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In the previous three installments, we looked at “4 Sections Every Business Plan Must Have (and Why They’re Important),” “Why You Need a Business Plan (and the Best Style for You),” and “When Is a Good Time to Review and Renew Your Business Plan?” This month, we discuss creating a business plan for a nonprofit.Marketing addresses the nonprofit’s target market, and all the analysis of identifying and reaching out to these customers applies equally to for-profits and nonprofits.
Additionally, you need to make the case for your mission, explain why donors and grantors should provide funding, and seek a qualified board of directors (sometimes called board of trustees).
In fact, since a nonprofit business plan contains more information about mission and vision, it is commonly referred to as a strategic plan.
AARP, for example, has both a for-profit business where it sells insurance and products, and a nonprofit business to advocate for people over 50.
In a nonprofit business plan, the marketing section is expanded to a marketing and development section.
Nonprofits usually call this fund-raising and friend-raising development.
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In your strategic plan, you should include a subsection under marketing and development addressing how you will achieve funding levels to support your efforts to carry out your mission.
Whether you’ve decided or not, starting to write a business plan will help you narrow the details and start to assess the viability of your idea.
A business plan will help you to understand costs, outline potential risks, as well as how you’ll manage cash flow for your non-profit.
The net assets section has three components capturing the nature of any donations classified as “unrestricted” (nonprofit can use funds for any purpose) “temporarily restricted” (funds are for a specific project, activity or time period) or “permanently restricted” (donated funds cannot be utilized by the nonprofit).
Here is a visual comparison of a for-profit balance sheet and a nonprofit statement of financial position: Second, since the purpose of a nonprofit is mission and not income, the for-profit income statement becomes the nonprofit statement of activities, and its bottom line is net assets rather than net profit or net income.