venture, and investors and set milestones to achieve your desired results. It also gives you a better look at the real potential of your nonprofit and how it can impact your target beneficiaries.

On top of that, taking the time to learn how to create a business plan and ultimately produce it shows investors just how serious you are. It will also send a clear message about what your nonprofit is all about and encourage volunteers to approach you. It will establish your nonprofit as a serious business entity with a professional approach and mindset towards achieving its vision.

Knowing the importance of a good business plan, here are nine simple steps for you to follow in coming up with the best nonprofit business plan:

Collect needed data

The most important ones you need to gather are those concerning money. Financial statements and existing documents and registrations should all be accounted for in a pre-existing nonprofit. If the organization is relatively new or just about to start up, any files on your funding source projections and proposals will come in handy.

Also, the data that you should be collecting must help you get more funding either from government sources or private foundations. Quantify your outputs by presenting the positive impact and outcomes of your nonprofit organization. Funders want to see the problems being solved and the good works your nonprofit does to the community that can be associated with them.

Tips on How to Collect Data for Your Nonprofit Organization 

Here are some tips on how to collect data that you will use to help identify the key strategic data gaps for your nonprofit or foundation.  

  • Collect internal and financial data, such as your expenses, taxes, and revenues, as these are crucial for budgeting and making organizational decisions.
  • Make a list of data that you are using and the purpose why it is being used.
  • Review the data you have collected across the organization. This could be surveys, interviews, donor profiles, annual reports, or inputs from focus groups.
  • Assess the progress and failures of your strategies and if the needs of your stakeholders or donors are being met.
  • Find data that back ups or prove the positive accomplishments of your programs to the community. 
  • Track data that shows you are solving issues that have lasting change in the community.
  • Document events that haven’t gone according to plan to understand your setbacks.
Nonprofit organization volunteers offering help to a PWD

Get to the heart of your organization

A mission statement empowers people within the organization by giving them a sense of direction and purpose for their tasks within the group. You can check out UNICEF’s mission statement to see a shining example of how you can tackle this part of your business plan.  

How to Write an Effective Nonprofit Mission Statement

Your mission statement should influence everything in your organization, from marketing to your culture. It speaks about your organization and its purpose. A strong mission statement should clearly explain and answer these questions: What is the ultimate goal of your nonprofit?  Why are you putting it up in the first place? And what is the heart of the organization?  

The following are some basic guidelines to help you craft a compelling mission statement.

  • Use simple and easy-to-understand words and language. Avoid using buzzwords and jargon.
  • Keep your statement short and focused. Keep it one to two sentences long, or five to 15 words long. 
  • Inform and guide others on what you do.
  • Gather insights from volunteers, employees, or nonprofit board members about how you can serve people with the services you plan to offer. 
  • Don’t rush the process and review frequently to accurately reflect what your nonprofit stands for.

Create an outline

Think of the outline as a draft of your overall business plan. In the outline, list down everything you want and need to include in the final business plan and how you want to sequence things. Having an outline gives you a rough idea of what to write and where everything should go.

Knowing what to expect, you will be able to finish your business plan faster, keep on track and relevant to your main idea, and ward off any confusion with how you can approach the writing process.

How to Write an Outline for a Business Plan

A nonprofit business plan also includes the same section of a standard business plan and adjusts it accordingly to fit your nonprofit business plan. Here’s a basic outline of a standard business plan.

  • Executive Summary. Provides a quick overview of what your company does, including your mission statement and information on your services.
  • Business Description. Outlines information about your business, what you do, and your unique points.
  • Market Analysis. Demonstrates that you have a thorough understanding of your target clients and know how to convince them.  
  • Competitive Analysis. Distinguishes your profit business from other businesses.
  • Sales and Marketing Plan. Offers a detailed explanation of your strategies and promotional method to acquire new clients.
  • Ownership and Management Plan. Outlines the legal structure of your nonprofit and management resources, including each member’s experience and special skills in your team.
  • Operating Plan. Discusses the key roles of your nonprofit business and what you need in day-to-day operations.
  • Financial Plan. Describes your funding requirements, financial statement analysis, and detailed financial statements.
  • Appendix. Includes additional information that will help establish your business idea’s credibility and success rate.  
Two male nonprofit organization volunteers holding boxes

Programs, services, and products

This part of your business plan specifies what you offer to your beneficiaries. Will it be in the form of a program? A product or service? Or maybe it is a combination of two or all of the three.

When listing down what you offer to your beneficiaries, it should be as clear and as detailed as possible. A good example is the programs and services provided by the Mayo Clinic, which includes medical education programs, research and resources, medical facilities, and expert consultation. 

This part of your plan should exactly show how you will solve the problem you’ve addressed. For example, are you going to provide shelter for the homeless? Will you be providing money to pay for the shelter? Or are you going to tackle the homelessness problem through advocacy? You should define how your solution will work clearly and how it will solve the issue.

Marketing strategies

Even though the organization does not exist for the purpose of earning, you still need a marketing strategy to reach out to your audience–your beneficiaries, benefactors, sponsors, partners, or anyone else you want to involve in the process.

This portion is usually the busiest part of the document since it is where you will detail how you carry out your business plan. If you have prepared any market analysis or market research, this is where you will be placing those in full detail.

Nonprofit Marketing and Promotion Strategies

Having little to no money to operate a nonprofit business is not easy. Raising awareness and marketing your nonprofit without spending a lot of money is possible using these strategies.

  • Use content marketing. You can produce one content per week or month either through a blog, video, podcast, or web page to create awareness of your nonprofit mission.
  • Create social media pages on different platforms, such as Facebook, Instagram, or Twitter, and post regularly. You can also opt to boost your posts or run an ad.
  • Produce short, impactful videos to awaken your audience’s emotions. Emotions drive people to act.
  • Add a “Donate Now” call-to-action button to your Facebook page to encourage Facebook users to take action.
  • Ask influencers to campaign for your cause.
  • Use email marketing and send emails often, a minimum of one per month.  

Operational and organizational structure

Your nonprofit will be made up of a group of people who should work well together and individually. There should be a structure in place which will define your organization and set clear expectations on how the organization should operate. This is the basis of how your team can carry out your mission with each task and responsibility that each individual carries.

In this portion of your plan, you should describe the day-to-day activities of each member and the actions required from them. Other people involved are under their project management, such as suppliers, benefactors, and other facilitating bodies such as government staff.  

Nonprofit charity workers

What impact do you plan to achieve?

Including an “impact plan” is probably one of the things that sets a nonprofit business plan apart from a regular business plan. Since your business has a primary mission to achieve within a community or a specific population, you are looking to create an impact with your activities as an ongoing end goal.

Your impact plan should answer your mission statement. If your mission statement is your destination, your impact plan is the journey. It highlights the most important things that your company values and the steps you plan to undertake to achieve them.

Financial status

As with any business, even a nonprofit one, you should get your finances in order. Set a minimum amount of funding that your company can withstand for it to stay in operation. Account for all of the funding you receive, how you plan to spend it, its allocation, and any plans for excesses that might be left over. 

Your financial statements should include your current financial status and projections, your fundraising plans, and possible financial gaps, and how you plan to overcome them. If you are starting up a company, also take into account the capital that was put in for the start-up.

Executive summary

Now that you have everything laid out in your plan, you can tie it all up with an executive summary. This part of the business plan is typically placed at the start of the document but is usually written last because it summarizes what your business is all about. Think of it as an introduction and overview of your nonprofit company.

It should include your mission, your plans, the need for your programs and services, and its impact on your target beneficiaries. It is the statement that aims to sell your business plan as a whole, so it should be clear and comprehensive despite being brief enough to fit on a page.

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