Business Planning for Nonprofit Organizations

A successful nonprofit organization requires not only a vision and mission that resonate,  but also a good business model and well thought out operational,  marketing and financial plans.  There must be a sufficient number of constituents in need of programs and services that the organization would provide.  Planning to ensure growth and sustainability into the future must be carried out.

Over the last 5 years or so,  foundations that make major grants to nonprofit organizations have begun to require that aspiring recipients submit a business plan in the application materials.  Apparently,  a proliferation of grant requests has prompted many deep-pocket foundations to demand evidence of viability and responsible leadership and management in nonprofits they agree to fund.

The goal of nonprofit organization leaders is to ensure that all programs and services offered by the organization reflect its mission and are expertly delivered.  The organization must attract a desirable number of constituents,  be fully staffed and operate at optimum capacity.  Good relationships with donors must exist and sources of reliable funding must be in place.  The leadership team should have reason to be optimistic about the organization’s ongoing viability and relevance within target constituent groups.  A business plan (and strategic plan) will see to it that nonprofits put those building blocks in place.

Business plans differ from strategic plans in that the focus is on finance.  A start-up nonprofit organization in search of initial funding,  or an existing nonprofit that has plans to expand or upgrade programs,  services,  capital equipment or office facilities will find that developing a business plan will better demonstrate the organization’s viability to potential major donors and strengthen the case for financial support.

When preparing to write the business plan,  the leadership team will take a big-picture 360-degree view of all aspects of the organization,   including the social and economic environment in which it operates,   target constituents groups,  the business model as it relates to the mission,  the financial health of the organization,  specifics of the proposed expansion or upgrades,  the funding request and details of how funds received will be utilized.  The business planning process will also encourage leaders to:

  • Connect the dots between the mission and programs and services delivered
  • Acknowledge operational efficiencies and strengths
  • Establish performance metrics for programs and services offered
  • Clarify the profile of the constituents and identify emerging needs for services and programs
  • Update and refine marketing and communication strategies and channels
  • Identify short and long-term funding needs and identify where funds will be designated

In small organizations,  the Board of Directors,  along with the Executive Director,  will write the business plan.  In larger organizations,  the Development Director,  Operations Director,  Finance Director and other senior staff share the responsibility.

The business plan for your nonprofit will compel the leadership team to acknowledge and address critical questions that face the organization and demonstrate to potential major donors that plans are underway to overcome challenges,  exploit opportunities,  improve constituent services and more fully express the organization’s vision and mission.

For more information on business plan writing tailored to nonprofit organizations,  please tune in to Writing Wednesdays on Wednesday December 4 at 3:00 PM EST  (2:00 PM Central, 1:00 PM Mountain, 12:00 PM Pacific)

Thanks for reading,



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