How to Write The Best Nonprofit Business Plan: Ultimate Step By Step Guide in 2023
Many assume that running a nonprofit is very different from running a company. And in some ways, they are right—from their philanthropic mission to the legalities of a tax-exempt status, those dedicating their time to operating a successful nonprofit organization deal with many worries that would not cross the mind of the average CEO.
But that is not to say that there aren’t any similarities between the two. One example is the necessity of a good business plan.
If you’ve never created one before, below you will find the ultimate step-by-step guide to how to write a nonprofit business plan.
Why Do You Need a Nonprofit Business Plan?
As their name implies, nonprofits are organizations that operate not for the purpose of profits, but rather in search of furthering philanthropic causes that help the world.
So why does a nonprofit need a business plan?
The truth is that a business plan does a lot more than strategizing for future profits. When done well, a business plan helps not only lay out an organization’s current standing, but it also demonstrates what it hopes to accomplish in the next three to five years, and how it will do so.
By seeing plans laid out in such a manner, one can more easily see both new possibilities and potential pitfalls. Business plans also help manage expectations so that one knows what is feasible, what is a stretch but still possible, and what is out of reach.
Understanding why you need a nonprofit business plan is very different from understanding what distinguishes a good one from those that are only serviceable.
If you’re familiar with regular business plans, then the good news is that there are not that many differences between that and a nonprofit business plan. There will be some changes of phrases and certain sections will be adapted to reflect the charitable nature of the organization, but at the core of its structure, the two can operate in very similar manners.
A good nonprofit business plan should be:
Easy to understand not only to those who are familiar with the organization, but also to those who are getting to know it through it.
Easy to read, with not a lot of technical terms.
Include as much information as possible while not being overly long.
Whoever reads your nonprofit business plan should, by the end of it, have a solid understanding of your goals, the structure of your organization, your vision for the future, and how you plan to accomplish these different things.
More than that, a good nonprofit business plan should provide you with a comprehensive roadmap for the next three to five years.
As is the case with any road trip, it is natural to sometimes go at a slower pace than expected or to deviate from the planned route due to unforeseeable circumstances; but by having planned the most efficient way to achieve your goals, you can use your roadmap to get back on track and adapt to the changes and challenges that come your way.
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Now that you understand why you need a nonprofit business plan and what qualities are featured in a good one, it is time to explore some of the elements that go into crafting a successful nonprofit business plan.
1. Executive Summary
When building a good nonprofit business plan, the executive summary is the last thing you write, but the first thing—and sometimes the only thing—that anyone will read. As the name it implies, it is a summary of the entire document.
Typically, your executive summary should:
Be no longer than two pages.
Explain your nonprofit’s reason for existing.
Discuss the issues you are trying to solve.
Detail your approach to solving these issues.
Go over your fundraising strategies.
Give an overview of the general structure of your nonprofit.
In a strong nonprofit business plan, this part of the document should give people a good idea of what your organization does by providing a summary of all the information that will be included in the business plan.
Potential donors and investors presented with your nonprofit business plan might not have the time to read the entire document. For this reason, consider also making the executive summary a soft sell as to why they should support your cause.
Don’t solicit donations, but instead make your writing persuasive enough so that while talking about your organization, your operations, and your plans for the future, you can also secure their support.
One common mistake to make with this section is including tons of acronyms and technical terms that would be unfamiliar to those not working closely with your cause.
Remember that the executive summary is meant to be read quickly so it can efficiently familiarize outsiders who may never have heard of your nonprofit, the problem you are trying to solve, or the innovative solutions you’re employing. There will be space to include and explain those technical terms later on, but the executive summary is not the place to do this.
2. Mission Statement
If you’ve worked on a website, worked on incorporating your nonprofit, or applied to possible funding opportunities, then you have probably written some version of a mission statement.
Your nonprofit’s mission statement should be written with simple words and be easy to understand. It should be concise while also being specific. When written well, the mission statement should include the main ideas behind your nonprofit and how you plan on executing this vision.
While you should be able to summarize this with one or two sentences, this section of your nonprofit business plan will also give you the opportunity to go into details of how your organization will make a difference in the world.
This mission statement is only three sentences long, but with it, it gives you enough information to understand what the nonprofit’s goal is and how it seeks to achieve this mission.
The first two top lines explain what the aim of the organization is and why they believe this is important. Notice how the highlights draw attention not only to the nonprofit’s name (“Arts Derbyshire”), but also its nature (“strategic arts charity”) and its mission (“enrich people’s lives through art”).
The third line details how Arts Derbyshire fulfills the goal mentioned above by working together with artists and art groups and communities by providing them with strategic direction. They do not need to go into more detail than this—an overview that is concise but specific is all you need for a successful mission statement.
For more examples and tips to help you craft your own effective mission statement, check out this post on our blog.
3. Information on Your Team
Those who read your business plan will be interested in knowing who works in your nonprofit and what function they serve. As such, it is important to lay out the structure of your organization by describing the important positions and their responsibilities.
When discussing your team, consider answering these questions:
Who are your board members?
Who is on your management team?
What are their qualifications?
Do they have past experience working with nonprofits?
Do they have a personal reason to be invested in this cause?
What does their daily schedule look like?
What are some responsibilities they have outside their usual day-to-day tasks?
How do they help with fundraising efforts?
How do they help with recruitment strategies?
Not only will answering these questions help outsiders learn what distinguishes your team from other similar nonprofits by highlighting what each individual brings to the table, it also gives you a better overview of how your nonprofit currently operates and the different ways you might be able to expand in the near future.
4. Target Audience
In most regular business plans, companies will often talk about their target audience and why they believe their product is a good fit for this demographic.
While nonprofits may not usually think of their interactions with others in such terms, the truth is that you still have an equivalent of a target audience. This would be your benefactors and your supporters.
When writing your nonprofit business plan, explain how your nonprofit will benefit communities and why you believe certain individuals are more likely to support your nonprofit.
Remember that this section is not exclusive to organizations focused on human beings or human communities and activities. Be it if your nonprofit fights for animal rights or if it seeks to preserve the natural environment, you should still go into details as to how you are benefiting these causes and who your supporters are.
5. Marketing Plan and Branding
We tend to think of marketing and branding as sales techniques. And while that is not entirely inaccurate, to limit yourself to this definition is to possibly ignore the role they play in the success of your nonprofit.
For a nonprofit, a marketing plan is not a plan on how to sell your product or service, but rather a plan on how to reach your supporters so that they will donate to your cause. For this reason, a good nonprofit business plan will include your different outreach strategies.
Advertisements, press releases, your website, and social media platforms are ways you can reach and engage with your audience. Not only should you understand how to best promote your nonprofit through each of these channels, but you should also craft a strategy based on the strengths and weaknesses of each format. This understanding and strategies should, in turn, be discussed in detail in your nonprofit business plan.
Remember to be specific. It could be beneficial to include projections on how you believe you will grow based on your marketing plan. If you’ve done any focus groups or market tests, or if there are any potential partners you would like to work with, you can also include them in this section. If appropriate, you can also touch upon the costs of your plan.
When it comes to branding, think about the following:
All of these will be key in your communication efforts with your supporters and potential partners. You must pick something that not only fits your cause, but that will effectively motivate others to donate to your nonprofit.
6. Financial Plan
Nonprofits, just like any organizations operating in our modern world, need money in order to stay afloat.
However, in the case of a nonprofit, the organization needs money not only to pay for its operational expenses, but also in order to contribute to its cause.
Your financial plan will cover all of this and more. In it, you should include details of:
Your current financial standing
All your costs and expenses
A detailed budget that takes into consideration both short-term expenses and long-term expectations
Your possible fundraising strategies
A plan for how to most effectively use any potential surplus
Your financial plan should show how you are covering all of your financial needs while also giving you a long-term budget that helps you create projections as to how your nonprofit will grow in the near future.
Some other things you should consider including in your financial plan include:
List of Assets
List of Liabilities
List of Revenue Streams
List of Grants Received
Cash Flow Statements
The financial plan section of your nonprofit business plan would also be a good spot to discuss potential corporate partnerships, and how you would plan to integrate said initiatives into your overall strategy.
When taken as a whole, your financial plan should help you see gaps in your strategy and give you an idea on how to address these issues. It should also prove to potential supporters and investors that your nonprofit knows how to responsibly manage any potential donations or grants that it might receive now or in the future.
7. Impact Plan
Most business plans include a section reserved exclusively to discussing profits. Naturally, when it comes to building a nonprofit business plan, this section is tweaked to reflect the not-for-profit nature of your organization.
Because your nonprofit is working to better the world in some way, your impact plan is perhaps just as important a section in your nonprofit business plan as your financial plan.
To put it simply, your impact plan shows how your nonprofit will bring change to the world.
In this section, you elaborate on the concepts presented on your mission statement. Rather than speaking in abstract terms, you will need to lay out concrete scenarios with figures and measurable goals so that your readers clearly see the ways in which your nonprofit is currently making a difference in the world and how it will continue to do so in the future.
For more tips on how to write a good impact plan, check out this post in our blog.
8. Operational Plan
If your impact plan lays out the ways your nonprofit is making a difference in the world, then your operational plan details how it achieves all of that. In other words, the operational plan includes information on your daily activities, your legal licenses and certificates, your insurances, and any other relevant information related to how your nonprofit operates.
Many good nonprofit business plans will also include information on how their team is uniquely capable of bringing their vision to fruition. After all, if this is a section dedicated to the hows of your nonprofit, and your staff are the ones responsible for enacting those hows, then it makes sense to discuss their qualifications and their duties.
9. Vision and Milestones
If the nonprofit business plan is meant to be a roadmap for the next three to five years of your organization’s existence, then the milestones are the guideposts with which you’ll measure your progress toward achieving that vision.
Some examples of milestones include:
Future campaigns goals
Future partnerships goals
Grant application goals
Remember to be specific—like with your impact plan, your goals should be easily measurable, concrete, and realistic.
The appendix is where you’ll attach any sort of documents that are relevant to your business plan and to your nonprofit. You can also use this section to include some of the more technical terms and information that you were not able to fit into the rest of your business plan.
4 Nonprofit Business Plan Tips to Consider
Now that you know what goes into a nonprofit business plan, here are four tips to help take yours to the next level.
1. Update Your Nonprofit Business Plan Often
While your business plan is a roadmap for the next three to five years, that does not mean it is written in stone. There are things that even the most savvy business-minded individuals cannot predict, and so, keeping your business plan flexible by adjusting it as you grow and learn is a good way to help your nonprofit adapt to the changing times.
Furthermore, by revisiting your nonprofit business plan on a regular basis—once a month is the usual recommended amount—you can better familiarize yourself with your goals, your milestones, and your strategies.
Soon, you will be better able to answer questions your board members and potential investors might have about your organization.
2. Write with an Audience in Mind
Whenever you are taking on an extensive writing project such as a business plan or a grant proposal, it is important to write with an audience in mind. While it is true that you will be using this document internally, there is a chance you will also show it to people outside of your nonprofit.
By writing with an audience in mind, you lessen your chances of overlooking important details of your strategy that may seem obvious to you but would not be so for someone else.
Think of potential donors, potential partners, or even grants you might be considering applying to. Writing to those audiences will not only prevent you from using too many technical terms, but it will also help you project confidence and persuasion into your writing without it coming across as a sales pitch.
3. Create an Outline Before You Start Writing
Never underestimate the power of a good outline.
While it may feel redundant to do so, outlining your business plan before you get to the actual writing will allow you to better structure this document so that it does not feel repetitive.
By outlining your business plan first, you can also see what sort of data you still need to collect and what sort of research you still need to conduct in order to support your strategies and aspirations. This way, you will not be caught by surprise half-way through drafting your nonprofit business plan because you realized you are missing a crucial piece of data.
4. Include Charts, Graphs, and Other Data
Charts, graphs, and other visual depictions of data are a great way to make your nonprofit business plan stand out.
By breaking up walls of texts so that it feels less overwhelming to the reader, you can create an aesthetic appeal that makes your writing more digestible while also supporting your statements with hard evidence.
Common Nonprofit Business Plan Mistakes
There are many mistakes one can make when writing a nonprofit business plan for the first time. Some of these we have alluded to already in this guide.
For example, it is important not to use too many technical terms or acronyms. Not only can that type of jargon bog down your writing, the time it takes to explain these terms and acronyms will eat away the much needed space that could be used discussing more important things.
We also mentioned before that you should not make your business plan overly long, as it could overwhelm readers with needless details. That being said, it should also not be too short, as that could mean you are missing important information.
Typically, the recommended amount is around 20 to 30 pages, but there are some that might be way below that, or way above those numbers. The right balance will depend tremendously on the specific organization, its scope, and its ambition.
Another common mistake that is easy to avoid involves formatting. While there’s no need to overthink things, pay attention so that you are not breaking the format you establish early on in the document. Not only can this be distracting and look unprofessional, it can also affect readability.
Successful Nonprofit Business Plan Examples
Finally, now that you know how to build your own nonprofit business plan, we’ve gathered some examples so that you can see these concepts in action.
World Wide Fund
The World Wide Fund is a massive international nonprofit operating across the globe and solving issues relating to nature and wildlife. Here you can see an example of their business plan-like document for their initiatives in Laos.
Aspire Public Schools
You don’t need to be an international organization to create a good business plan. Based in California, Aspire Public Schools is a charter management organization that aims to help students receive the best education possible so they can be ready for college. Constant Contact shows their 2004 business plan here.
World Vision is a faith-based nonprofit that works all over the world with the aim to help children overcome the struggles of poverty by improving access to education, clean water, health services, disaster management, and more. You can see one of their current business plans here.
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Wrapping Up: How to Write The Best Nonprofit Business Plan
Building a good nonprofit business plan can be intimidating. With the amount of research that must be done, the extensive writing, and with so many potential pitfalls, it can be easy to get lost in the details and lose sight of the whole picture. This step-by-step guide hopefully helped you learn some tips and tricks to make sure your nonprofit business plan is the best it can be.