Business Planning For Nonprofits: Sample Nonprofit Business Plans

10/6/2020 Business Planning for Nonprofits
Published on National Council of Nonprofits (https://www.councilofnonprofits.org)
Home > Business Planning for Nonprofits
Business Planning for Nonprofits

Business planning is a way of answering, “What problem(s) are we trying to solve?” or “What are we trying to achieve?” but also, “Who will get us there, by when, and
how much money and other resources, will it take?” The business planning process takes into account the nonprofit’s mission and vision, the role of the board, and
external environmental factors, such as the climate for fundraising. Ideally, the business planning process also takes into consideration the potential for changes in basic
assumptions about the nonprofit’s operating environment. For example, many nonprofits rely on government contracts or grants. What if the particular sources of income
that exist today change in the future? A business plan can help the nonprofit and its board be prepared for future risks, by answering questions such as, “What is the
likelihood that the planned activities will continue as usual? or that our current sources of revenue will continue to provide this level of income? And what is Plan B if
they don't?”
Narrative of a business plan

You can think of a business plan as a narrative - or story - explaining (ideally in a way that will make sense to someone not intimately familiar with the nonprofit's
operations) how the nonprofit will thrive given its activities, its sources of revenue, its expenses, and the inevitable changes in its internal and external environments over
time. According to Propel Nonprofits [1], business plan usually should have 4 components that identify: revenue sources/mix; operations costs; program costs; and capital
structure.
A business plan can explain: what the income sources will be to support the charitable nonprofit's activities. What will be the types of revenue (sometimes referred to as
"income streams") that the nonprofit will rely on to keep its engine running? A business plan can also take into account assumptions that exist today but may change in the
future: Are there certain factors that need to be in place in order for those income streams to continue flowing? The plan should address both the everyday costs needed to
operate the organization as an entity, as well as costs that are specific to the unique programs and activities of the nonprofit. The plan may include details about the need
for the organization's services (a needs assessment) and about the likelihood that certain funding will be available (a feasibility study) or about changes to the
organization's technology or staffing that will be needed in order to successfully advance its mission. Another potential aspect of a business plan could be a "competitive
analysis" describing what other entities may be providing similar services in the nonprofit's service and mission areas. Finally, the business plan should name important
assumptions, such as that the organization's reserve policy requires it to have at least six months' worth of operating cash on hand at all times. The idea is to identify the
known - and take into consideration the unknown - realities of the nonprofit's operations, and propose how the nonprofit will continue to be financially healthy. It's a
"plan" after all - and the underlying assumptions may change. If they do, then having a plan can be useful during the process of identfying adjustments that need to be
made to respond to changes in the nonprofit's operating environment.
Basic format of a business plan

The format may change depending on the audience. A business plan prepared for a bank (to support a loan application) may be different from a busines plan that board
members will use to help define their priorities in recruiting new board members. Here is a typical outline of the format for a business plan:
Table of contents
Executive summary - Name the problem the nonprofit is trying to solve: its mission, and how it accomplishes its mission.
People: overview of the nonprofit’s structure and who makes what happen
Market opportunities /competitive analysis
Programs and services: overview of implementation
Contingencies: what could change?
Financial health: what is the current status and where will the revenue come from to advance the mission over time?
Assumptions and proposed changes: What needs to be in place for this nonprofit to continue on sound financial footing?
What’s the difference between business planning and strategic planning?

A business plan explains the “who/what/how/where/when” and typically will answer questions such as: “Who are the nonprofit’s “customers?” “What is the geographic
area for the nonprofit’s services?” “What other nonprofits are providing similar services?” and “What services does our nonprofit deliver that are unique?” A business
plan is the action plan, identifying the tasks, milestones, and goals, but also identifying the potential for success and the potential risks ahead, given the nonprofit’s
“competitive advantages” and the environment in which it operates.
The strategic plan takes all that the business plan has identified and answers “how” the desired results will be achieved, such as, “How will we accomplish all this with
limited resources? What will we prioritize? How will we acheive more ambitious revenue goals?” Other questions that a strategic plan might answer include: “What needs
to happen so that we can achieve success?” and “How will we measure success?” More resources on strategic planning for nonprofits [2].
Example: One finding from a nonprofit’s “business plan” could be the need to diversify financial resources. The strategic plan might then address how the nonprofit will
diversify its resources, such as by enlarging the nonprofit’s individual donor base, and then drill down to identify how that will happen, such as through the tactic of
developing an annual giving campaign; and further, how that tactic could be sustained, such as by identifying the cost of staff needed to support that activity on an
ongoing basis; and how success in the annual giving campaign will be measured.
Tools for business planning

Should your nonprofit use a business model statement [3] to complement its mission statement? (Blue Avocado)
Tools for business planning [4], creating a theory of change, a case for support, and building a revenue plan (for purchase from Social Velocity)
Free sample nonprofit business plans [5] (Bridgespan)
Components of transforming nonprofit business models [1] (Propel Nonprofits)
Resources
https://www.councilofnonprofits.org/print/613 1/2
10/6/2020 Business Planning for Nonprofits
What is a business plan and why do I need one for my nonprofit? [6] Joanne Fritz, About.com
Business Planning for Nonprofits: What It Is and Why It Matters [7] (Bridgespan)
How do I write a business plan for a nonprofit organization? [8](Grantspace)
The matrix map: a powerful tool for nonprofit sustainability [9] (Nonprofit Quarterly)
The Nonprofit Business Plan: A Leader's Guide to Creating a Successful Business Model [10] David La Piana, Heather Gowdy, Lester Olmstead-Rose, and Brent
Copen, Turner Publishing
Sample business plan for a social enterprise [11] (Propel Nonprofits)
Join your state association of nonprofits [12] for special opportunities, such as assistance with business planning, as well as strategic planning.
Category: Financial Management [13]

Tags: Business Plan [14]
Source URL: https://www.councilofnonprofits.org/tools-resources/business-planning-nonprofits
Links
[1] https://www.propelnonprofits.org/resources/transforming-nonprofit-business-models/
[2] https://www.councilofnonprofits.org/tools-resources/strategic-planning-nonprofits
[3] https://blueavocado.org/finance/nonprofit-business-model-statements/
[4] https://www.socialvelocity.net/tools/
[5] https://www.bridgespan.org/insights/library/strategy-development/sample-nonprofit-business-plans
[6] https://www.thebalancesmb.com/why-do-i-need-a-business-plan-for-nonprofit-2502272
[7] https://www.bridgespan.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=2658
[8] https://learning.candid.org/resources/knowledge-base/business-plans/
[9] https://nonprofitquarterly.org/2014/04/01/the-matrix-map-a-powerful-tool-for-mission-focused-nonprofits/
[10] https://www.amazon.com/Nonprofit-Business-Plan-Creating-Successful/dp/161858006X/189-2670573-6815645?
ie=UTF8&camp=1789&creative=390957&creativeASIN=161858006X&linkCode=as2&redirect=true&ref_=as_
20
[11] https://www.propelnonprofits.org/resources/social-enterprise-business-plan/
[12] https://www.councilofnonprofits.org/find-your-state-association
[13] https://www.councilofnonprofits.org/tools-resources-categories/financial-management
[14] https://www.councilofnonprofits.org/tools-resources-tags/business-plan
https://www.councilofnonprofits.org/print/613 2/2

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10/6/2020 Business Planning for Nonprofits

Published on National Council of Nonprofits (https://www.councilofnonprofits.org)

Home > Business Planning for Nonprofits

Business Planning for Nonprofits

Narrative of a business plan

Basic format of a business plan

What’s the difference between business planning and strategic planning?

Tools for business planning

Category: Financial Management [13]

Source URL: https://www.councilofnonprofits.org/tools-resources/business-planning-nonprofits

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