The Foundation for Change: How to Write Your Nonprofit Business Plan

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 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.

Executive summary

The first section of your nonprofit business plan is your 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? 

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:

1. Unincorporated association. This is the S corporation for nonprofits—you don’t need to file any paperwork. Many nonprofits start out as unincorporated associations.
2. Trust. The first structure for nonprofits, this mandates all the organization’s assets be given to charitable use.
3. Corporation. This structure offers the most protection from liabilities but also comes with some extra paperwork and fees.
4. 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.

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:

The blurb below from Keiko Conservation’s website could also be repurposed into a mission or vision statement:

Keep your mission statement on the shorter side (one to two sentences) and use your vision statement to expand on the ideas.

Value proposition

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:

The Empowerment Plan hires single parents from shelters, training them to make coats. It also shares relevant metrics to show its impact. These metrics would also work as excellent measurable goals to include in its nonprofit business plan. Perhaps it would aim to double those numbers in the next year, projecting 180 new jobs, 550 impacted children, and 100,000 distributed coats.

Team

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 the nonprofit business plan, Re:new would also 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.

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.
• Conduct a competitive analysis.
• Research industry trends and trajectory.
• Make educated guesses based on your experience and research.

You may also consider doing a SWOT analysis to identify your current strengths, weaknesses, opportunities, and threats.

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, would 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. 

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. A farmers market, for example, may sell tables to its vendors, give branded tote bags to donors, sell handmade goods to shoppers, and create programs to feed underprivileged families.

Merit sells products as a brand on its website and then donates a 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. 

Likewise, Re:new sells products made by the artisans it works with. The organization also sells wholesale to retailers, so it would be important to note this here in the business plan as well. 

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, note 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

Check out these resources to learn more about customer segmentation:

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:

1. 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.
2. 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.
3. Promotion. How will you get your cause in front of your ideal customer? How will you connect with recipients?
4. Place. Where will you sell your products or share information about your organization? Will this be online, in person, or both? 

You may also make note of which channels you plan to leverage, including email, social media, content marketing, and paid ads. EllieFunDay had an influencer program when it was still in operation, for example.

Here are some more resources to help put together the marketing section of your nonprofit business plan:

Learn more: Meet the Entrepreneurial Women of Social Change

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. This includes 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.
• Shipping and fulfillment. 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.

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.

LSTN Sound Co. is a headphone and speaker brand that also aims to help individuals who have hearing disabilities. The brand publishes an annual impact report outlining the contributions it has made to the cause—highlighting how choosing to be a LSTN customer is also a decision to support the cause.

Similarly, sustainable clothing and shoe brand Allbirds uses its annual sustainability report to show how the company has followed through on its own environmentally conscious CSR initiatives.

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.
• Credit cards. 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.

---

Ready to create your first business? Start your free 14-day trial of Shopify—no credit card required.

Nonprofit business plan FAQ

What should be in a nonprofit business plan?

Your nonprofit business plan should have the following sections:

• 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?

The four types of nonprofit organizations are:

1. Unincorporated association
2. Trust
3. Corporation
4. 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.

Do nonprofit organization owners make money?

Nonprofit organization founders are permitted to make money from their roles.

Source