How to Write a Nonprofit Business Plan

How to Write a Nonprofit Business Plan

by Belle Wong, J.D., October 2015

When you had the idea of starting a nonprofit, you might not have envisioned yourself working on a business plan for your new nonprofit corporation. However, even though a nonprofit organization. has different goals than a for-profit organization, the two types of organizations are still similar because both are businesses. And much as a business plan is an extremely useful tool for the for-profit business, so too are nonprofit business plans very helpful tools for the nonprofit business; this is true whether you have an established nonprofit organization or plan to start a nonprofit business.

Because there are similarities between the two kinds of business plans, you'll find information about how to write a business plan directed toward for-profit business will still be useful. Developing a business plan for nonprofit businesses is, however, a little different than creating a business plan for a for-profit business. While each type of business plan has similar elements, there are certain differences between the two which you should keep in mind when working on your nonprofit business plan outline.

For example, even the reason why you've decided to create a business plan for your nonprofit organization will probably be different than the reasons why a for-profit organization requires a business plan. Many businesses, particularly small businesses, engage in the business plan process because they require funding via a bank loan or some other source of credit. A nonprofit organization is more likely to need a business plan for other reasons, such as gaining the support of important, potential donors for a specific project.

Some Elements Common to Both For-Profit and Nonprofit Business Plans

The elements in a nonprofit corporation's business plan will vary depending on the type of organization it is and the goals it wishes to accomplish with the plan, but in general nonprofit business plans share a number of common elements with the for-profit business plan, such as:

  • Executive Summary. As with the Executive Summary in the for-profit business plan, the Executive Summary in the nonprofit business plan will describe to readers what the nonprofit business does, or plans to do. This usually includes the organization's mission statement, as well as a summary of products or services provided and funding sources. In some nonprofit business plans, the mission statement may be a separate section on its own.
  • Products, Services or Programs Offered. Just as a for-profit business plan will describe the products or services it provides, the nonprofit business plan will have a section where it describes its products or services, as well as any programs offered. As with a for-profit business plan, in this section you'll also highlight the needs your products, services or programs can help meet, and the specific benefits of your particular product, service and program offerings. This is also the place where you can discuss how you'll position and deliver your offerings to your target market.
  • Market Analysis. In this section you'll provide information about the current state of the market you're trying to reach, as well as a description of who your target market is, what their needs are and any additional factors which may be relevant. As in a for-profit business plan, this section plays an important role in your overall business plan.
  • Strategy. This section focuses on your marketing and sales strategies. Here you'll describe how you intend to reach your target audience, any relevant market trends and your promotional plans including advertising and public relations.
  • Management/Organizational Team. In the for-profit business plan, this section is often referred to as the Management Summary. In this section, you'll provide information about the experience and expertise of key members of your management or organizational team, as well as similar information about each of the members of your board. This is a good place to include your organizational chart. If you're still in the start-up stage and do not have any board members yet, use this section to outline your plan for developing a board with diverse and experienced board members.
  • Financial Plan. Both for-profit and nonprofit business plans typically end with this section which provides important financial details about your organization. This is the section in which you'll discuss your nonprofit corporation's current financial status, as well as its future financial status.

Financial statements commonly included in this section include income statements, balance sheets and cash flow statements. Unlike a for-profit business plan, you might also include descriptions of any major grants you've been awarded or large contributions you've received. If you do not have a specific fundraising section, you might want to include your fundraising plan here as well.

Other Nonprofit Business Plan Elements

As mentioned previously, the elements in your nonprofit business plan will vary depending on the type of nonprofit organization it is and the goals you wish to accomplish. Here are some other elements you may want to consider including in your nonprofit business plan:

  • Needs Analysis or Assessment. A Needs Analysis section takes your Market Analysis further. In this section you'll answer questions such as how effective and relevant will your product, service or program offerings be? Are you covering different ground than what's already being covered by other community organizations? Have you discovered an underserved need which your offerings address directly? This section is also a good place to provide the research and data to support your answers.
  • Fundraising Development and Plan. This is a section that can be developed as a subsection of your Strategy section, or as a section on its own. For the nonprofit corporation, fundraising is a crucially important element. In the Fundraising Development and Plan section of your business plan, you'll outline how you intend to achieve the levels of funding required to successfully carry out your mission or meet the objectives of a specific project.
  • Evaluation. Unlike a for-profit business, the success of your nonprofit organization cannot be measured by focusing on financial results. Use your Evaluation section to describe the metrics you will use to assess how well your organization is fulfilling its charitable goals, as well as when and how these metrics will be used, and any proposed targets.

For more ideas on what to include in your nonprofit business plan, you can also check out various nonprofit business plan templates. While not every element in such templates will be ideal for your organization, you might discover additional elements which will help to strengthen your nonprofit business plan and assist you in creating a plan which will attract donors and potential board members, as well as provide a road map that highlights what you wish to accomplish with your nonprofit organization.

If you’re looking for help with your nonprofit, LegalZoom is here for you. We can help you complete and file the application to start a nonprofit organization, help you file the additional federal, state, and tax paperwork you need, and can even get you in touch with an independent attorney to help with specific questions.