How to Write a Nonprofit Business Plan

Why Write One, Even Without Investors to Impress

A for-profit startup writes a business plan largely to raise money from investors or a lender. A nonprofit has different audiences, its own founding board, grantmakers, major donors and sometimes a bank evaluating a loan, but the underlying purpose is similar: forcing the organization to think through its mission, its approach, its structure and its money before committing to it in practice. Even a founding board that's confident in its mission often discovers gaps, an unclear revenue plan, an underestimated expense, a program that duplicates another local organization's work, once it's written down in plan form rather than discussed informally.

The Core Sections of a Nonprofit Business Plan

Most nonprofit business plans include some version of the following sections, adapting the same general business-plan structure the SBA describes for any new venture to a mission-driven context:

• Executive summary: a short overview of your mission, the need you address, and what you're asking for (funding, partnership, or simply board approval).
• Statement of need: the problem your organization exists to address, ideally supported by data, and why existing organizations aren't already fully meeting that need.
• Programs and services: what you'll actually do, described specifically enough that a reader understands your activities, not just your mission statement.
• Organizational structure: your board, key staff roles (even if initially unpaid or part-time), and how decisions get made.
• Marketing and fundraising plan: how you'll reach the people you serve and how you'll raise the money to operate, including your mix of grants, individual donations, and earned revenue if any.
• Financial projections: a budget for your first one to three years, including both expected revenue and expenses, and the assumptions behind each number.
• Evaluation plan: how you'll know whether your programs are actually working, which increasingly matters to grantmakers evaluating your request.

Connecting Your Plan to Your IRS Narrative

If you're planning to apply for 501(c)(3) status using the full Form 1023, the IRS requires a detailed narrative description of your activities as part of the application. Much of the work you do describing your programs and activities for your business plan can be adapted directly into that narrative section, since both documents are ultimately describing what your organization actually does and how. This doesn't mean the two documents are identical, the IRS narrative has its own specific requirements and format, but writing a thorough business plan first generally makes the Form 1023 narrative easier to draft, not harder.

How a Business Plan Differs From a Strategic Plan

These two documents are often confused. A business plan is typically written once, at or near launch (or when considering a major new program or earned-revenue venture), and focuses on whether and how the organization, or the new initiative, should get off the ground and sustain itself financially. A strategic plan is generally written by an already-operating organization, on a recurring cycle (often every three to five years), and focuses on priorities and goals for where the organization is headed next, assuming its basic structure and funding model are already working. A new nonprofit generally needs a business plan first; a strategic plan becomes more relevant once the organization has some operating history to build on.

Using a General Business-Plan Framework as Your Starting Structure

If you're unsure where to start, the SBA's general guide to writing a business plan lays out a structure, built for any new venture, that a nonprofit can adapt: a clear statement of what you do and why, a description of your market or the population you serve, your organizational structure, and financial projections. Adjust the language throughout to reflect a mission-driven organization: "customers" become the people or communities you serve, "sales" become earned revenue and contributed income, and "competitors" become other organizations addressing a similar need, which you may think of as potential collaborators as much as competition.

Keeping the Plan a Living Document

A business plan written once at launch and never revisited quickly becomes outdated as your actual programs, funding sources and costs evolve. Revisit it at least annually, and certainly before pursuing a major grant, a significant new program, or a strategic plan process, updating the financial projections and program descriptions to reflect where the organization actually is rather than where it expected to be when the plan was first written.

Don't Let the Financial Section Be an Afterthought

It's tempting to spend most of your drafting time on the mission and programs sections, since they're often the most engaging to write, and treat the financial projections as a quick afterthought. Funders and board members often scrutinize the numbers hardest; build your projections with the same care as the narrative sections, including realistic assumptions about how quickly fundraising will actually ramp up.

A Business Plan Isn't a Grant Application, But It Makes Writing One Easier

Don't confuse a business plan with any specific grant application; grantmakers each have their own format and requirements. But having a thorough, current business plan means you're not starting from scratch describing your programs, need, and financials every time a new grant opportunity comes up.

Revisit the Plan Before Major Funding or Structural Decisions

A plan written at launch won't anticipate a major new revenue source, a significant program expansion, or a shift in your target population. Treat any of those moments as a trigger to update the plan, not just an annual calendar reminder.

This Is Not Legal or Financial Advice

How to structure your organization's specific programs, revenue mix, or financial projections depends on your particular mission and local landscape. Consider working with a nonprofit consultant or a board member with relevant financial experience when drafting your first real business plan.