While businesses exist primarily to make a profit, nonprofits instead serve the public good for charitable, religious, educational, or other public service reasons. Starting a business as a nonprofit organization is an excellent way to impact positive change for a cause you care about. Plus, nonprofits are exempt from federal and state taxes on any income earned, unlike for-profit corporations. So there are also financial benefits.
If you’re just getting started with your nonprofit idea, one of the first things you’ll want to document is your nonprofit business plan. Below, we’ll take you through your nonprofit business plan, section by section, using this business plan template and guide as a base.
What is a nonprofit business plan?
A nonprofit needs a plan, just like any other business. But there’s a big difference: while most businesses aim to make profits for their owners or shareholders, a nonprofit’s main goal is to make a positive impact on a particular cause or in the community. The nonprofit business plan aims to achieve that mission while keeping the organization running and paying its bills.
Why do you need a nonprofit business plan
At its core, a nonprofit business plan provides a clear mission and vision for the organization. It lays out where the organization is headed and the steps to get there. Some other benefits of a nonprofit business plan include:
- Helping to set priorities and allocate resources to reach the nonprofit’s goals.
- Deciding where funds will come from, be it donors, sponsors, or grant-making institutions.
- Outlining the operational details, from roles and responsibilities to day-to-day activities.
- Identifying risks and highlighting strategies to mitigate them.
For a nonprofit to have a lasting impact, it needs to outline strategies for long-term funding and growth. You want to make sure the organization has a clear direction, works efficiently, communicates well with stakeholders, and stays adaptable and sustainable—all of which you can find in a nonprofit business plan.
How to write a nonprofit business plan
- Create an executive summary
- Write an organization description
- Conduct market analysis
- Outline management and organization
- Describe programs, products, and services
- Document customer segmentation
- Create a marketing plan
- Create a logistics and operations plan
- Write an impact plan
- Outline the financial plan
1. Create an executive summary
The first section of nonprofit business plans is the executive summary. The executive summary should describe your organization and the contents of your nonprofit business plan. This section should be no more than a page, briefly covering the following:
- Concept. What does your nonprofit organization do?
- Goals and vision. What does your nonprofit want to do?
- Product description and differentiation. What do you sell, and why is it different?
- Target market. Who do you sell to and raise money from? Who do you serve?
- Marketing strategy. How do you plan on reaching your audience?
- Current and projected financial state. What do you currently earn through fundraising? What do you foresee earning through fundraising?
- The ask. How much money are you asking for?
- The team. Who’s involved in the organization?
- The document. What can your audience expect from the following sections of your nonprofit business plan? Which highlights should they be excited about?
2. Write an organization description
The second section of your nonprofit business plan is the description of your organization. While the executive summary sets the stage for the business plan document, the organization description is a summary focused on your organization and what it does and aspires to do. Use this section to identify the industry or niche your organization operates in.
Here, you’ll want to identify the structure of your organization. A nonprofit is a tax-exempt, non-business entity that invests excess funds back into the mission. For nonprofits, you’ll typically register as a 501(c)(3), but you’ll also need to choose your business structure from the following list:
- Unincorporated association. This is the S corporation for nonprofits—you don’t need to file any paperwork. Many nonprofits start out as unincorporated associations.
- Trust. The first structure for nonprofits, this mandates all the organization’s assets be given to charitable use.
- Corporation. This structure offers the most protection from liabilities but also comes with some extra paperwork and fees.
- Limited liability company (LLC). LLCs offer both tax benefits and limited fees, but not as much protection as a corporation. All members of the LLC must be 501(c)(3) organizations. See our state specific guides for California LLC, Texas LLC and Florida LLC.
The organization description should also include the following elements:
Mission and vision statement
Your mission and vision statement serve as the foundation for why your nonprofit exists, and this “why” influences your decision making. It’s also an effective tool for connecting with your audience and reaching your organization’s full potential.
Outdoor brand Cotopaxi also has a nonprofit arm—the Cotopaxi Foundation. The brand and nonprofit each have their own mission statements, published boldly on the company’s website:
Keep your mission statement on the shorter side (one to two sentences) and use your vision statement to expand on the ideas.
Your value proposition tells people why they should choose to support your nonprofit over other ones. It essentially outlines your unique selling proposition, or competitive advantage for what sets you apart from the competition.
Short- and long-term goals
Your nonprofit business plan should also include measurable short- and long-term goals. Cotopaxi, for example, makes no secret of both its socially driven and business-minded goals through the Cotopaxi Foundation:
You’ll also want to highlight the people behind your organization. This information shows you have enough people to make the nonprofit a success. Nonprofits typically have a few different “teams,” including a board of directors, paid staff, and maybe even volunteers. There may also be key donors who are worth noting here, as well as key people who you plan to help through your organization.
Re:new is a community of refugee artisans and students, volunteers, staff, and board members. It raises money by selling handcrafted products made by refugees from around the world. On its website, Re:new shares information about some of the people behind the organization, including board members, artisans, and paid staff.
For your business plan, outline how those board members are chosen and what their involvement is, salaries and roles for paid staff members, and payment information for the artisans. Remember to note this information in your nonprofit business plan as well.
3. Conduct market analysis
The market analysis section of your nonprofit business plan demonstrates that you’ve done research to determine there is a need for your services and people who will potentially support your mission. Here, you’re essentially determining how big your potential market is.
There are a few key ways to get information about your market:
- Check government census data. Visit official websites such as the US Census Bureau to get the latest statistics. Filter the data to match your nonprofit’s target demographic. For example, if your nonprofit is aiming to help homeless youth, determine how many young people are homeless or at risk in your region.
- Conduct a competitive analysis. Identify similar nonprofits or organizations in your area. Study their services, target audience, and how they communicate their mission, and include your findings in the business plan.
- Research industry trends and trajectory. Subscribe to newsletters, join nonprofit forums, and attend seminars or webinars focused on your sector. Stay updated on the latest trends.
- Make educated guesses based on your experience and research. While hard data is important, there will be times where you have to rely on intuition. Ensure these guesses are always grounded in some form of research or past experience.
Organize a brainstorming session with your team to map out the strengths, weaknesses, opportunities, and threats (SWOT). Make sure it’s comprehensive and considers both internal and external factors.
4. Outline management and organization
Every organization needs people to run it. When it comes to nonprofits, this typically involves the following groups of people:
- Board of directors. Nonprofits typically have a board of directors or leadership team. Give Merit, for example, might include its leadership team in this section.
- Staff. These people are your paid employees. Include roles, responsibilities, salaries, etc.
- Volunteers. You may or may not have specific people in mind for these volunteer roles. Some nonprofits have different tiers of volunteers—maybe lead volunteers or volunteer coordinators. Make note of these individuals, if relevant.
- Donors/customers. If you have any significant or notable donors who plan to make sizable contributions, include them in this section of your nonprofit business plan.
- Recipients. These are the people who you’re planning to help. This may not always be a person (as is the case with environmentally driven nonprofits, for example). Sometimes this is a group of people and sometimes this is a specific person.
Sometimes these groups overlap. The Empowerment Plan, for example, actually hires the people it helps—one of the organization’s main pillars.
5. Describe programs, products, and services
Your programs, products, and services section sums up what your organization offers. These offerings include everything for customers, donors, volunteers, and recipients.
For example, Merit sells products as a brand on its website and then donates the proceeds of its sales to its nonprofit, Give Merit. So Merit would note all of these things in this section of its nonprofit business plan.
If you operate like Merit, consider diversifying how you generate funds. Selling products and then donating the proceeds is one method. You can also explore direct donations, sponsorship deals, and grants.
6. Document customer segmentation
You can pull from your management and organization section for your customer segmentation, as some of these groups represent your customers as well.
For example, your volunteers are one key customer segment and your donors are another. Within each of these segments, you’ll want to drill down further into smaller segments so you can build targeted campaigns to recruit volunteers and/or donors when needed.
When documenting your customer segments in your nonprofit business plan, add the following information:
- Where they live
- Age range
- Level of education
- How they spend their free time
- Where they work
- How much they earn
- What technology they use
- Their values, beliefs, and opinions
- Common behavior patterns
7. Create a marketing plan
Your marketing plan outlines how you plan to spread the word about your nonprofit organization. Marketing may include attracting donors, volunteers, and/or customers, depending how your nonprofit operates.
The four main components of this section of your nonprofit business plan are:
- Price. How much do your products cost, and why have you made that decision? If you don’t sell products, you might outline different tiers of donorship.
- Product. What are you selling and how do you differentiate it in the market? Again, if you don’t plan to sell products, outline what you plan to provide to both donors and recipients.
- Promotion. How will you get your cause in front of your ideal customer? How will you connect with recipients?
- Place. Where will you sell your products or share information about your organization? Will this be online, in person, or both?
8. Create a logistics and operations plan
The logistics and operations section of your nonprofit business plan outlines how you plan to raise money and execute your mission. Add a few key sections:
- Suppliers. This could refer to the suppliers for products you sell, as well as donors who contribute financially. You might also include fundraising organizers. One Tree Planted, for example, allows volunteers to run their own independent fundraisers.
- Production. If you’re selling products to raise money for your nonprofit, this part outlines whether you manufacture yourself, purchase wholesale, or use a dropshipping company.
- Facilities. Where will your organization operate? You might outline where headquarters is, as well as any sites or locations. This may also include storage and warehousing facilities.
- Equipment. List which tools and technology you need for your nonprofit. Remember to include everything from phones and computers to vehicles and machinery.
- Shippingandfulfillment. If you need to ship any packages, determine how you’ll do this. You may ship yourself or work with a third-party fulfillment partner.
- Inventory. Determine how much stock you’ll keep on hand (if any) and where you’ll store it, as well as how you’ll approach inventory management.
9. Write an impact plan
The impact plan is an important part of your nonprofit business plan because it outlines the change you’ll inspire in regards to your mission.
Many companies with a strong commitment to corporate social responsibility (CSR) publish their own impact plans as well. Though these impact plans aren’t part of a nonprofit business plan, they serve as great reference points for drafting this section of your plan.
For your impact plan:
- Start by clearly stating what you hope to achieve.
- Detail the actions and initiatives you’ll undertake to achieve your objectives.
- Develop indicators for each output, outcome, and impact.
Before starting your project, determine the current state or level of the issue you’re addressing. For each indicator, establish targets that you aim to achieve by specific timeframes.
10. Outline the financial plan
Every nonprofit organization needs a financial plan. This includes how you’ll collect funds, as well as how those funds will be distributed. The financial plan typically includes the following financial statements:
As far as potential sources of funding, you may consider the following for your nonprofit business plan:
- Self-funding. If you have the means, you may support your nonprofit organization financially yourself. You can do this personally or through a business—like how ecommerce brand Merit donates 20% of all purchases to its organization Give Merit, which funds college scholarships for underserved youth.
- Donors. You may seek financial support from organizations, businesses, and individuals. You may also use crowdfunding sites to raise funds and build buzz for your cause.
- Investors. The downside here is that you have to pay the money back, which isn’t ideal for nonprofits in particular.
- Loans. Loans also require repayment. Check with your lender to see if it offers lower interest rates or other benefits to nonprofits. Nonprofits with a Shopify store can leverage simple loans based on sales history, which may be a more hassle-free option.
- Creditcards. Credit cards typically come with high interest rates and lower limits, so be wary about the terms before you fund your organization this way.
Use this spreadsheet template, which includes everything you’ll need to create an income statement, balance sheet, and cash flow statement, including some sample numbers. You can edit it to reflect projections for your specific organization.
Make a positive change with your nonprofit business plan
Starting a nonprofit organization is an excellent way to make a difference for a cause you’re passionate about. The best way to kickstart your nonprofit organization is with a well-formulated business plan. Your nonprofit business plan will help you secure funding and build excitement for your organization.
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Nonprofit business plan FAQ
What should be in a nonprofit business plan?
- Executive summary
- Organization description
- Market analysis
- Management and organization
- Programs, products, and services
- Customer segmentation
- Marketing plan
- Logistics and operations plan
- Impact plan
- Financial plan
What are the 4 types of nonprofit organizations?
- Unincorporated association
- Limited liability company (LLC)
How do you start a nonprofit with no money?
It doesn’t cost anything to start a nonprofit. You can start a nonprofit with no money by securing donations from external sources. You can raise money to start your nonprofit from businesses, organizations, individuals, and crowdfunding.