Nonprofit Business Planning

11-22-2025

Despite the contrary belief, a nonprofit organization is a business. Almost all companies do one of two things: either offer a service or provide a product; sometimes it is both. Therefore, like any good business, they too should have a business plan, meaning they need to be able to answer some basic fundamental questions. First, what problem or problems are you trying to solve? Secondly, what are the best strategies we need to put in place to solve those problems? Who is our target market? How long will this take? And how much money and resources will we need to allocate to meet our goals?

Business Planning – Nonprofit Mission and Vision.

Making a profit is not only necessary but mandatory for all businesses to survive, and even though profit is not the sole motivation for a nonprofit organization, it should not be treated like the enemy. It takes money to accomplish your goals.

Also, nonprofits tend to get confused concerning the definition of what their mission is as well as their vision. Simply put a mission statement is a short phrase that explains what the nonprofit is currently doing daily and it  explains who are you serving and how are you serving your clients. The vision statement describes your future of what you hope to achieve. Your business plan should be a join process driven by the paid staff and volunteer board members with a clear expectations assigned to both the role of the board and staff for achieving your goals.    

The Business Plan Narrative.

To help nonprofits develop a plan they need to be able to tell their story which will explain in great detail how they plan to operate. Like all businesses they need to be mindful and laser focused on their balance sheet. So this requires nonprofits to identify all their sources of revenue as well as their expenses. This will require real time updates to the board and both the internal and external environments change. 

The Fundraising Pie.

The first dollars any nonprofit should receive should be from the board itself. If the people in charge of directing the nonprofit are not committed enough to contribute monetarily to the organization in a meaningful way then your nonprofit is starting off on the wrong foot. A healthy nonprofit is one that receives the bulk of its funding from individuals in the community. If your nonprofit is only grant funded then if you live by the grant you will die by the grant.

The executive director who is the chief operating officer for your organization must be able to identify what revenue is required to operate the specific programs and activities of your organization as well as be able to identify the funding sources. Your plan may also include a needs assessment as well as a feasibility study. Nonprofits should not operate off of a random hope and a prayer.

 Who’s Job Is It To Raise Funds?

In short, the answer is everyone! The paid staff, the volunteer board members and even the clients themselves all should feel a level of commitment to your cause. Nonprofits often are hesitant to charge program fees to clients but they could not hesitate in doing so. If your providing a valuable service then charging a program fee to access this service is justified. Unfortunately when if a product or service is  provided for free, even if this is well meaning, people do not value such and will take this for granted.

Financial Health And Contingencies.

Nonprofits as well as all other business entities need to remain laser focused on their bottom line at all times. A CFO of a major hospital said it once best in a meeting, no margin no mission. Therefore, it is critical that any financial plan be realistic and not some pie in the sky vision. The number of times I have seen nonprofits place unrealistic numbers down for fundraiser is disheartening. If last year your nonprofit held a golf tournament and only netted $5000, don’t write in your budget you plan to raise $10,000 unless you plan on doing something drastically different the following year.

Lastly, all nonprofits much not budget everything to the penny and have no cash reserve for emergencies. Every nonprofit needs to have a contingency plan and preferability not rely on a line of credit.

Competitive Analysis.

Most nonprofits fail to think about who might also be providing the same services they are providing. In fact one of the biggest criticisms of the nonprofit space in general is the amount of duplicative organizations providing the same or similar services. This criticism is warranted from donors because how many cloths closets or food pantries are really needed in one area? Wouldn’t it make more sense to have only a few in a community versus five or ten all seeking contributions from the same donor pool?

If you have any questions or comments, please don't hesitate to contact me. Additionally, please explore the rest of my blog and website to see if any of this information can be helpful to you.

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