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.
If you want more information on how to plan a nonprofit, there is a wealth of information online.
Here are a few of my favorite: Also, check out Guide Star for more information about Form 990 (“Return of Organization Exempt From Income Tax”— nonprofits must file a tax return but owe no money).
There are several nuances in accounting rules between for-profit and nonprofits, which your accountant can help you with.
Be sure to use an accountant with nonprofit experience and other nonprofit clients.The executive summary can be used to help a potential lender, donor, etc. In order to be effective, your mission should be clearly defined, easy to remember, and it should meet a particular need. What are the exact outcomes that you want to achieve? When will the nonprofit reach certain impact goals?get the gist of the nonprofit and of the “business side of things.” Use this section to communicate the basic concept and the big picture items that are relevant to your nonprofit and to the cause you serve. If you can’t define the need (pain) the nonprofit solves, others won’t be able to rally behind your efforts. The impact is the overall result when you implement your solution. How many donations does the nonprofit need to be viable?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.Nonprofits also have a second set of customers — those individuals or entities who will be making contributions or volunteering their time and/or services. Together, this is called the pain/solution scenario.The reader of the nonprofit business plan may be a person who can help you fulfill objectives in these key areas.Although it is one of the last things to write, this section goes at the front of your nonprofit business plan, so that readers have an overview of the plan before diving in to get more detail. Financial overview This is a snapshot of what the reader will see in the financials section of the plan. Keys to success Include any keys to success for the organization to be effective. In other words, you have a clear definition of the thing you want to change and how you plan to change it.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.