How to Write a Business Plan for a Charity

By Lisa McQuerrey

Writing a business plan for a charity is similar to writing a business plan for a for-profit organization. Key elements include identifying competition, developing a marketing strategy and forecasting income. The main difference is that while a for-profit business relies on sales projections to form the basis of a comprehensive business plan, a charity must evaluate its current and future funding sources, which typically come from donors, fundraisers and grants.

Writing a business plan for a charity is similar to writing a business plan for a for-profit organization. Key elements include identifying competition, developing a marketing strategy and forecasting income. The main difference is that while a for-profit business relies on sales projections to form the basis of a comprehensive business plan, a charity must evaluate its current and future funding sources, which typically come from donors, fundraisers and grants.

Step 1

Collect financial and operating data, if available. If the charity is already in operation, this material should include profit and loss statements, detailed operating expense reports and a spreadsheet that indicates income sources, amounts and time lines for funding. If the charity has not yet been launched, compile materials related to any secured funding sources and operational funding projections, including anticipated startup, overhead and operating costs.

Ready to form a nonprofit? Get Started Now

Step 2

Write a one-page executive summary that outlines the intended goals for the charity in one-, three- and five-year increments. The summary should provide an overview of program and fundraising goals. If the charity has an advisory board or board of directors responsible for guiding the organization, their input should be considered as the executive summary is written.

Step 3

Describe current and planned marketing activities. This may include community outreach initiatives, public awareness campaigns or specific use of contributions to be used for marketing. Include in-kind marketing provided by donors and charity supporters. The description should include anticipated costs for marketing and anticipated outcomes. For example, “$1,000 will be invested each month in local newspaper advertising with an anticipated return of recruiting between 10-20 new program participants."

Step 4

Describe your competition and how their activities have the potential to impact your operating plans. For example, if your charity is an after-school program for at-risk youth and a new community center opens in your neighborhood, you will need to evaluate how the new center has the potential of impacting your charity goals and adjust your calculations appropriately.

Step 5

Detail your current and anticipated operating procedures, including details about staffing. This should include creating an organizational chart that includes details about positions, responsibilities and salaries. Include time donated by charity volunteers.

Step 6

Develop a budget. Include startup costs, if necessary, the cost for supplies, equipment, securing a facility, if applicable, and monthly operating costs. If the charity is already operational, use established accounting records to complete this section of the business plan.

Step 7

Evaluate revenue streams. Use information gathered as part of steps one and six as reference if necessary. For a charity organization, this is a vital component of business plan development. Established charities can use income statements from previous years of operation as a benchmark for developing a cash flowchart, including multi-year grants and endowments. New charities should use pledged gifts and anticipated revenue from fundraising and grant writing activities.

Step 8

Assess your compiled business plan materials to look for areas that don’t support one another and adjust accordingly. For example, if you have less anticipated revenue than necessary to meet operating expenses, adjust either your operating budget or your fundraising budget to bring your plan into line.

Ready to form a nonprofit? Get Started Now
Do You Need a License to Collect for Charity?

References

Related articles

What Is a Nonprofit Case Statement?

Nonprofits issue case statements to potential donors when embarking on fundraising campaigns. Because nonprofit organizations rely primarily on the generosity of donors, they must provide donors with information about the specifics of new projects, programs and campaigns. Moreover, nonprofit case statements may ask donors for support regarding everyday operating expenses.

Rules for 501(c)3 Corporations

Many charities pursue 501(c)(3) status because it allows organizations to avoid certain taxes and accept tax-deductible donations. The Internal Revenue Service grants 501(c)(3) status to charitable organizations that meet the requirements set forth in the Internal Revenue Code. While charities are first organized under state law, the IRC restricts the activities and profit distributions of 501(c)(3) organizations, also known as exempt organizations.

How a Nonprofit Can Set Up a Scholarship

Scholarships are one of many tools used by nonprofit organizations to do charitable work. And given the continuing increase in education costs, scholarships from private organizations have become even more important for struggling students and their families. If your nonprofit wants to become one of the many entities providing funding for students, the process of creating a scholarship program is straightforward but requires some planning.

Doing the right thing has never been easier.

Related articles

Rules for Fundraisers for Non-Profit Organizations in Florida

Nonprofit organizations carry out different activities to raise funds for their individual charitable or social ...

How to Start a Charity for the Needy

Charities are formed as nonprofit organizations to serve the needs of struggling people, the environment or entire ...

How to Build a Successful Non-Profit

Starting a new nonprofit and building it into an organization that will exist for years, even after the founders have ...

How to Make a Business Plan for a Sole Proprietorship

A sole proprietorship is a form of business that operates as an alter ego of the owner as opposed to a separate and ...

Browse by category