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on June 7, 2013
NONPROFIT BOOK REVIEW: The Nonprofit Business Plan

This how to "Guide to Creating a Successful Business Model" for nonprofit executives is one of the best, I believe, on the topic. Its the companion guide to the previously reviewed "The Nonprofit Strategy Revolution," but I might advise the reader - if he or she must chose - to skip that one for this one.

To begin, the author makes an important distinction between strategic planning and business planning, which are often treated as interchangeable concepts. In simplest terms, the difference is revenue generation. If your nonprofit produces its own income, then you need a business plan. Since independent revenue generation is a major trend in the nonprofit sector, its essential to understand the difference.

Unlike the strategic plan, the business plan includes financial and ratio analysis, cash-flow planning, balance sheet projections, and yes - proper financial planning for nonprofit organization - so the sector can not only survive, but thrive during volatile economic times. It demands that we produce a reasonable profit to create enough risk reserves and fuel expansion plans. It constrains the pursuit of mission to its economic logic.

Throughout the manual, the author weaves a fictional case study, which builds into a sample business plan for the last chapter. This approach is especially helpful to nonprofit managers new to financial and accounting concepts.

It demonstrates how business certain, simple business principles are critical to nonprofit decision-making. Do you base your fundraising projections on historical data and proven growth rates? Or at least on realistic trends?

In my experience, most nonprofit leaders do not use financial analysis, or even common sense (seriously) to project fundraising goals. Rather, they plug revenue and charitable giving projections with unrealistic and imaginary numbers, calling them "stretch goals." Its a great approach...for an inevitable deficit. I know that I sound severe, but the problem is that pervasive.

This book is a good dose of common sense essential to proper financial management and fundraising expectations. It would greatly benefit Executive directors, development professionals and nonprofit financial mangers that hunger for a more sophisticated approach to the marriage of fundraising and finance. It is a pragmatic, step-by-step guide to a brighter future.

It does require more than financial skills, and might take an outside consultant to overcome resistance to change, because it does represent a new paradigm. It does change the culture of the organization. However, the process is not too complex.

The business plan springs from market research, based in both qualitative (shareholder interviews) and quantitative analysis (statistical analysis). It then aligns the proposed services and organizational infrastructure to the need established by the market research. This part of the process produces a viable nonprofit business model.

The financial projections that drive and constrain the business plan are derived from those revenue and cost drivers, inherent to the business model. Because few nonprofits produce a profit from revenues, the difference between cost and revenues established the "charitable gap" - the annual fundraising goal, with room for reserves - that's how it comes full circle.

The book covers so much more. It explores the financial implications of the Board structure, volunteer management, and even marketing marketing. In particular, new and start-up nonprofits would benefit from turning this process and these principles into traditional, making them central to a new organizational culture.

Is it a dry read? Yeah.. It is also essential to the success of modern nonprofits. Its so rich in vital information that I read it twice...and I sure took copious notes! I am still high from the yellow, highlighter ink that covers the pages of my tattered and dog-eared copy of this book.
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on August 13, 2012
I humbly suggest that a nonprofit business plan should be focused on a particular program/product, rather than on the entire organization -- unless the organization has just one program/product.

To explain, each program/product has its own unique market, competitors (nonprofits do have competitors), collaborators, pricing, advertising and promotions. So there should be a separate business plan for each program/product.

So a nonprofit organization with two programs, might benefit best from having a strategic plan for the overall organization, and a business plan for each of the two programs.

Usually funders invest in a program/product, not the entire nonprofit organization. That's another reason to have a focused nonprofit business plan specific to a program/product, rather than trying to organize information about the entire organization and each of its programs into one overall plan.

Something to think about :-)
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on April 19, 2014
I really wish that I hadn't purchased this book. Most of the advice is completely obvious, such as use outside advice to avoid bias and to get an idea of possible income and expenses, compare to similar nonprofits. A lot of it was also very repetitive...most of it could have been condensed into one blog post. However, there is one saving grace. It has a nice laid out sample business plan. The formatting guidelines and examples are great. It would have been better served to just have that with some tips. That's worth seeing, but the rest...I wouldn't read it again.
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on April 7, 2014
A very well written guide that helped me, a beginner at writing business plans, to write my first, which a fellow board member called exceptional.
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on January 2, 2013
This book contains detailed, actionable info that will truly help me develop a business plan. I highly recommend the book.
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on June 4, 2016
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