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What Investors Look for in a Nonprofit Business Plan

Dave Lavinsky is the co-founder and president of Growthink. In this informative guide, Dave shares how developing a business plan for your nonprofit organization forces you to think through your vision and develop a solid plan to achieve it. When done right, it should convince investors and donors that your organization can and will be successful and that they should be a part of that success.

As a board member of a nonprofit organization, fundraising is a topic on which you probably spend a significant amount of time. Over the past 20+ years, I have been involved in writing hundreds of plans for nonprofits. In this article, I’ll go through the elements of a nonprofit business plan with a focus on how to best prepare your plans for donors and investors.

Your nonprofit business plan should have 10 sections as follows:

  1. Executive summary
  2. Organization Overview
  3. Products, Programs, and Services
  4. Industry Analysis
  5. Customer Analysis
  6. Marketing Plan
  7. Operations Plan
  8. Management Team
  9. Financial Plan
  10. Appendix (optional)

Below please find details regarding what to include in each section of your plan.

1. Executive Summary

This section is the first thing readers see when they open your nonprofit’s business plan. It should be 1-2 pages long and include a brief summary of your organization and detail why your organization will be successful.

Importantly, if your executive summary is not compelling, the reader won’t progress to the rest of our plan and clearly won’t donate or invest. So, start with a succinct summary of your organization. Explain what you do and the value you provide. Make the donor realize that helping your organization reach its goals will provide great value to your constituents. Help them want to be a part of your vision. Discuss your nonprofit’s mission statement and topline financial projections. Document any successes your organization has achieved to date since the best indicator of future success is past success.

2. Organization Overview

This section should include a more detailed version of the nonprofit’s mission. Include background information about where the organization is located, how many years it has been in business and any other professional details on the nonprofit. Giving a timeline of the nonprofit’s performance and achievements over time can be very powerful here and give investors and donors comfort and confidence that your nonprofit will succeed in the future.

Finally, document here why your nonprofit is unique and different from other nonprofits that might be serving a similar cause or providing a similar service.

3. Products, Programs, and Services

This section of your plan should discuss what services you provide for people, communities, and/or causes. Discuss specifically what it is you do. For example, do you offer after-school programs for teenagers, do you operate a food pantry, do you administer green energy programs?

Talk about how many individuals you serve each year as well as where and when these services take place (time and location). You must also describe your “products” or materials you give people (i.e., food bags, reusable water bottles) as appropriate. Detail any other services you provide in this section. Document why the products, programs, and/or services you offer will make an impact on those who support the nonprofit financially and will impact those who participate in your program activities.

4. Industry Analysis

In this section, you will describe the industry in which you are operating. For example, if you offer after-school education to K-12 students, discuss the K-12 education market. How big is the market? Who are the key players in the local market? Etc. Also, discuss any industry trends that are affecting it and how they might change market dynamics in the future.

Additionally, you will discuss competition in this section. Answer these questions:

  • Who are your competitors?
  • What makes your nonprofits different from them?
  • How do you plan on standing out from competitors in your market/area of service?

In writing this section, make sure you communicate in a way that best resonates with your readers (e.g., donors, investors). Let them know you are truly unique and solving a real pain. Make them feel they will be part of something really great when they invest so they are compelled to do so.

5. Customer Analysis

The customer analysis section of your plan should detail who your customers are and their needs. Customers are the individuals, organizations, or others that you serve. Aim to document your target customers in as much detail as possible. How old are they? What genders are they? Where do they live? What is their socio-economic status?

Next, detail their needs as specifically as possible. The goal is to create a very specific profile of your target customers. Doing this allows you to better target them and satisfy their needs. Having a specific target customer with clearly defined needs will help investors and donors better understand the value your nonprofit offers.

6. Marketing Plan

This section includes the strategies your nonprofit uses to reach its audience/customers. You will discuss your main marketing messages and your key promotional channels (e.g., social media marketing, pay-per-click advertising, print advertising, flyers, radio advertising, public relations, etc.) and how you will use them.

To give investors and donors confidence that your marketing spend will be efficient and effective, document to the best of your ability the return on investment from each promotional channel. For example, you might say that you’ve been able to acquire and serve 10 more customers with every $100 pay-per-click advertising spend (so only a $10 customer acquisition cost).

7. Operations Plan

In this section, you’ll show donors and investors your ability to fulfill your mission and objectives. Detail the systems and operations structure you have in place or will implement to fulfill your mission. Document the key day-to-day operations and roles that your organization performs.

Next, create a chart detailing your 5-year growth plan. In the chart, document your key goals for each year, such as serving your 1,000th customer, hiring your 100th employee, launching a 2nd location, etc. This milestone chart will show investors and donors your long-term vision and hopefully excite them to be a part of it.

8. Management Team

In this section include bios of your management team members. Describe each individual’s professional experience and their accomplishments that make them well suited to perform their roles. As needed, document roles and responsibilities you still need to fill, and the characteristics of the ideal candidates.

This section should prove to investors and donors that you have the right team to execute your vision.

9. Financial Plan

In your financial plan, you will start by detailing the amount of funds you seek to raise and the key uses of the funds.

Next, you will present your summary financial projections. Document your projected income and expenses and confirm you can grow your nonprofit in a financially successful way. Show that you will have the financial resources to successfully implement your plan.

In this section, give donors and investors the confidence that you have financial savvy. Let them know that your nonprofit will effectively use all funds to serve your constituents, that money will not be wasted, and that financially, the nonprofit will be successful.

10. Appendix

Finally, in the appendix, include any information to support what you’ve written in the previous sections.

For example, you might include team member resumes, lease agreements, operation procedures, full financial statements, and projections, etc.

101 Resource | Last updated: December 14, 2021