July 6, 2023
Adam Hoeksema
Does a non profit really need a business plan? Your organization isn’t a “normal” business after all, you are pursuing a mission, so shouldn’t the business plan just be to pursue the mission of the organization?
Also, is there really such a thing as a “non profit business plan”? Non profit organizations are so diverse in their business models. For example, the financial model for a church based on donations is quite different than a non profit healthcare provider financial model based on provided health care services.
Since the only common attribute among non profits is that they are pursuing a mission rather than a profit for shareholders, the size, scope and type of a business plan that your non profit might need can vary dramatically.
In this article I hope to cover the following:
With that in mind as the path forward, let’s dive in.
Why write a business plan for a non profit?
Writing a business plan for a non-profit organization has several important benefits and can serve as a key tool in achieving the organization's goals. Here are a few reasons why writing a business plan for a non-profit is essential:
- Clarity and Direction: A business plan helps define the mission, vision, and values of the organization. It provides a clear roadmap outlining the steps to be taken to achieve these goals, and the strategies and tactics to be used.
- Operational Planning: A business plan includes operational details, including organizational structure, staffing needs, resource allocation, and day-to-day operations. This information is essential for the smooth and efficient running of the organization.
- Financial Planning: Non-profits need financial management and planning as much as for-profit businesses. A business plan outlines the financial needs of the organization, budgeting, funding sources, and expenditure, which helps in ensuring financial sustainability.
- Fundraising Tool: A well-structured business plan can be a crucial tool when seeking funding from donors, grantmakers, or sponsors. It demonstrates to potential funders that the organization is well-organized, has a clear mission, and is likely to be successful in its endeavours.
- Performance Measurement: The business plan sets clear objectives, goals, and milestones that enable the organization to measure its progress. This information can be used to make necessary adjustments to strategies or operations to improve performance.
- Stakeholder Communication: A business plan is a formal document that communicates the organization's purpose, strategies, and financial plans to various stakeholders, including staff, volunteers, board members, donors, and beneficiaries.
What should be included in a non profit business plan?
It is difficult to give you a one size fits all answer for what should be included in a non profit business plan because as we have mentioned every non profit has a different model. So you really need to customize your business plan to your non profit’s unique situation. That being said, we did put together an outline of a generic non profit business plan which should at least give you a good head start.
Non profit business plan outline
1. Executive Summary
1.1 Organization Overview
1.2. Objectives
1.3. Mission Statement
2. Organization Description
2.1. Organization History
2.2. Legal Structure
2.3. Unique Value Proposition
2.4. Target Beneficiaries
3. Market Analysis
3.1. Industry Overview
3.2. Collaborator and Competitor Identification
3.3. Target Beneficiaries
Key Point 1
4. Marketing and Fundraising
4.1. Strategic Plan
4.2. Program or Service Offerings:
4.4. Distribution Channels
4.5. Promotions and Fundraising
Key Point 2
5. Organizational Structure and Management
5.1. Organization’s Facility & Location
5.2. Staffing Plan and Volunteer Management
5.3. Governance, Financial Management, and Accountability
Key Point 3
6. Financial Plan
6.1. Startup Costs
6.3. Expense Projections
6.4. Profit and Loss Statement
6.5. Cash Flow Projections
6.6. Break-even Analysis
Key Point
7. Appendix
7.1. Supporting Documents
7.2. Glossary of Term
7.3. References and Resources
Key Point 5
Do non profits have competitors?
You might be tempted to think that non profit organizations don’t have competition because you are just all out to support the mission. Although you can certainly work toward the same goal, as an organization you still have competition. A non profit church may be competing for church members in a sense, a non profit university is competing for students, and a non profit health care system is competing to recruit the best doctors and employees.
How to analyze the competition for a non profit?
One way to analyze your competition might be to use a tool like Ahrefs.com which allows you to input an organizations website and see roughly how much website traffic they get and what keywords are driving traffic to their website. My alma mater is Taylor University. Ahrefs shows that their website receives roughly 25,000 visitors per month from organic search results.
Furthermore I can do a keyword report and see that they are ranking first for a competitive keyword like “Christian University Indiana” which sends them roughly 34 organic website visitors per month.
How big is the market for my a non profit?
Ahrefs is also a great tool to understand how big the market might be for your particular non profit. For example, we can see that there are only 350 people searching for “Christian colleges in Indiana” per month, so the total market of people searching for an organization like Taylor University is relatively small. If you are starting a church you could run a report for keywords like “church in XYZ city” which would help you understand that number of people searching for a church in your area.
How to market a non profit?
By doing competitor and keyword research for your market on Ahrefs, you should now have a good idea of how your competitors are attracting customers / beneficiaries and you can look for opportunities to compete in that market. You can then advertise for certain keywords, write content or blog posts related to the keywords that your target market is searching for, and you can try to replicate or improve upon strategies that appear to be working for your competitors.
How to structure a non profit board?
Structuring a nonprofit board involves considering a number of elements, including board size, member composition, board officer roles, committees, and member terms. Here are some guidelines for how you can structure a nonprofit board:
- Board Size: The size of a board should be dictated by the needs and capacity of the organization. Smaller nonprofits may only need a board of five to seven people, while larger organizations may require 20 or more. As a general rule, a board should be large enough to carry out its duties, but small enough for effective discussions and decision-making.
- Member Composition: The board should consist of individuals who bring a variety of skills and perspectives to the organization. This can include people with financial, legal, and managerial expertise, as well as those with knowledge of the organization's mission and community. It can also be beneficial to include individuals who reflect the demographics of the community the nonprofit serves.
- Board Officer Roles: Nonprofit boards typically have at least three officers: a Chair, a Secretary, and a Treasurer. The Chair presides over meetings and guides the direction of the board. The Secretary is responsible for keeping records of board actions, and the Treasurer oversees the financial management of the organization. Some boards may also have a Vice Chair to support the Chair in their duties.
- Committees: Committees can be useful for handling specific aspects of board governance. Common nonprofit board committees include the Executive Committee (made up of board officers), the Finance Committee, the Governance or Board Development Committee (which handles board recruitment and training), and the Fundraising or Development Committee. There may also be ad hoc committees set up to handle specific projects or initiatives.
- Member Terms: Board members usually serve for specific terms, which can range from one to four years. Some organizations use staggered terms, where a portion of the board is up for re-election each year, to ensure continuity. There may also be term limits, which can help to ensure fresh perspectives on the board.
- Board Member Roles and Responsibilities: It's important to establish clear roles and responsibilities for board members. This can include setting strategic direction, ensuring financial oversight, hiring and evaluating the executive director, fundraising, and acting as ambassadors for the organization.
- Board Meetings: Regular board meetings are crucial for decision-making and governance. The frequency of these meetings will depend on the organization's needs, but many boards meet quarterly. The board may also meet in special sessions as needed.
- Board Evaluation and Training: Regular evaluations can help ensure that the board is functioning effectively and meeting its responsibilities. This can include individual self-assessments as well as full board evaluations. In addition, ongoing board training can help to ensure that members understand their roles and responsibilities.
Remember, each nonprofit organization is unique and may have different needs and requirements when it comes to board structure. It's important to create a structure that works best for your particular organization, in compliance with any applicable local, state, or national laws.
How to Create Financial Projections for a Nonprofit Business Plan
Just like in any industry, the non-profit sector has its own unique factors that impact financial projections, such as fundraising efforts, grant opportunities, and donor contributions. Utilizing a non-profit financial projection template can simplify the process and boost your confidence. Creating precise financial projections goes beyond demonstrating your organization's ability to secure funding; it's about showcasing the financial path that will enable you to achieve your mission and make a positive impact. To develop accurate projections, consider the following key steps:
- Estimate startup costs for your non-profit, including administrative expenses, program development, and marketing efforts.
- Forecast revenue sources such as grants, donations, fundraising events, and membership fees.
- Project program costs
- Estimate operating expenses like office rent, utilities, insurance, and professional services.
- Calculate the amount of funding needed to launch and sustain your non-profit's activities.
While financial projections are vital for your non-profit business plan, remember to seek guidance from experienced professionals who understand the non-profit landscape. Adapt your projections based on real-world insights and leverage industry resources to refine your financial plan, ensuring you can effectively execute your organization's mission and achieve your desired outcomes.
Example Non Profit Business Plan
Below is the content of our sample non profit business plan. A Google Doc version of this nonprofit business plan template is available here for you to modify and personalize. There's also a video walkthrough available to guide you in tailoring the business plan to your specific nonprofit organization's needs.
Table of Contents
1. Executive Summary
1.1 Organization Overview
1.2. Objectives
1.3. Mission Statement
2. Organization Description
2.1. Organization History
2.2. Legal Structure
2.3. Unique Value Proposition
2.4. Target Beneficiaries
3. Market Analysis
3.1. Industry Overview
3.2. Collaborator and Competitor Identification
3.3. Target Beneficiaries
Key Point 1
4. Marketing and Fundraising
4.1. Strategic Plan
4.2. Program or Service Offerings:
4.4. Distribution Channels
4.5. Promotions and Fundraising
Key Point 2
5. Organizational Structure and Management
5.1. Organization’s Facility & Location
5.2. Staffing Plan and Volunteer Management
5.3. Governance, Financial Management, and Accountability
Key Point 3
6. Financial Plan
6.1. Startup Costs
6.3. Expense Projections
6.4. Profit and Loss Statement
6.5. Cash Flow Projections
6.6. Break-even Analysis
Key Point
7. Appendix
7.1. Supporting Documents
7.2. Glossary of Term
7.3. References and Resources
Key Point 5
1. Executive Summary
1. Organization Overview
Briefly introduce the organization's background, programs, and target market.
- Example: Safe Haven is a non-profit organization based in Minneapolis, Minnesota, dedicated to promoting mental health awareness and providing accessible counseling services to underserved communities
1.2. Objectives
Outlines the organization's short-term and long-term goals.
- Example: Increase the number of counseling sessions offered by 25% within the next six months to meet the growing demand for accessible mental health services in underserved communities.
- Example: Long-term: Establish satellite centers in neighboring cities within three years to expand the reach of Save Haven's mental health programs and services to a wider population.
1.3. Mission Statement
Describes the organization's purpose and core values.
- Example: Empowering underserved communities by promoting mental health awareness and providing accessible counseling services for all.
2. Organization Description
2.1. Organization History
Provides context on the organization's background and founding story.
- Example: Established in 2010 by Andy Mitchell and a group of passionate professionals and activists, Safe Haven is a mental health organization dedicated to providing accessible counseling services. Through community partnerships and continuous growth, we have made a lasting impact on mental health awareness and support.
2.2. Legal Structure
Describes the organization's legal structure (e.g., sole proprietorship, partnership, LLC, corporation).
- Example: Safe Haven operates as a non-profit organization registered as a 501(c)(3).
2.3. Unique Value Proposition
Emphasizes the organization's competitive advantage or unique values.
- Example: Safe Haven stands out by offering collaborative mental health care, bringing together a multidisciplinary team of professionals who work together to foster holistic well-being and resilience in individuals and communities.
2.4. Target Beneficiaries
Defines the organization's ideal beneficiary base.
- Example: Safe Haven aims to serve underserved communities, including individuals from low-income backgrounds, marginalized groups, and those facing barriers to mental health services.
3. Market Analysis
3.1. Industry Overview
Presents a general overview of the industry, its trends, and growth potential.
- Example: The mental health industry is experiencing significant growth and increased awareness due to a growing recognition of the importance of mental well-being. Safe Haven aims to leverage this trend and contribute to the industry by providing accessible counseling services and promoting mental health awareness in underserved communities.
3.2. Collaborator and Competitor Identification
Identification of similar non-profit organizations and potential collaborators
- Example: Direct competitors: Compassionate Minds: A non-profit organization providing mental health services and counseling operating in the same region as Safe Haven.
- Example: Indirect competitors: Mental Health Foundation: A national non-profit organization focusing on advocacy and awareness, partnering with various stakeholders to promote mental well-being.
3.3. Target Beneficiaries
Explores the organization's target beneficiaries, demographics, preferences, and pain points.
- Example: Our programs and services primarily target low-income families and individuals residing in Minneapolis, Minnesota, with a focus on marginalized communities, such as homeless individuals, domestic violence survivors, and immigrant populations.
Key Point 1
- Example 1: Localized research findings reveal a significant increase in mental health awareness and a growing demand for accessible and affordable mental health services in the community.
- Example 2: Analysis of demographic data indicates a high prevalence of mental health concerns among underserved populations, highlighting the urgent need for targeted intervention programs.
4. Marketing and Fundraising
4.1. Strategic Plan
Describes the action plans, timelines, and key milestones for your organization
Describes the organization's programs or services in detail.
- Example: Secure sustainable funding through grant applications, fundraising events, and community partnerships
Key Milestone: Raise a minimum of $100,000 in grant funding within the first year.
- Example: Develop and implement mental health awareness campaigns in collaboration with local community organizations within the first year of operation, starting from Month 1.
Key Milestone: Launch the first mental health awareness campaign within 6 months.
- Example: Recruit and train a team of licensed mental health professionals to offer counseling services within the first year of operation, starting from Month 1.
Key Milestone: Launch the first mental health awareness campaign within 6 months.
4.2. Program or Service Offerings:
Describes the organization's programs or services in detail.
- Example: Save Haven offers a comprehensive range of services including individual counseling, group therapy, group therapy, crisis intervention, and support groups.
4.4. Distribution Channels
Describes the methods through which the organization will deliver its programs or services to beneficiaries.
- Example: Safe Haven employs a multi-channel distribution approach, utilizing remote counseling, and community partnerships with schools, community centers, and healthcare facilities.
4.5. Promotions and Fundraising
Details of the organization's promotional efforts and advertising strategies.
- Example: Safe Haven employs a comprehensive promotional strategy encompassing online presence through its website and social media platforms, active community outreach at events and health fairs, partnerships with local media outlets, and collaborations with healthcare professionals and community organizations to ensure a continuous flow of individuals seeking mental health support.
Key Point 2
- Example 1: Safe Haven plans to collaborate with local schools to provide mental health education programs and workshops to students, empowering them with essential skills and knowledge for mental well-being.
- Example 2: The organization aims to establish partnerships with community centers and faith-based organizations to create safe spaces for support groups, fostering a sense of belonging and social connection among individuals facing mental health challenges.
- Example 3: Organize a grand opening event offering free washes and dryer credits, attracting over 200 local residents and generating buzz through word-of-mouth referrals.
5. Organizational Structure and Management
5.1. Organization’s Facility & Location
Specify the organization's premises used to carry out its activities, programs, and services. I
- Example: Save Haven operates from a welcoming and serene facility located in the heart of Minneapolis, Minnesota. The facility comprises modern counseling rooms, a comfortable waiting area, and administrative offices, creating a safe and supportive environment for individuals seeking mental health services.
5.2. Staffing Plan and Volunteer Management
Involves the systematic approach of recruiting, coordinating, and supporting volunteers and staff
- Example: Safe Haven implements a comprehensive staffing plan that includes recruiting, training, and retaining qualified staff members to ensure the effective delivery of programs and services. Additionally, the organization establishes a volunteer management system to engage and support volunteers in their roles, providing them with meaningful opportunities to contribute to the mission.
5.3. Governance, Financial Management, and Accountability:
Involves the effective and responsible management of financial resources to support the organization's operations
- Example: Safe Haven upholds strong policies and procedures to ensure responsible governance, financial management, and accountability, including clear guidelines for board members, transparent financial reporting, and performance evaluations to continually improve its impact and stakeholder satisfaction.
Key Point 3
- The team at Safe Haven comprises licensed mental health professionals with extensive experience in trauma-informed care, ensuring high-quality and compassionate support for individuals affected by adverse life experiences.
- Our board members bring diverse backgrounds in psychology, social work, and public health, offering a comprehensive perspective on addressing mental health disparities and promoting holistic well-being.
All of the unique Non-Profit projections you see here were generated using ProjectionHub’s Non-Profit Financial Projection Template. Use PH20BP to enjoy a 20% discount on the template.
6. Financial Plan
6.1. Startup Costs
Provide a detailed breakdown of the total startup costs requirements, and where you plan for those funds to come from. You will also want to break down how the startup costs will be used including working capital to cover losses before the business breaks even.
- Example: Save Haven's total startup costs are estimated at $150,000. The organization has raised $125,000 through fundraising and donations, and they are seeking an additional $25,000 to cover the remaining expenses.
Watch how to create financial projections for your Non-Profit
6.2. Revenue Projections
Provide an estimate of the organization's future revenue based on market research and assumptions.
- Example: Save Haven projects a steady increase in revenue over the next five years, with anticipated amounts of $509,060 in 2023, in the first year.
6.3. Expense Projections
Estimates the organization's future expenses, including fixed and variable costs.
- Example: Save Haven has estimated its operating expenses, including direct expenses, fundraising costs, sales and marketing expenses, general and administrative costs, research and development expenses, programming costs, salaries, interest and taxes, loan principal, and leasehold improvements.
6.4. Profit and Loss Statement
Summarizes the organization's financial position and expenses, over a specific period.
- Example: Save Haven anticipates an initial net loss in 2023 due to startup expenses and infrastructure investments. However, the organization projects a positive net income in the following years, demonstrating a consistent and promising financial growth trajectory.
6.5. Cash Flow Projections
Outlines the organization's projected cash inflows and outflows.
- Example: Save Haven's cash flow projections factor in expected fluctuations in cash inflows and outflows, ensuring effective financial management and stability.
6.6. Break-even Analysis
Determines the point at which the organization's revenue equals its expenses.
- Example: Save Haven's break-even analysis indicates that the organization is expected to reach a point of revenue equaling expenses within a relatively short timeframe, highlighting its potential for early profitability.
Key Point 4
- Example 1: Safe Haven's financial projections align with industry benchmarks, with operating costs accounting for a realistic percentage of total revenue based on similar non-profit mental health organizations.
- Example 2: The organization conducts thorough market research to identify potential revenue streams, such as government grants, corporate partnerships, and individual donations, ensuring a diversified and sustainable funding base.
7. Appendix
7.1. Supporting Documents
Includes any relevant documentation that supports the information presented in the business plan, such as resumes, financial projections, market research data, and permits or licenses.
7.2. Glossary of Term
Provides definitions for industry-specific terms used throughout the business plan to ensure reader comprehension.
7.3. References and Resources
Lists any sources or resources referenced during the preparation of the business plan, including industry reports, market research data, and relevant publications.
Key Point 5
- Example 1: The founders of Safe Haven have personally invested their own resources and time into establishing the organization, demonstrating a strong commitment to its mission and the community it serves.
- Example 2: Safe Haven's leadership team actively participates in mental health advocacy initiatives and professional development opportunities, continuously enhancing their expertise and dedication to improving mental health outcomes.
Nonprofit Business Plan FAQs
How do I start a non-profit organization?
To start a non-profit organization, you'll need to define your mission, create a board of directors, file the necessary paperwork with the government, develop a fundraising strategy, and establish policies and procedures for your organization's operations.
How can I fundraise for my non-profit?
You can fundraise for your non-profit by organizing events, applying for grants, seeking corporate sponsorships, launching online crowdfunding campaigns, cultivating individual donor relationships, and exploring partnerships with other organizations.
What are the key elements of a successful non-profit strategic plan?
A successful non-profit strategic plan should include a clear mission and vision, goals and objectives, an analysis of the target community or cause, strategies for fundraising and program implementation, and a monitoring and evaluation framework.
How can I measure the impact of my non-profit's programs?
To measure the impact of your non-profit's programs, establish specific metrics and evaluation methods, conduct surveys or interviews with beneficiaries, track outcomes and outputs, and use data to inform program improvements and report to stakeholders.
What legal requirements do I need to comply with as a non-profit?
Legal requirements for non-profits may include obtaining tax-exempt status, filing annual reports, adhering to accounting and financial regulations, ensuring transparency in governance, and complying with any specific regulations related to your non-profit's activities.
