Business planning for nonprofits

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Business planning for nonprofits

Share 25 Shares Many for-profit companies consider a comprehensive risk assessment to be a critical part of their overall risk management process.

business planning for nonprofits

Regrettably, some not-for-profit organizations do not take the time to perform a risk assessment for a variety of reasons: This article provides a framework that all not-for-profit organizations can use as a starting point to implement a periodic risk assessment.

While the mechanics of a risk assessment may be undertaken by staff or consultants, the role of the board in understanding, evaluating, and assessing risk cannot be understated. Goals of Risk Assessment Nonprofit organizations face different types of risks than for-profit companies, but the goals of a risk assessment should be similar: Who Should Undertake Risk Assessment A comprehensive risk assessment can be done by staff if competent to do so or by outside consultants, such as a law or accounting firm.

Even if staff is capable of performing the risk assessment, there is value to having outsiders perform this task occasionally. This assures a fresh perspective is brought to risk evaluation and allows all parts of the organization to be evaluated without any potential for the self-interest of staff to color the assessment.

These benefits must be weighed against the additional costs of an outside review. A useful compromise is to have an outside reviewer evaluate the work of staff at the end of the process, or to consult with staff during the process.

Some outside firms will undertake a risk assessment pro bono, while others may discount fees. One Methodology for In-House Risk Assessment A risk assessment should identify a broad parameter of risks within specific categories, analyzing the probability of occurrence and the severity of impact.

It should also identify mitigating factors to various risks and suggest a process for tracking or monitoring risk.

All of these steps require the exercise of judgment based on knowledge of the organization. In general, this process is as much art as science. Identify Risks Step one is to carefully consider the types of risks faced by the organization.

Think broadly and do not constrain yourself to solely legal risks.

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Risks can be broadly conceptualized into two categories: Threat risks can result in fines, penalties, liabilities or even loss of tax exemption and can be operational, legal, financial, or related to the investments of the organization.

Risks of failure include the risk that an underlying program objective or strategy may not succeed or that the investment or financial performance necessary to sustain the organization cannot be achieved.

For many nonprofit organizations, particularly foundations, failing to embrace risk in their programs or grants may result in a cautious, unimaginative organization. Foundations, in particular, have the freedom to take risks that other types of organizations or government may be unable or unwilling to take.

Narrative of a business plan

An organization may wish to adopt a risk philosophy that articulates how it views the risks it will embrace and how it approaches threat risks.

This article focuses primarily on threat risks. It is important, however, for an organization conducting a risk assessment to recognize the different types of risks and their attendant consequences.

Ultimately, in assessing any action or inaction that carries risk, an organization must balance the benefits to be achieved against the downside.

An organization may also consider adopting a risk management philosophy that would entail, among other things, defining the risk appetite of the organization, determining how to implement a comprehensive risk management process, and building the process into the many facets of the organization.

Incorporating an agreed upon framework regarding risk management into the DNA of an organization helps align the balance between risk and reward, reduces the potential for unwelcome surprises, permits better planning and response time, enhances the ability to take advantage of opportunities, and more effectively allows the organization to make decisions as to how and where to use scarce resources.

Most nonprofit organizations will share the same type of broad risks that can be generally described as follows: Internal or external fraud Inadequate monitoring or understanding of investments Incomplete, unreliable or improperly reported information Damage to reputation caused by a variety of potential factors Violation of legal requirements Government investigations or audits Within these broad categories there are a host of specific risks that should be considered and analyzed.

A listing of many of these risks can be found here. Of course, not all of these risks will apply to every organization.Learn about business planning for nonprofits and for-profits in this topic from the Free Management Library.

Business Planning for Nonprofits | National Council of Nonprofits

The edition of the One Page Business Plan Series has been specifically designed for Non-Profits. If you are responsible for founding or managing a non-profit .

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Business planning is a time for an organization’s leaders to connect the dots between mission and programs, to specify which activities and resources will be required to deliver those programs, and to establish performance measures that allow everyone to understand whether the .

Aug 27,  · This article is part of our Business Planning Guide and our Nonprofit Business Startup Guide—curated lists of our articles that will help you with the planning and starting process!

If you’re thinking about launching a nonprofit, or if you’re at the helm of established c3, you need a /5(84). Nonprofit organizations have a unique set of needs and requirements. That's why these sample business plans for nonprofit organizations and social enterprise businesses can help you get started on .

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business planning for nonprofits

GCN's Nonprofit Consulting Group has launched a new service to help nonprofits develop strategies and action plans in specific areas: annual fundraising, strategy, developing talent, starting a nonprofit, and by senior consultants, each Lab brings together small cohorts of nonprofit leaders to learn theory and gain confidence through practice.

Business Planning for Nonprofits | National Council of Nonprofits