charity commission business plan template

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Good Practice Guidance

Business plan good practice guidance

By reading this guidance you'll get help with how to develop a business plan, including basic headings and prompts on how to review your plan as it develops. It also includes a list of further resources and a glossary of terms to do with business planning.

Please note: if you already have a business plan, you don’t need to produce a new one.

Writing your plan

Before producing your business plan, consider:

if you need expertise in areas such as market analysis, taxation or legal matters
who will be involved in writing the plan, including staff and trustees
the timelines for the business plan to be approved

The headings below give a basic framework for developing a business plan, but every organisation is different so you may want to use different headings or additional content that better explains how your organisation works:

executive summary
about the organisation
governance and management structures
market appraisal and current approach
financial appraisal
risk register
monitoring and evaluating the organisation
organisational impact assessment
contact details for the organisation

Once you have a draft it’s a good idea to review it to assess its strengths and weaknesses, tackle any gaps and ensure it’s as clear, concise and logical as possible.

Your business plan will be a document you refer back to continually and update in the general course of running your organisation, so ask yourself:

Does your business plan present a strategy for achieving your aims and your mission?
Does your business plan align with our Heritage 2033 investment principles ?

Executive summary

Your plan should start with a concise overview (no more than two pages) highlighting the most important information in the document, including:

an overview of your organisation including your mission statement and what you want to achieve
the organisation’s key aims for the period of the plan (usually 3–5 years)
key elements of your strategy including how you will assure the longer-term financial future of the organisation
the main risks facing your organisation and how you plan to manage these in the short, medium and long term
an explanation of how your organisation is resilient enough to meet challenges: likely including financial information, how you will ensure governance and management structures are fit for purpose, and the monitoring and evaluation processes you have in place
any additional key information

Review this section by asking:

Is it a well-structured summary highlighting key points from the plan?
If someone with no prior knowledge of your organisation read this summary on its own, would it make sense?

About the organisation

This should provide information on the structure, objectives and activities of your organisation, including:

when and why it was started
its purpose, aims and key successes
the key areas of activity, products and/or services that you deliver, how they are distinctive and how will they be developed over the course of the plan
details of the targets you have set for each area of activity
Legal status, eg: unincorporated association or trust, or incorporated by Act of Parliament, Royal Charter, as a company limited by shares/guarantee, (Scottish) Charitable Incorporated Organisation or Industrial and Provident Society. Indicate whether it is a Community Interest Company or is registered or recognised as a charity.
whether it has a membership of individuals, and if so the number of members
the names of any other entities with which it has a formal association (eg: any bodies with which there are funding agreements or that have the right to nominate multiple board members)
Whether it is a partnership of different organisations with a shared interest, identifying the other organisations/stakeholders you will be working with, the basis of the arrangement and whether it is formal or informal. Summarise any partnership agreements.
the number and roles of paid staff (in total and full-time equivalents) and explain the tasks they perform within the organisation
the role of volunteers (give estimates of the number of regular volunteers, the tasks they do within the organisation and the total number of hours they work on each task every year)
describe how you fund your organisation’s activities, noting any sources that account for a particularly large proportion of your income and, if these come from a funding body, when this funding will be subject to review
Have you accurately described your organisation’s purpose and main areas of activity and how you are distinctive?
Do you highlight key successes?
Is it clear what services or products you offer and how you intend to develop them?
Have you set clear targets?
Is the structure of your organisation clearly set out in a way that is easy to understand?
Have you included key information about your legal set up and how you staff and fund core activities?

Governance and management structures

This should explain your organisation’s management structure, decision-making processes, lines of communication and reporting. It can include simple organograms/network diagrams to show your governance, management and staffing structures.

Governance summary

This should provide an overview of the governance in place within your organisation to ensure that business plans and strategies are approved and monitored.

Describe the size and composition of the governing body (eg: council, board of trustees, board of directors) and, where appropriate, arrangements in place for succession planning and board development training. List the roles covered by your senior management team.

You should explain the make-up of your board. This includes how the board provides a diversity of perspective and skills. You should also explain their engagement with the organisation, particularly in relation to:

business planning, pricing policies and marketing strategies
financial management and administration
fundraising
approving potential projects and maintaining oversight
commissioning advisers and consultants

Summarise the functions of any sub-groups, describing their membership, roles and responsibilities, and specifying any delegated powers they are authorised to use. Indicate how frequently such groups meet.

Management structure

You should include simple organigrams or network diagrams. These should show each job title. There’s no need to include individuals’ names.

Show how many post-holders are employed in each position and whether they are full-time, part-time or volunteers.

An example of an organogram, featuring three levels of hierarchy from Manager to assistants

An accompanying schedule should list each role, summarising its purpose and function, and the name of the post-holder (so we can see if there are vacancies in key roles).

You should provide information on your recruitment policies for core staff. If you use external advisors regularly, you should give details of their company and role and how they relate to the positions on the organogram.

If volunteers are a key part of your organisation, you should explain:

the roles volunteers play in the organisation, including the types of responsibilities they have
how many volunteers the organisation works with
the number of volunteer hours
the role within your organisation responsible for managing volunteering and how this is monitored
Have you covered how your organisation is managed and governed in a clear way? Is there any information missing?
Have you included the main challenges you face in running your business?
Is it clear what skills and experience are needed going forward? Have you included information on how you develop skills within the organisation?
Have you included plans for developing your structure and processes in the future?

This should include a more detailed overview of the aims of your organisation for the period of the plan and how they relate to your overall mission, setting out the key activities you will undertake to achieve them.

Include any projects you plan to take on, demonstrating how they will work together to achieve your organisation’s aims. You should include information on the impact additional projects will have on your organisation and how you plan to deal with those impacts.

Include dates and a timetable for reviewing and updating your strategy.

Market appraisal and current approach

A market appraisal looks at your offer within the context of the marketplace. You should assess your market, your competition and your marketing strategy. Market analysis should be proportionate to the scope and size of your organisation.

Describe your current market:

Is the profile of your heritage attraction or place of local or national interest? Is it well known?
Is it valued by a wide cross-section of the public or a more limited special-interest group?
How many customers have you had each year over the past 10 years?
What are the demographics of your current customers and visitors – their age, gender, income, education, and occupation? What proportion are family groups/schools?
Where do they live – very locally, from the surrounding region, from the UK or overseas?
What proportion of customer contacts are repeats?

Show you know your market:

On a national or regional basis, is your market growing, falling or stable?
How does this relate to your organisation’s experience?
Are there any national socio-economic trends or policies that will have an impact on your market?
How might foreseeable political, economic, social and/or technological changes affect your market?

Consider your potential/target audience:

Who are the people most likely to access your service?
Are they single or repeat customers?
What are their needs, behaviours, tastes and preferences?
What has research shown you so far?

Review the competition

All organisations have competition of some sort. Find out what organisations are in competition with yours. Look at how they price their activities, their business strategy, strengths and weaknesses.

Develop a competitive strategy for your organisation

Do a ‘SWOT’ analysis looking at the strengths, weaknesses, opportunities and threats to your organisation.

Use evidence-based information and remember to include internal and external factors. Describe what is unique and special to your organisation and include the disadvantages you have.

Outline your marketing strategy

A marketing strategy is how you will reach new audiences. It will likely be based on evidence from:

data you have collected, over as long a period of time as is achievable
national data, for example, the Taking Part survey (in England), national tourism surveys, national and local authority statistics
existing market research
market research commissioned to estimate potential markets and the potential popularity of the business with your target market
reviewing operations that are similar to those you propose in your own area and further afield, using annual accounts available online from the Charity Commission (England) or Companies House

Your marketing strategy should clearly set out:

people: who your target audiences are, including the size of these audiences
product: what you’re offering people
price: your pricing strategy and the rationale behind it
promotion: the communication channels and messages you will use to reach your target audiences

Financial appraisal

This should include a general financial assessment of your organisation, an overview of your total financial need to support your day-to-day operations and details of your financial model, including your main sources of funding.

Provide supporting documents in an appendix at the end of your business plan, detailing:

a forecast income and expenditure account
a cashflow forecast showing the expected monthly cashflow
statements of assumptions underlying the forecasts

Detail the assumptions made in your calculations. An assumption is anything you are relying on to make forecasts. For example, the average number of visitors you are expecting based on the previous year, or any unknown costs of materials. Make sure you also include details of any reserves.

You may want to undertake a sensitivity analysis to show what your finances would look like if your projections fall short by various amounts, for example between 5% and 20%. What would the risk to your operation be if either of these scenarios were to occur and what action might you need to take?

Have you described how your organisation operates financially in a way that is easy to understand?
Have you included an overview of your total financial needs, what your main sources of funding are and how your main activities contribute to achieving this?
Have you included an expected cashflow forecast and income and expenditure forecast?

Risk register

A risk assessment identifies your organisation’s internal weaknesses and external threats. A risk register, usually set out as a table, lists all the identified risks prioritised in order of importance.

For each risk, outline:

the nature of the risk, eg: technical, market, financial, economic, management, legal
a description of the risk
the probability of the risk happening: low, medium, high or as a percentage
the effect the risk could have, eg: on cost, time, performance
the level of effect: low, medium, high, or as a percentage
how you would prepare for and lessen the risk’s effect
Have you listed the key potential problems that your organisation faces?
On reflection, are they your main risks or can the list be reduced?
Have the risks been properly calculated?
Do you need to do any further thinking about how risks will be mitigated?
Are there any alternative courses of action that have not been considered?

Monitoring and evaluating your organisation

In this section you should set out your plans for monitoring and evaluating your organisation's performance and impact to ensure you are meeting your aims and achieving your mission.

You will need to gather different kinds of information at various stages, starting at the earliest opportunity by benchmarking where you are to start with. You should set a series of milestones, financial targets and performance targets to track these.

Evaluation should be carried out regularly using the monitoring information. You should summarise your planned approach and include details of milestones. Your approach should show when you anticipate evaluating your achievements and specify the scope of the evaluation and whether your organisation plans to bring in any expertise to help you assess the extent to which you are meeting your aims.

Have you included details of the changes you want your organisation to make? How does this link to your mission and aims?
Have you set out how you intend to monitor progress? Will you need any external advice?
Have you detailed what success looks like? How will you know if you have achieved your targets?
Do you have a plan for linking your findings into future decision-making? How do you report back to your board of trustees?

Organisational impact assessment

Within your application we want to see how your proposed project will impact your organisation and its finances and continue to deliver against our investment principles for a period of five years from the end of the project, including:

How will any additional costs created by the project continue to be funded?

These can include additional staffing and housekeeping costs, business rates, maintenance obligations arising from implementing management and maintenance plans (and, if applicable, conservation plans ). Document these additional costs in a table.

Where the project is expected to lead to reduced expenditure (for example, reduced energy expenditure, productivity gains due to improved technology), include the costs of the savings in the table to give the planned net additional cost or saving.

What additional volunteer input will be required?

Tell us about additional numbers of hours to be worked and the number of additional hours required. Indicate where these volunteers come from and the impact on your volunteer management and training arrangements.

Are there any changes in governance or management that could affect the project?

Tell us about any relevant changes to board composition or committee structure, or variation in individual duties or responsibilities. If the structure will be different during different phases of your project, provide separate diagrams to explain the arrangements. Outline any other material change in how the organisation will be managed as a consequence of the project.

Provide the following financial projections:

A statement of unrestricted funds, or of income and expenditure where the organisation is a local authority, university or other large organisation and the scale of the project is immaterial to the organisation's total financial circumstances. Where the organisation has a trading subsidiary, its projections should be consolidated with those of its parent. Include:

the organisation's balance sheet
the assumptions on which the financial projections are based
a sensitivity analysis

In carrying out this impact assessment you should:

Use the market appraisal you have carried out in your overall business planning to give details of your market size and the income generated. The assumptions should clearly show the basis on which the numbers have been calculated.
demonstrate that the general trend will be for the organisation to generate annual surpluses on its unrestricted funds
Base your assessment on your latest completed financial year if you have been in existence for that length of time (or the current year budget). Use this as a starting point for your projections so you can clearly assess the net impact on your financial position from the incremental, on-going income and expenditure caused by the project you are proposing.
Include in the sensitivity analysis the income items that are most critical to the organisation's success, are most uncertain or contain the greatest risk. By adjusting these by percentages between 5% and 20%, depending on their nature and risk, it is possible to see the impact on the reported surplus.

Contact details for your organisation

At the end of your business plan, include:

head office address
telephone number
email address

If you need to include additional information to support your plan, for example, evidence or reports you have commissioned, external advice, financial information or visuals which support the plan, add these as appendices.

When you have completed the plan, review your appendices to make sure you haven’t missed any relevant detail. Check whether you have included information in the main business plan that should be listed in the appendix instead.

Additional resources

Sample business plans for various industries.
Business planning guidance for arts and cultural organisations commissioned by Arts Council England for the arts and cultural sector.
The Sustainable Sun tool : 10 steps towards financial sustainability from the National Council for Voluntary Organisations.
An introduction to benchmarking , developed by The Audience Agency.
How to build a measurement and evaluation framework , developed by New Philanthropy Capital.
Impact and evaluation resources from the Small Charities Coalition
DIY toolkit on how to invent, adopt or adapt ideas that can deliver better results, created by Nesta, the UK’s innovation agency. It includes a template for SWOT analysis .
Various business planning resources from the Scottish Council for Voluntary Organisations.
Various resources to help you run your organisation from the Wales Council for Voluntary Action.
Resources and templates relating to business planning , including a template for developing a cashflow, from the Small Charities Programme.

Glossary of terms to do with business planning

Aims: a broad statement of intent.

Asset : an item of value owned and controlled by the organisation that has a useful life longer than a single accounting period.

Budget : a plan for future activity expressed in terms of incoming and outgoing resources.

Cashflow : the pattern of an organisation’s income and expenditure. Having surplus cash in hand after being able to meet all debts on the day they are due is a ‘positive’ cashflow, not having cash to meet debts as they fall due is a ‘negative’ cashflow.

Forecast : a financial projection, based on performance to date, of where the organisation expects to be at the end of the current financial period. Revised forecasts are often prepared throughout the financial year.

Impact: the intended or unintended sustainable changes brought about by an initiative, project, programme or organisation.

Mission : the overall guiding direction of the organisation, which usually states your purpose, refers to what your organisation does, who it does it for and what is unique or different about what you do.

Objectives : achievements set out for a business to aim for, often within a certain timeframe. These should be ‘SMART’, ie: specific, measurable, achievable, realistic and time-based. They underpin planning and strategic activities and serve as the basis for performance monitoring and evaluation.

Trustee: a person who has independent control over, and legal responsibility for, an organisation’s (especially a charity’s) management and administration. Find out more about trustees on the Government’s website .

Sensitivity analysis: tests different scenarios to see how they will affect your bottom line, for example by increasing and decreasing your financial projections by between 5% and 20%.

Unrestricted funds: money that can be spent on any activity that furthers the organisation’s purpose.

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charity commission business plan template

Charity Strategy and Business Planning

Pro bono management consultancy, help with charity business planning, charity business strategy, and charity business plan template..

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Advice on immediate questions and management challenges is available via Cranfield Trust On Call, our telephone advice service.

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Working with a management consultant

Before you start work with an external consultant, Stella Smith gives some useful pointers.

Is management consultancy right for your charity?

CHARITY BUSINESS STRATEGY AND PLANNING

Having a good charity business plan in place will not only help you to have a clear focus, it will position you to attract new funders, volunteers and supporters. , thinking about and aligning your charitable activities also gives you time to think about potential risks and opportunities. a well thought out business plan is vital part of building a robust and successful charity. .

Webinar: How to create a business plan for your charity

The below webinar was delivered by Cranfield Trust Volunteer Stephen Cahill, as part of the ongoing Essentials to Excellence webinar series. The style of the webinar is a mix of presenter input and lively case studies with as much input as possible. You will leave the session equipped with simple practical steps you can take to translate your thoughts into action quickly.

You will learn how to:

Be successful at business planning – what has changed forever and why you need to revisit your business planning approach.
Make your business plan robust and avoid being ‘blindsided’.
Use your business plan as a focus for funders.
Do business planning with half the effort for twice the result!

Stephen Cahill Bio:

Stephen Cahill BSc MPA (Warwick) is a semi-retired executive with extensive senior experience across the public, private and charity sectors. He has over 30 years of experience in helping organisations improve their governance, strategy, and operations. He specialises in helping organisations to achieve rapid results by focusing on,"the things that really matter". He has been an active Cranfield Trust volunteer for nearly a decade.

Reworking your strategy

Six steps to reworking your charity’s strategy in the ‘new normal’ by Cranfield Trust Volunteer, Stephen Cahill.

Build your charity business plan

Questions to ask to help you build your charity's business plan.

Business Planning - questions to build your plan

Charity business plan template

A template for a straightforward business plan, in Word and PDF versions.

Word template for three year business plan

PDF template for three year business plan

LEAN Management

In reviewing your activities and writing your business plan you may wish to consider your processes to ensure that they are efficient and contributing to a high quality of activity. This article on LEAN management provides some guidance.

Introduction to Lean

Is merger right for your charity?

Volunteer Matthew Wilkley, Director of Income Generation at Independent Age, considers merger as a strategic option, with particular reference to fundraising.

Blog: To merge or not to merge

Related free charity resource library

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Business Plan Template for Charity Organizations

Great for beginners
Ready-to-use, fully customizable Subcategory
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Charity organizations play a crucial role in making the world a better place. But to truly make an impact, they need a solid roadmap. That's where ClickUp's Business Plan Template for Charity Organizations comes in.

This template is specifically designed to help charity leaders and managers:

Clearly define their organization's mission, goals, and strategies
Secure funding and establish key partnerships by presenting a comprehensive plan
Guide their day-to-day operations towards maximizing social impact

Whether you're a non-profit veteran or just starting out, this template will provide the structure and guidance you need to create a powerful business plan that sets your charity up for success. So let's get started and make a difference together!

Business Plan Template for Charity Organizations Benefits

A business plan template for charity organizations offers a range of benefits to help leaders and managers effectively navigate the complex world of fundraising and social impact. Some of the key benefits include:

Streamlining the planning process by providing a structured framework to outline the organization's mission, vision, and goals
Enhancing credibility and professionalism when presenting the organization to potential donors, partners, and stakeholders
Guiding strategic decision-making by identifying key priorities, target demographics, and sustainable funding models
Facilitating effective communication and alignment among team members, board members, and volunteers
Increasing the likelihood of securing funding and partnerships by demonstrating a clear roadmap and measurable outcomes.

Main Elements of Charity Organizations Business Plan Template

ClickUp’s Business Plan Template for Charity Organizations is designed to help charity organization leaders and managers create a comprehensive and impactful business plan. Here are the main elements of this template:

Custom Statuses: Keep track of the progress of each section of your business plan with statuses like Complete, In Progress, Needs Revision, and To Do.
Custom Fields: Add important information to your business plan such as Reference, Approved, and Section, making it easy to organize and reference key details.
Custom Views: Explore different perspectives of your business plan, including Topics, Status, Timeline, Business Plan, and Getting Started Guide, to easily navigate and focus on specific areas of your plan.

With ClickUp's Business Plan Template for Charity Organizations, you can streamline the process of creating a comprehensive and effective business plan to guide your organization's success in maximizing social impact.

How To Use Business Plan Template for Charity Organizations

If you're a charity organization looking to create a business plan, follow these six steps to make the most of the Business Plan Template in ClickUp:

1. Define your mission and vision

Start by clearly defining the mission and vision of your charity organization. What is the purpose of your organization? What impact do you hope to make in the world? This will serve as the foundation for your business plan and guide all of your future decisions.

Use a Doc in ClickUp to articulate your mission and vision statements.

2. Identify your target audience and beneficiaries

Next, identify the specific audience or beneficiaries that your charity organization aims to serve. Who are the individuals or communities that will benefit from your work? Understanding your target audience will help you tailor your programs and services to meet their needs.

Create tasks in ClickUp to list and categorize your target audience and beneficiaries.

3. Outline your programs and services

Now it's time to outline the specific programs and services that your charity organization will offer. What initiatives will you undertake to fulfill your mission? This could include fundraising events, community outreach programs, educational workshops, or any other activities that align with your goals.

Use custom fields in ClickUp to define and track your programs and services.

4. Develop a fundraising and financial strategy

Every charity organization needs a solid fundraising and financial strategy to support its operations. Determine the different fundraising methods you'll use, such as grants, donations, sponsorships, or partnerships. Additionally, create a budget and financial plan that outlines your expected income and expenses.

Utilize the Goals feature in ClickUp to set financial targets and track your progress.

5. Establish a marketing and communication plan

To raise awareness about your charity organization and attract supporters, you'll need a well-defined marketing and communication plan. Consider the various channels and strategies you'll use to reach your target audience, such as social media, email campaigns, press releases, or partnerships with influencers or media outlets.

Use the Calendar view in ClickUp to schedule and manage your marketing and communication activities.

6. Set goals, milestones, and measures of success

Finally, set specific goals, milestones, and measures of success for your charity organization. What do you hope to achieve in the short term and long term? Break down your goals into actionable steps and establish deadlines to keep yourself accountable.

Create Milestones in ClickUp to track your progress and celebrate your achievements.

By following these steps and utilizing the Business Plan Template in ClickUp, your charity organization will be well-equipped to create a comprehensive and effective business plan.

Get Started with ClickUp’s Business Plan Template for Charity Organizations

Charity organization leaders and managers can use the Business Plan Template for Charity Organizations in ClickUp to create a comprehensive plan that aligns with their mission and goals, and helps them secure funding and partnerships.

First, hit “Add Template” to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to create a powerful business plan:

Use the Topics View to organize your plan into different sections, such as mission, goals, strategies, and financials
The Status View will help you track the progress of each section, with statuses like Complete, In Progress, Needs Revision, and To Do
The Timeline View will give you a visual representation of your plan's milestones and deadlines
The Business Plan View will provide a comprehensive overview of your plan, allowing you to easily navigate and make updates
The Getting Started Guide View will provide step-by-step instructions on how to use the template and create an effective business plan
Utilize custom fields like Reference, Approved, and Section to add additional information and track key details
Collaborate with team members to gather input, make revisions, and ensure everyone is aligned with the plan's objectives
Monitor and analyze your plan's progress and performance to make informed decisions and drive social impact.
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Charity Business Plan Template

Written by Dave Lavinsky

Charity Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their charity companies. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a charity business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Charity Business Plan?

A business plan provides a snapshot of your charity business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Charity

If you’re looking to start a charity business or grow your existing charity company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your charity business to improve your chances of success. Your charity business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Charity Businesses

With regards to funding, the main sources of funding for a charity business are personal savings, credit cards, bank loans, and major donors . When it comes to bank loans, banks will want to review your business plan (hand it to them in person or email to them as a PDF file) and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Donations and bank loans are the most common funding paths for charity companies.

Finish Your Business Plan Today!

How to write a business plan for a charity business.

If you want to start a charity business or expand your current one, you need a business plan. The guide and sample below details the necessary information for how to write each essential component of your charity business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of charity business you are running and the status. For example, are you a startup, do you have a charity business that you would like to grow, or are you operating more than one charity business?

Next, provide an overview of each of the subsequent sections of your plan.

Give a brief overv iew of the charity business industry.
Discuss the type of charity business you are operating.
Detail your direct competitors. Give an overview of your target customers.
Provide a snapshot of your marketing strategy. Identify the key members of your team.
Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of charity business you are operating.

For example, you m ight specialize in one of the following types of charity businesses:

Public charity business: A charity business that is defined by the Internal Revenue Service as a “public service support,” is one that benefits the public at large. This may include chambers of commerce, labor unions, and certain types of insurance companies. If a charity business fits within the specifications set by the IRS, the charity is considered a 501c3 entity, and receives preferential tax treatment.
Private charity business: By far, the majority of charities fall within the category of “private charities,” which can be identified as serving a specific group of people. This may include philanthropic foundations, churches or synagogues, and other clubs or associations that serve via a privately-funded means. If a private charity business fits within the specifications set by the IRS, the charity is considered a 501c3 entity and receives preferential tax treatment.

In addition to explaining the type of charity business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

When and why did you start the business?
What milestones have you achieved to date? Milestones could include the number of people served, the number of charitable outcomes, reaching X number of geographic locations, etc.
Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the charity business industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the charity business industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your charity business business plan:

How big is the charity business industry (in dollars)?
Is the market declining or increasing?
Who are the key competitors in the market?
Who are the key suppliers in the market?
What trends are affecting the industry?
What is the industry’s growth forecast over the next 5 – 10 years?
What is the relevant market size? That is, how big is the potential target market for your charity business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Donor Analysis

The donor analysis section of your charity business plan must detail the individuals or business entities who donate or those you expect to donate to your charitable business.

The following are examples of donor segments: individuals, families, foundations and corporations.

As you can imagine, the donor segment(s) you choose will have a great impact on the type of charity business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target donors in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential donors you seek.

Psychographic profiles explain the wants and needs of your target donors . The more you can recognize and define these needs, the better you will do in attracting and retaining your donors . Ideally you can speak with a sample of your target donors before writing your plan to better understand their needs.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are othe r charity businesses.

Indirect competitors are other options that donors may contribute to that aren’t directly competing with your product or service. This includes service-related charitable endeavors, private foundations, and organizations that serve specific communities, etc. You need to mention direct competition, as well.

For each direct competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

What types of donors do they solicit ?
What type of charity business are they?
What is their donation model (cash, assets, estate-wealth)?
What are they good at?
What are their weaknesses?

With regards to the last two questions, think about your answers from the donors’ perspective. And don’t be afraid to ask your competitors’ donors what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

Will you provide recognition for all your donors?
Will you offer premium products or services for your top-tier donors?
Will you provide consistent communication with your donors?
Will you offer directorships or preferential placement for your donors?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a charity business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type o f charity company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide food for the homeless population? Will you improve the neighborhood park? Will you invest in artwork on behalf of your charity to support the art world?

Value : Document the specific value your charity provides and how that compares to your competitors. Essentially in the product and price sub-sections of yo ur plan, yo u are presenting the products and/or services you offer and their respective values.

Place : Place refers to the site of your charity company. Document where your company is situated and mention how the site will impact your success. For example, is your charity business located in an affluent neighborhood, a warehouse, a standalone office, or is it purely online? Discuss how your site might be the ideal location for the donors who contribute and the services you provide.

Promotions : The final part of your charity business marketing plan is where you will document how you will drive potential donors and charitable recipients to your location(s). The following are some promotional methods you might consider:

Advertise in local papers, radio stations and/or magazines
Reach out to websites
Distribute flyers
Engage in email marketing
Advertise on social media platforms
Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your charity business, including answering calls, planning and providing fund-raising events or campaigns, correspondence with donors and charitable recipients, and maintaining records of acts of service.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your Xth charity recipient, or when you hope to reach $X in donations. It could also be when you expect to expand your charity business to a new city.

Management Team

To demonstrate your charity business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing charity businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a charity business or top-tier donors who are regularly involved in your charity business.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your donation and gift income statement, balance s heet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. In a charity business, profits can be made through sales; however, the majority of income is received from donor gifts and activity. Your income statement will show several avenues of income as a result. It will demonstrate your receipts and then subtract your costs to show the IRS the activity of your 501c3 organization.

In developing your income statement, you need to devise assumptions. For example, will you hold 5 donor events each year, and/or offer acts of service weekly ? And will your charity business grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your charity business, this will not give you an immediate return on the investment. Rather it is an asset that will hopefully help you maintain your charity business for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can generate gifts or assets , but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a charity business business:

Cost of equipment and office supplies
Payroll or salaries paid to staff
Business insurance
Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your list of top-tier donors, or examples of how your charity has changed lives or communities for the better.

Writing a business plan for your charity business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the charity business industry, your competition, and your donors. You will develop a marketing strategy and will understand what it takes to launch and grow a successful charity business.

Don’t you wish there was a faster, easier way to finish your Charity business plan?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success. Click here to see how a Growthink business plan consultant can create your business plan for you.

Charity Business Business Plan FAQs

What is the easiest way to complete my charity business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your charity business plan.

How Do You Start a Charity Business?

Starting a charity business is easy with these 14 steps:

Choose the Name for Your Charity Business
Create Your Charity Business Plan
Choose the Legal Structure for Your Charity Business
Secure Startup Funding for Your Charity Business (If Needed)
Secure a Location for Your Business
Register Your Charity Business with the IRS
Open a Business Bank Account
Get a Business Credit Card
Get the Required Business Licenses and Permits
Get Business Insurance for Your Charity Business
Buy or Lease the Right Charity Business Equipment
Develop Your Charity Business Marketing Materials
Purchase and Setup the Software Needed to Run Your Charity Business
Open for Business

Where Can I Download a Free Business Plan Template PDF?

Click here to download the pdf version of our basic business plan template.

Our free business plan template pdf allows you to see the key sections to complete in your plan and the key questions that each must answer. The business plan pdf will definitely get you started in the right direction.

We do offer a premium version of our business plan template. Click here to learn more about it. The premium version includes numerous features allowing you to quickly and easily create a professional business plan. Its most touted feature is its financial projections template which allows you to simply enter your estimated sales and growth rates, and it automatically calculates your complete five-year financial projections including income statements, balance sheets, and cash flow statements. Here’s the link to our Ultimate Business Plan Template.

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Charity Business Plan

Starting a charity business is a huge responsibility. To make a positive impact in society, you will need to build your charity business strong, for which you will need a detailed business plan.

Need help writing a business plan for your charity business? You’re at the right place. Our charity business plan template will help you get started.

Free Business Plan Template

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How to Write A Charity Business Plan?

Writing a charity business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Highlight the charity programs you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of charity company you run and the name of it. You may specialize in one of the following charity businesses:

Humanitarian charities
Public charity
Private charity
Health charities
Educational charities
Environmental charities
Animal welfare charities
Describe the legal structure of your charity company, whether it is a sole proprietorship, LLC, partnership, or others.
Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established charity service provider, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Conduct SWOT analysis:

Competitive analysis:, market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your charity business plan:

Conduct market research, industry reports, and surveys to gather data.
Provide specific and detailed information whenever possible.
Illustrate your points with charts and graphs.
Write your business plan keeping your target audience in mind.

4. Products of Your Bicycle Shop

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Describe your programs:

Mention the charity programs your business will offer. This list may include:

Direct assistance
Education and training
Healthcare & medical services
Social services
Advocacy and awareness

Describe the objectives behind programs:

Supportive services:.

In short, this section of your charity plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.

Marketing Mix:

Marketing channels:, fundraising strategies:.

Describe the fundraising strategies you plan on implementing to generate revenue for your nonprofit. Your nonprofit may generate income from grants, major gifts, individual giving, charity events, online fundraising, corporate sponsorship, etc.

Donor Retention:

Overall, this section of your charity business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your charity business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, equipment & software:.

Include the list of equipment and software required for charity, such as office equipment, software & IT infrastructure, communication & presentation tools, fundraising equipment, vehicles & transportation, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your charity business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your charity, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

Add a table of contents for the appendix section to help readers easily find specific information or sections.
In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
Include any legal documents such as permits, licenses, and contracts.
Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your charity business plan should only include relevant and important information supporting your plan’s main content.

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This sample charity business plan will provide an idea for writing a successful charity plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our charity business plan pdf .

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Frequently asked questions, why do you need a charity business plan.

A business plan is an essential tool for anyone looking to start or run a successful charity business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your charity company.

How to get funding for your charity business?

There are several ways to get funding for your charity business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

Bank loan – You may apply for a loan in government or private banks.
Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your charity business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your charity business plan and outline your vision as you have in your mind.

What is the easiest way to write your charity business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any charity business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How do I write a good market analysis in a charity business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

Stating the objective of your market analysis—e.g., investor funding.
Industry study—market size, growth potential, market trends, etc.
Identifying target market—based on user behavior and demographics.
Analyzing direct and indirect competitors.
Calculating market share—understanding TAM, SAM, and SOM.
Knowing regulations and restrictions
Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

How detailed should the financial projections be in my charity business plan?

The level of detail of the financial projections of your charity business may vary considering various business aspects like direct and indirect competition, pricing, and operational efficiency. However, your financial projections must be comprehensive enough to demonstrate a complete view of your financial performance.

Generally, the statements included in a business plan offer financial projections for at least the first three or five years of business operations.

What key components should a charity business plan include?

The following are the key components your charity business plan must include:

Executive summary
Business Overview
Market Analysis
Products and services
Sales and marketing strategies
Operations plan
Management team
Financial plan

Can a good charity business plan help me secure funding?

Indeed. A well-crafted charity business will help your investors better understand your business domain, market trends, strategies, business financials, and growth potential—helping them make better financial decisions.

So, if you have a profitable and investable business, a comprehensive business plan can certainly help you secure your business funding.

What's the importance of a marketing strategy in a charity business plan?

Marketing strategy is a key component of your charity business plan. Whether it is about achieving certain business goals or helping your investors understand your plan to maximize their return on investment—an impactful marketing strategy is the way to do it!

Here are a few pointers to help you understand the importance of having an impactful marketing strategy:

It provides your business an edge over your competitors.
It helps investors better understand your business and growth potential.
It helps you develop products with the best profit potential.
It helps you set accurate pricing for your products or services.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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5 steps for creating the business continuity plan, 4+ charity business continuity plan templates in pdf, 1. business continuity plan template, 2. simple business continuity plan template, 3. disaster recovery and business continuity plan, 4. standard business continuity plan template, charity templates.

When the charity faces a crisis then it is important to come out of the crises because it would either cause harm to the reputation of the organization or completely can shut down it. It is the most important step to eradicate any kind of crisis that comes over your organization through the business continuity plan whose work is to revive the business back to the early stage. Nowadays, in the modern era, the organization faces many crises like fire, flood, and illness. To manage the risk there is the risk management team that uses the charity business continuity plan templates to eradicate the risk and the crisis situation.

Step 1: Review the Risk

Step 2: limit the disruption and damage, step 3: create alternative means, step 4: train the members, step 5: minimise interruptions.

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Business and industry
Charities and social enterprises

Charities and risk management (CC26)

Published 1 June 2010

Applies to England and Wales

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected] .

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/charities-and-risk-management-cc26/charities-and-risk-management-cc26

1. Introduction

1.1 what is this guidance about.

Charity trustees should regularly review and assess the risks faced by their charity in all areas of its work and plan for the management of those risks. Risk is an everyday part of charitable activity and managing it effectively is essential if the trustees are to achieve their key objectives and safeguard their charity’s funds and assets.

This guidance outlines the basic principles and strategies that can be applied to help charities manage their risks. It should help trustees set a risk framework that allows them to:

identify the major risks that apply to their charity

make decisions about how to respond to the risks they face

make an appropriate statement regarding risk management in their annual report

The risks that a charity faces depend very much on the size, nature and complexity of the activities it undertakes, and also on its finances. As a general rule, the larger and more complex or diverse a charity’s activities are, the more difficult it will be for it to identify the major risks that it faces and put proper systems in place to manage them. This means that the risk management process will always need to be tailored to fit the circumstances of each individual charity, focusing on identifying the major risks. Trustees of large, complex charities may need to explore risk more fully than the outline given here.

The main body of the guidance covers:

an overview of the reasons for and the processes involved in risk management

the legal requirement for trustees to make a risk management statement in their annual report, and what that statement must contain

a model of risk management to help charities work through the process;this section is intended to be of particular interest to those actually carrying out or involved in the identification and management of a charity’s exposure to risk

Annex 1 contains a risk register template with examples of how it can be used and Annex 2 gives examples of the most common risk areas for charities, their potential impact and the possible steps to mitigate them.

1.2 Previous guidance

This guidance has been updated to include current thinking in models for assessing risk and to draw attention to the distinction between risks that arise from a financial situation and risks arising in other ways that can be seen as non-financial, even if ultimately they have a financial impact. There is no change to the regulatory requirements for charities (see Part 3 ).

1.3 ‘Must’ and ‘should’: what the Charity Commission mean

The word ‘must’ is used where there is a specific legal or regulatory requirement that you must comply with. ‘Should’ is used for minimum good practice guidance you should follow unless there’s a good reason not to.

The commission also offer less formal advice and recommendations that trustees may find helpful in the management of their charity.

1.4 The meaning of some terms used in this guidance

The Charities Act means the Charities Act 2011.

Annual report means the trustees’ annual report prepared under the Charities Act.

Governing document (GD) means a legal document setting out the charity’s purposes and, usually, how it is to be administered. It may be a trust deed, constitution, memorandum and articles of association, will, conveyance, Royal Charter, scheme of the commission, or other formal document.

Joint venture in this guidance means an entity formed between two or more parties to undertake some form of economic activity together. The parties involved create a new entity by all contributing equity, and they then share in the revenues, expenses, and control of the enterprise. The venture can be for one specific project only, or a continuing business relationship.

Regulations refers to the Charities (Accounts and reports) Regulations 2008 (SI 2008 No. 629) which set out the required form and content of the trustees’ annual report and the scrutiny and accounting arrangements for charities. The Regulations made the SORP recommendations that the trustees’ annual report should contain a risk management statement a statutory requirement for certain charities.

Risk is used in this guidance to describe the uncertainty surrounding events and their outcomes that may have a significant impact, either enhancing or inhibiting any area of a charity’s operations.

Subsidiary trading company is any non-charitable trading company owned by a charity or charities to carry on a trade on behalf of the charity or charities.

Trustee means a charity trustee. Charity trustees are the people who are responsible for the general control of the management of the administration of the charity. In a charity’s governing document they may be collectively called trustees, the board, managing trustees, the management committee, governors or directors, or they may be referred to by some other title.

2. Understanding the basics of risk management

This part covers:

Why is risk management important?
What particular types of risk do charities face?
How can risk be managed?
What is disaster recovery planning?

More detail on approaches to identifying and managing risk management can be found in Part 4 .

2.1 Why is risk management important?

Identifying and managing the possible and probable risks that a charity may face over its working life is a key part of effective governance for charities of all sizes and complexity.

By managing risk effectively, trustees can help ensure that:

significant risks are known and monitored, enabling trustees to make informed decisions and take timely action

the charity makes the most of opportunities and develops them with the confidence that any risks will be managed

forward and strategic planning are improved
the charity’s aims are achieved more successfully

Reporting in its trustees’ annual report on the steps a charity has taken to manage risk helps to demonstrate the charity’s accountability to its stakeholders including beneficiaries, donors, funders, employees and the general public.

2.2 What types of risk do charities face?

Charities will face some level of risk in most of the things they do. The diverse nature of the sector and its activities means that charities face different types of risk and levels of exposure.

An essential question for charities when considering risk is whether or not they can continue to meet the needs of beneficiaries now and in the future. For example, in a period of economic uncertainty, the major financial risks for a charity are likely to be:

termination of funding from other bodies

the future of contracts

fundraising from the general public

fluctuations in investments

an unforeseen rise in demand for their services

Generally, risk will need to be considered in terms of the wider environment in which the charity operates. The financial climate, society and its attitudes, the natural environment and changes in the law, technology and knowledge will all affect the types and impact of the risks a charity is exposed to. Although the risks that a charity might face are both financial and non-financial, a part of the ultimate impact of risk is financial in most cases. This could be where a party seeks compensation for loss, or costs incurred in managing, avoiding or transferring the risk, for example by buying employers’ liability insurance or buildings insurance. The law requires that some risks are insured - motor insurance and employers’ liability insurance for charities that employ staff are compulsory.

A system of classification, such as the example below, is helpful for ensuring key areas of risk arising from both internal and external factors are considered and identified. Annex 2 expands on this approach and provides further illustrations of the type of risks that may fall into each category.

2.3 How can risk be managed?

Following identification of the risks that a charity might face, a decision will need to be made about how they can be most effectively managed. Trustees may wish to establish a risk framework to help them make decisions about the levels of risk that can be accepted on a day to day basis and what matters need to be referred to them for decision.

There are four basic strategies that can be applied to manage an identified risk:

transferring the financial consequences to third parties or sharing it, usually through insurance or outsourcing

avoiding the activity giving rise to the risk completely, for example by not taking up a contract or stopping a particular activity or service

management or mitigation of risk

accepting or assessing it as a risk that cannot be avoided if the activity is to continue: an example of this might be where trustees take out an insurance policy that carries a higher level of voluntary excess or where the trustees recognise that a core activity carries a risk but take steps to mitigate it - public use of a charity’s property such as a village hall would be such a risk

Part 4 sets out a possible framework for evaluating the potential courses of actions that can be taken to manage the risks identified.

Two simple examples that illustrate different risks and how they might be managed.

Example 1: funding of core activities.

This concerns two charities that are working with disadvantaged people in a local community.

One charity is dependent on funding in the form of donations from local philanthropists, including local businesses, for the vast majority of its funds. In the event of a downturn in the economic cycle, those same local businesses may no longer be in a position to contribute either because of cash flow difficulties or because they face severe financial difficulty themselves. This will lead to a sudden drop in income that may have a severe impact on the charity’s ability to do its work.

The other charity depends mostly on public sector funding and, provided this funding is renewed on a timely basis, it may therefore have a more secure income stream. Uncertainty only arises at the time that the funding agreement comes up for review or renewal.

Both charities in this example may find that the impact on their local community of an economic downturn means that families in the community are struggling to manage and that both charities are dealing with a far higher number of potential beneficiaries than they had expected or planned to help.

In such a situation the trustees of both charities will need to draw up an outline of the steps that their charity should take in these circumstances. At the same time they will need to draw up a recovery plan, that could be activated when necessary, that would include alternative ways of raising funds, concentrating on core activities, reducing costs and taking advantage of any new opportunities that arise. Consideration of the risks attached to these areas would be part of the budget setting and forward planning process and also part of the ongoing monitoring of their charity’s performance throughout the year.

The commission’s guidance Charity governance, finance and resilience: 15 questions trustees should ask sets out a number of key questions that trustees can use as a basis for discussion at any planning meeting.

Example 2: Cutting costs

In this example, one charity is organising a garden fete and the other is organising a charity concert.

The organisers of the garden fete want to set out stalls and fun activities for children in a large private garden to raise funds for the village hall. They are expecting a good turnout of up to 200 people over the day. Since the event is being held on an English summer’s day, they may plan to have a tented area just in case of showers and a back up plan to use the village hall if it rains heavily. This means they wouldn’t need to take out insurance covering the effects of adverse weather conditions. In thinking through and planning the event, the trustees are taking account of risk in a very practical, pragmatic way.

The organisers of the charity concert may approach the weather risk differently as part of their planning. They may be hiring an outdoor venue, hiring seating, incurring costs in setting up a parking area and refreshments, and paying artists’ performance fees. The fete described in the previous paragraph was comparatively small with 200 people attending over the whole day, but the concert is planned to have 600 seats for a 3 hour early evening performance. The risk from adverse weather to the charity concert is viewed as so great that the extra cost of insurance is considered worthwhile.

*Note that even though facing the same risk of adverse weather, the scale and nature of the fundraising events can cause trustees to take a different approach to risk management.

2.4 What is disaster recovery planning?

As a part of an effective risk management process, a charity should consider what needs to be done if a serious event does take place. This could range from a fire or flood to a serious computer malfunction.

Charities should consider how their services to their beneficiaries would be affected as a result of a serious incident, including those with a major impact and a low likelihood, and plan to resume normal operations as far as and as soon as possible. Many charities develop disaster recovery plans (sometimes referred to as business contingency plans) and follow good practice procedures used in the public and private sector.

The scope and complexity of any disaster recovery plan will vary according to the size and activities of the charity concerned. However, the basic stages in establishing an effective disaster recovery or business contingency plan are likely to be similar to those shown in the following grid.

3. Knowing the requirements - the risk management statement

Who is responsible for risk management in a charity?
What are the legal requirements for charities in relation to risk management?
Which charities must have a risk management statement?
What does the risk management statement need to cover?
Does the risk management statement need to be audited?

3.1 Who is responsible for risk management in a charity?

The responsibility for the management and control of a charity rests with the trustee body and therefore their involvement in the key aspects of the risk management process is essential, particularly in setting the parameters of the process and reviewing and considering the results.

This should not be interpreted as meaning that the trustees must undertake each aspect of the process themselves. In all but the smallest charities, the trustees are likely to delegate elements of the risk management process to staff or professional advisers. The trustees should review and consider the key aspects of the process and results. The level of involvement should be such that the trustees can make the required risk management statement with reasonable confidence.

3.2 What are the legal requirements for charities in relation to risk management?

Legal requirement: charities that are required by law to have their accounts audited must make a risk management statement in their trustees’ annual report confirming that ‘…the charity trustees have given consideration to the major risks to which the charity is exposed and satisfied themselves that systems or procedures are established in order to manage those risks.’ (Charities (Accounts and Reports) Regulations 2008)

Major risks are those risks that have a major impact and a probable or highly probable likelihood of occurring. If they occurred they would have a major impact on some or all of the following areas:

environmental or external factors such as public opinion or relationship with funders
a charity’s compliance with law or regulation

Any of these major risks and their potential impacts could change the way trustees, supporters or beneficiaries might deal with the charity.

Charities will need to consider risk and its management in a structured way if a positive risk management statement is to be made. One method of reviewing and assessing risk through a ‘risk mapping’ exercise is set out in Part 4 .

3.3 Which charities must have a risk management statement? (Legal requirement)

Charities that are required to be audited: All charities that are under a legal requirement to have their accounts audited must make a risk management statement in their trustees’ annual report.

The statutory audit thresholds effective from 1 April 2009 are:

an income of £500,000 or more or

a gross income exceeding £250,000 with gross assets held exceeding £3.26 million

Further information on audit thresholds can be found on the GOV.UK website .

Smaller charities: Trustees of smaller charities with gross income below the statutory audit threshold (who should still be concerned about the risks their charity faces) are encouraged to make a risk management statement as a matter of good practice.

Incorporated charities (companies): Charities that are incorporated under company law (other than small companies [footnote 1] as defined by company law) must include a business review in their directors’ report. The business review must contain a description of the principal risks and uncertainties facing the company.

3.4 What does a risk management statement need to cover?

The purpose of the risk management statement is to give readers of the trustees’ annual report an insight into how the charity handles risk and an understanding of the major risks the charity is exposed to. It is also an opportunity for the trustees to comment on any further developments of risk management procedures being undertaken or planned.

The form and content of the statement is likely to reflect the size and complexity of an individual charity’s activities and structure. The commission is not seeking ‘template’ reporting, or requiring a detailed analysis of the processes and results. A narrative style that addresses the key aspects of the requirements is acceptable. This means:

an acknowledgement of the trustees’ responsibility

an overview of the risk identification process

an indication that major risks identified have been reviewed or assessed
confirmation that control systems have been established to manage those risks

Many charities, particularly larger charities or those with more complex activities, will, as a matter of best practice, expand on this basic approach in their reporting. Where this more detailed approach to reporting is adopted the following broad principles can be useful:

a description of the major risks faced

the links between the identification of major risk and the operational and strategic objectives of the charity

procedures that extend beyond financial risk to encompass operational, compliance and other categories of identifiable risk

the link between risk assessment and evaluation to the likelihood of its occurrence and impact should the event occur

a description of the risk assessment processes and monitoring that are embedded in management and operational processes

trustees’ review of the principal results of risk identification processes and how they are evaluated and monitored

3.5 Does the risk management statement need to be audited?

Although the risk management statement forms an important part of the trustees’ annual report, there is no requirement for the statement to be audited unless other requirements outside the Charities Act 2011 or the Companies Act 2006 apply. The regulatory requirements do not extend auditors’ duties but auditors who become aware of apparent misstatements or inconsistencies in the trustees’ annual report, based on their other audit work, will seek to resolve them and will need to consider the impact on their report, if such issues cannot be resolved. In extreme cases a reporting duty may arise where charity assets are at significant risk or have already been lost, auditors should be aware of their whistle-blowing obligations and may find the commission guidance Reporting Serious Incidents of help.

4. A risk management model

This part sets out a model for risk management covering the typical stages in the process and will be of use to those actually carrying out or involved in the identification and management of the risks a charity faces. The model can be adapted by any charity to suit its size and activities and covers:

Establishing a risk policy

Identifying risks

Assessing risks

Evaluating what action needs to be taken on risks

Periodic monitoring and assessment

For most charities, risk management has been incorporated into their management processes for many years. While there is no requirement or obligation for trustees to adopt any particular model, having a rigorous process and a clear risk management policy helps ensure that:

the identification, assessment and management of risk is linked to the achievement of the charity’s objectives

all areas of risk are covered - for example, financial, governance, operational and reputational

a risk exposure profile can be created that reflects the trustees’ views as to what levels of risk are acceptable

the principal results of risk identification, evaluation and management are reviewed and considered

risk management is ongoing and embedded in management and operational procedures

Stage 1: Establishing a risk policy

An effective charity regularly reviews and assesses the risks it faces in all areas of its work and plans for the management of those risks. The implementation of an effective risk management policy is a key part of ensuring that a charity is fit for purpose.

There are risks associated with all activities - they can arise through things that are not done, as well as through ongoing and new initiatives. Charities will have differing exposures to risk arising from their activities and will have different capacities to tolerate or absorb risk. For example, a charity with sound reserves could embark on a new project with a higher risk profile than, say, a charity facing financial difficulties. Risk tolerance may also be a factor in what activities are undertaken to achieve objectives. For example, a relief charity operating in a war zone may need to tolerate a higher level of risk to staff than might be acceptable in its UK-based activities in order to achieve its objectives. A charity will also need to look at the risk profile, ie the balance taken between higher and lower risk activities.

These considerations will inform the trustees in their decision as to the levels of risk they are willing to accept and may provide a benchmark against which the initial risk assessment is undertaken. The risk assessment and evaluation in turn will inform the trustees of the charity’s overall risk profile and the steps taken to manage the major risks identified. This will help the trustees agree their policies on risk. Trustees need to let their managers know the boundaries and limits set by their risk policies to make sure there is a clear understanding of the risks that can and cannot be accepted.

Stage 2: Identifying risks

Although there are various tools and checklists available, the identification of risks is best done by involving those with a detailed knowledge of the way the charity operates. Whilst the risk management statement focuses on major risks identified by trustees, input into this process will extend beyond the trustee body (except perhaps in the smallest charities).

Examples of what a charity will need to consider as part of this process include:

the charity’s objectives, mission and strategy

the nature and scale of the charity’s activities

the outcomes that need to be achieved

external factors that might affect the charity such as legislation and regulation

the charity’s reputation with its major funders and supporters

past mistakes and problems that the charity has faced

the operating structure - for example using subsidiary trading companies, collaborating in a joint venture; branches or an affiliated structure where a parent body offers support to its members or affiliated bodies

comparison with other charities working in the same area or of similar size

examples of risk management prepared by other charities or other organisations

For this process to work, trustees and executive management need to be committed to it. All staff and volunteers will need to understand the part they should play in risk management. Trustees will need to consult widely with key managers and staff, as ideas are likely to come from all levels of the organisation. Internal workshops involving management, staff and volunteers are often used to gather information. Some workshops can involve supporters and beneficiaries where reputational risk or provision of service to beneficiaries is being considered.

Where the charity conducts some of its activities through affiliated members, branches, subsidiary companies or joint ventures which are legally separate entities, risks may arise that could directly or indirectly impact on the charity. For example, events in a subsidiary trading company may affect income streams to the charity, give rise to reputational risk or may even affect operational objectives directly if the subsidiary is used as a vehicle for service delivery. The risk identification process, whilst focusing on the risk to the charity itself, is therefore also likely to include identifying risks that may arise in branch, subsidiary company or joint venture activities. The trustees of a charity may seek to ensure that the directors of subsidiary companies also adopt similar risk management procedures, with the results being reviewed by the charity’s trustees or incorporated into the overall risk management processes of the charity.

There are a number of models or frameworks that provide a classification of the type of risk to which an organisation can be exposed. Most models can be adapted to fit the charitable sector. Annex 2 sets out one possible framework, looking at risk across the following categories:

operational risk

finance risk

environmental and external risk

law and regulation compliance risk

It is important to appreciate that the process of risk identification must be charity specific reflecting the activities, structure and environment in which a particular charity operates. It follows from this that Annex 2 should not be used as a checklist, but rather to illustrate the type of risks that may be faced.

Similarly, although the process of risk identification should be undertaken with care, the analysis will contain some subjective judgements - no process is capable of identifying all possible risks that may arise. The process can only provide reasonable assurance to trustees that all relevant risks have been identified.

Stage 3 Assessing risk

Identified risks need to be put into perspective in terms of the potential severity of their impact and likelihood of their occurrence. Assessing and categorising risks helps in prioritising and filtering them, and in establishing whether any further action is required. One method is to look at each identified risk and decide how likely it is to occur and how severe its impact would be on the charity if it did occur.

This approach attempts to map risk as a product of the likelihood of an undesirable outcome and the impact that an undesirable outcome will have on the charity’s ability to achieve its operational objectives. It enables the trustees to identify those risks that fall into the major risk category identified by the risk management statement.

In previous guidance the commission set out a risk management methodology that focused on considering both the impact of a risk and the likelihood of it occurring, giving them equal importance. Using this method, the impact score is usually multiplied by the score for likelihood and the product of the scores used to rank those risks that the trustees regard as major risks.

In recent years, methodologies for measuring risk impact and likelihood have developed further. Many organisations now take account of events that are rare or unprecedented, where the rules are unknown or rapidly changing or where risks are driven by external factors beyond their control. These risks which have very high impact and very low likelihood of occurrence are now accepted by many as having greater importance than those with a very high likelihood of occurrence and an insignificant impact. In these cases, the concept of impact and the likelihood of risks occurring and their interaction should be given prominence in both the risk assessment and risk management processes. Using the method outlined in the previous paragraph, they would have scored the same.

If an organisation is vulnerable to a risk that potentially might have an extremely high impact on its operations, it should be considered and evaluated regardless of how remote the likelihood of its happening appears to be. Charities need to find a balance and they will need to weigh the nature of the risk and its impact alongside its likelihood of occurrence. With limited resources, the risks and the benefits or rewards from the activity concerned will need to be considered. It is important to bear in mind that on rare occasions improbable events do occur with devastating effect, at other times probable events do not happen.

A focus on high-impact risk is important, but trustees should not forget that what may be a lower impact risk can change to very high impact risk because of the possible connection between it happening and triggering the occurrence of other risks. One low impact risk may lead to another and another so that the cumulative impact becomes extreme or catastrophic. Many studies have shown that most business failures are the result of a series of small, linked events having too great a cumulative impact to deal with rather than a single large event. If organisations only look at the big risks they can often end up ill-prepared to face the interaction of separate adverse events interacting together.

The following tables can be used to provide some guidance on the 1-5 scoring illustrated in this section.

The ‘heat map’ below shows a different way of assessing risk by increasing the weighting of impact. This works on a scoring of xy+y where x is likelihood and y is impact. This formula multiplies impact with likelihood then adds a weighting again for impact. The effect is to give extra emphasis to impact when assessing risk. It should be remembered that risk scoring often involves a degree of judgement or subjectivity. Where data or information on past events or patterns is available, it will be helpful in enabling more evidence-based judgements.

In interpreting the risk heat map below, likelihood is x and impact is y.

The image below shows the same heat map with colour codes.

The colour codes are:

Red - major or extreme/catastrophic risks that score 15 or more
Yellow - moderate or major risks that score between 8 and 14
Blue or green - minor or insignificant risks scoring 7 or less

Some suggest an even greater weighting for impact and use a formula of xy+2y.

Stage 4 Evaluating what action needs to be taken on the risks

Where major risks are identified, the trustees will need to make sure that appropriate action is being taken to manage them. This review should include assessing how effective existing controls are.

For each of the major risks identified, trustees will need to consider any additional action that needs to be taken to manage the risk, either by lessening the likelihood of the event occurring, or lessening its impact if it does. The following are examples of possible actions:

the risk may need to be avoided by ending that activity (eg stopping work in a particular country)

the risk could be transferred to a third party (eg use of a trading subsidiary, outsourcing or other contractual arrangements with third parties)

the risk could be shared with others (eg a joint venture project)

the charity’s exposure to the risk can be limited (eg establishment of reserves against loss of income, foreign exchange forward contracts, phased commitment to projects)

the risk can be reduced or eliminated by establishing or improving control procedures (eg internal financial controls, controls on recruitment, personnel policies)

the risk may need to be insured against (this often happens for residual risk, eg employers liability, third party liability, theft, fire)

the risk may be accepted as being unlikely to occur and/or of low impact and therefore will just be reviewed annually (eg a low stock of publications may be held with the risk of temporarily running out of stock or loss of a petty cash float of £25 held on site overnight)

Once each risk has been evaluated, the trustees can draw up a plan for any steps that need to be taken to address or mitigate significant or major risks. This action plan and the implementation of appropriate systems or procedures allows the trustees to make a risk management statement in accordance with the regulatory requirements.

Risk management is aimed at reducing the ‘gross level’ of risk identified to a ‘net level’ of risk, in other words, the risk that remains after appropriate action is taken. Annex 1 gives two examples of how gross and net risk can be recorded in a risk register. Trustees need to form a view as to the acceptability of the net risk that remains after management.

In assessing additional action to be taken, the costs of management or control will generally be considered in the context of the potential impact or likely cost that the control seeks to prevent or mitigate. It is possible that the process may identify areas where the current or proposed control processes are disproportionately costly or onerous compared to the risk they are there to manage. A balance will need to be struck between the cost of further action to manage the risk and the potential impact of the residual risk.

Good risk management is also about enabling organisations to take opportunities and to meet urgent need, as well as preventing disasters. For example, a charity may not be able to take advantage of technological change in the absence of a reserves policy that ensures there are adequate funds, or perhaps could not organise a successful emergency relief programme without adequately trained staff and organisational structures. Annex 2 sets out some illustrative examples of the type of systems and procedures that can be put into place to mitigate an identified risk.

Stage 5 Periodic monitoring and assessment

Risk management is a dynamic process ensuring that new risks are addressed as they arise. It should also be cyclical to establish how previously identified risks may have changed. Risk management is not a one-off event and should be seen as a process that will require monitoring and assessment. Staff will need to take responsibility for implementation. There needs to be communication with staff at all levels to ensure that individual and group responsibilities are understood and embedded into the culture of the charity. A successful process will involve ensuring that:

new risks are properly reported and evaluated

risk aspects of significant new projects are considered as part of project appraisals

any significant failures of control systems are properly reported and actioned

there is an adequate level of understanding of individual responsibilities for both implementation and monitoring of the control systems

any further actions required are identified

trustees consider and review the annual process

trustees are provided with relevant and timely interim reports

One method of codifying such an approach is through the use of a risk register (see Annex 1 ). The register seeks to pull together the key aspects of the risk management process. It schedules gross risks and their assessment, the controls in place and the net risks, and can identify responsibilities, monitoring procedures and follow up action required.

The trustees can monitor risk by:

ensuring that the identification, assessment and mitigation of risk is linked to the achievement of the charity’s operational objectives

ensuring that the assessment process reflects the trustees’ view of acceptable risk

reviewing and considering the results of risk identification, evaluation and management

receiving interim reports where there is an area needing further action

considering the risks attached to significant new activities or opportunities

regularly considering external factors such as new legislation or new requirements from funders

considering the financial impact of risk as part of operational budget planning and monitoring

Annual monitoring by trustees supplemented by interim reports is likely to be sufficient for most charities where operating conditions are stable. Depending on a charity’s risk profile, more frequent monitoring might be advisable.

The commission are grateful to Pesh Framjee, Head of Not for Profits at Howarth Clark Whitehill for his contribution to the updated guidance on assessing risk Part 4.

Annex 1. Risk register template with examples of use

Risk management is aimed at reducing the ‘gross level’ of risk identified to a ‘net level’ of risk, in other words, the risk that remains after appropriate action is taken. This template has been created to illustrate a practical way of recording in a risk register how this reduction in level might be achieved by the charity. In example 1, the gross risk is identified as the lack of return/diversity of investment portfolio and rated as high. After identifying the procedures for managing this risk, the net risk has been rated as medium. Trustees need to form a view as to the acceptability of the net risk that remains after management.

Annex 2. Examples of potential risk areas, their impact and mitigation

The charitable sector is by its nature diverse. The nature of activities, funding base, reserves and structures will expose charities to differing areas of risk and levels of exposure. While the areas of risk identified below will deserve consideration by most charities, it is not an exhaustive list of all potential areas of risk and should not be a substitute for a charity undertaking its own processes for risk identification.

This list is intended to be an indication of some of the main areas of risk that may need to be considered by trustees. Illustrative examples of potential impact are given, as well as some illustrative examples of controls or action that might be taken to mitigate the risk or impact. Some risks will fall into more than one category. Although the list may be long, it is not exhaustive and there will be other risks that apply to a particular charity because of its own circumstances and activities.

The risks are classified as follows:

Governance risks

Operational risks, financial risks, environmental or external factors, compliance risk (law and regulation).

To be a small company at least two of the following conditions must be met: • annual turnover must be £6.5 million or less • the balance sheet total must be £3.26 million or less • the average number of employees must be 50 or fewer ↩

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Management structure

Market appraisal and current approach

Describe your current market:

Show you know your market:

Consider your potential/target audience:

Review the competition

Develop a competitive strategy for your organisation

Outline your marketing strategy

Financial appraisal

Risk register

Monitoring and evaluating your organisation

Organisational impact assessment

How will any additional costs created by the project continue to be funded?

What additional volunteer input will be required?

Are there any changes in governance or management that could affect the project?

Provide the following financial projections:

In carrying out this impact assessment you should:

Contact details for your organisation

Additional resources

Glossary of terms to do with business planning

Charity Strategy and Business Planning

CHARITY BUSINESS STRATEGY AND PLANNING

Related free charity resource library

Business Plan Template for Charity Organizations

Business Plan Template for Charity Organizations Benefits

Main Elements of Charity Organizations Business Plan Template

How To Use Business Plan Template for Charity Organizations

1. Define your mission and vision

2. Identify your target audience and beneficiaries

3. Outline your programs and services

4. Develop a fundraising and financial strategy

5. Establish a marketing and communication plan

6. Set goals, milestones, and measures of success

Get Started with ClickUp’s Business Plan Template for Charity Organizations

Template details

Charity Business Plan Template

Charity Business Plan

What is a Charity Business Plan?

Why You Need a Business Plan for a Charity

Sources of Funding for Charity Businesses

Finish Your Business Plan Today!

Executive Summary

Company Overview

Industry Analysis

Donor Analysis

Finish Your Charity Business Plan in 1 Day!

Competitive Analysis

Marketing Plan

Operations Plan

Management Team

Financial Plan

Income Statement

Balance Sheets

Cash Flow Statement

OR, Let Us Develop Your Plan For You

Charity Business Business Plan FAQs

How Do You Start a Charity Business?

Where Can I Download a Free Business Plan Template PDF?

Other Helpful Business Plan Articles & Templates

Charity Business Plan

How to Write A Charity Business Plan?

1. Executive Summary

Introduce your Business:

Market Opportunity:

Marketing & Sales Strategies:

2. Business Overview

Business Description:

Mission Statement:

Future Goals

3. Market Analysis

Target market:

Conduct SWOT analysis:

Regulatory Environment: