How to Create an Effective Revenue Plan

Transcription

1 How to Create an Effective Revenue Plan a social VELOCITY step-by-step guide How to Create an Effective Revenue Plan What is a Revenue Plan? A revenue plan, unlike a traditional fundraising plan, is an integrated, thoughtful, and strategic way to help a nonprofit achieve social impact in a more sustainable way. The revenue plan is a key element of a nonprofit s strategic plan. It is critical that an organization understand the cost of achieving the goals set out in the strategic plan (expenses) and how it will pay for them (revenue). Fundraising, raising money from private sources (individuals, foundations, and corporations), is just one revenue options available to nonprofits. Additional options include: earned income (selling a product or service), government grants, fee for service, and corporate sponsorships, just to name a few. A revenue plan differs from a fundraising plan in a number of ways. Unlike a fundraising plan, a revenue plan: Includes ALL activities that bring money in the door in a fully integrated strategy and execution plan. Supports the short AND long term goals of the organization. Funds the programs AND infrastructure of the organization. Employs money-securing activities that are in line with the core competencies of the organization. With a clear revenue plan, your nonprofit will bring more money in the door, in a more sustainable way, ultimately achieving greater social impact. How to Use This Guide This guide is designed to help you build a revenue plan for your nonprofit. It is divided into 6 parts and can be completed in a couple of hours, if you have all of the necessary information in front of you. If you would like to include board and staff in the process, you can pause between sections and work through it over a few weeks. 1. Analyzing Revenue Sources 2. Assessing Fundraising Infrastructure 3. Determining Infrastructure Costs 4. Drafting the Revenue Plan 5. Brainstorming Road Blocks 6. Monitoring the Plan 1

2 Part 1: Analyzing Revenue Sources Identify Sources of Revenue Identify each source of revenue and determine the percentage raised from each source. List how much money from each source comes into your organization annually: Revenue Source Foundation grants $ Individual donations (include events) $ Corporate dollars $ Government grants $ Earned income (sale of goods/services) $ Other: $ TOTAL $ Annual Income Now, determine the percent that each revenue source contributes to the total. The formula to determine the % is ((Annual income from each revenue source Total revenue) x 100) Revenue Source Annual Percentage Foundation grants % Individual donations (include events) % Corporate dollars % Government grants % Earned income (sale of goods/services) % Other: % TOTAL 100% Forecasting Budget Growth Think about what you would like your budget to be three years from now. In the space below, roughly estimate the dollar amount to which you would like your overall budget to grow. Current Year Budget (total take from above): $ 3 Years From Now Budget Goal $ Percent Change [(future budget - current budget) / current budget] X 100 % 2

3 Additional Revenue Opportunities Take a look at each of your current sources of revenue. Are there any areas that are generating only a small amount or no money at all? Alternatively, are there things you could do to increase current revenue lines that are already strong? Brainstorm some ways your organization could increase revenue line items: Revenue Source: Ideas to increase revenue: Revenue Source: Ideas to increase revenue: Revenue Source: Ideas to increase revenue: Do you currently have any activities that earn income (where you sell a product or service for a profit) for your organization? If yes, skip to the next question. If no, do you think there is any potential to sell products/services? If so, list some of your ideas in the box: Ideas for products and services: Is the percent of individual donations you raise below 20%? If so, there is probably potential for your organization to grow this source of revenue. List ways that you could increase individual support: 3

4 Ideas to increase individual support: Part 2: Assessing Fundraising Infrastructure In order to effectively raise money you need a certain level of infrastructure (staffing, technology, systems, marketing materials, etc). This section will allow you to assess your current level of fundraising infrastructure. Current Infrastructure Assessment Put a check mark next to everything your organization currently possesses in the table below: A donor database Dedicated fundraising staff positions (i.e. staff who only work on fundraising) A strategic plan A case for support (an articulated, compelling argument for why people should give to your organization) A written fundraising plan Job descriptions for the development staff A Board give/get requirement Frequent social media activity (Twitter, Facebook, organizational blog, YouTube, etc.) An interactive website Adequate computers and other technology hardware (servers, printers, etc) Marketing materials (official logo, brochures, letterhead, etc.) Desired Infrastructure and Resources In order to grow your revenue to $ (see answer in part 1 above) in the next 3 years, what additional resources and infrastructure items (staff, technology, space, materials, training, etc) do you think you need? List of Desired Resources and Infrastructure Items: 1. additional details: 2. additional details: 3. additional details: 4. additional details: 4

5 Part 3: Determining Infrastructure Costs Now that you have thought about what it will take to bring in additional revenue over the next three years, you need to determine what it will cost. In the space below, list each item from Part 2B above and estimate the cost for each item over the next 3 years: Items Example: Development Director $150,000 plus benefits 1. $ 2. $ 3. $ 4. $ 5. $ TOTAL $ Part 4: Drafting the Revenue Plan Total Cost Over the Next 3 Years Now it is time to put your annual revenue plan together. Start by creating goals for each revenue area. Look at all your revenue sources from Part 1A and the additional opportunities for revenue in Part 1C and decide on a realistic and measurable goal for each revenue source. Revenue Goals Revenue Source Current Annual Income Goal for Next Fiscal Year Foundation grants $ $ Individual donations $ $ Corporate dollars $ $ Government grants $ $ Earned income $ $ Other/New: $ $ TOTAL $ $ When you create these goals, don t just think about what you have raised in that area in past years; think about how you would like to grow the overall organization budget over the next 3 years (answer to Part 1B above). Work to stretch your goals so that you will eventually get there. Make sure that each goal is measureable. For example: Raise $500,000 from individuals (measurable) Versus Increase revenue from individual donors (not measureable) 5

6 Infrastructure Goals Now create a goal for additional infrastructure (from Part 3 above) necessary to meet your revenue goals. Objectives Examine each goal and break it down into the parts required to achieve it. For example, look at your individual donations goal, and think about all the ways your nonprofit draws individuals to the organization (direct mail, online giving, major donors etc) and create an objective for each of those. Activities, Deliverables, Timeline Once you have your list of objectives, take each one and break it down into the laundry list of things that will need to happen (activities) to make that objective a reality. For each activity, list the deliverable (the final product) that will let you know that the activity has been completed. Add a person responsible for carrying out the activity and a due date to so they have a timeframe to work with. The Final Plan Below is a sample outline of what your final revenue plan should look like. Goal 1 Objective 1 Activity, deliverables, people responsible, due date Activity, deliverables, people responsible, due date Objective 2 Activity, deliverables, people responsible, due date Activity, deliverables, people responsible, due date Objective 3 Activities, deliverables, people responsible, due date Goal 2 Objective 1 Activities, deliverables, people responsible, due date Objective 2 Objective 3 Objective 4 Goal 3 Objective 1 Objective 2 and so on until you have listed all your revenue related goals, activities, and deliverables. 6

7 Part 5: Brainstorming Roadblocks As you review your work so far in this guide, what are the roadblocks you are anticipating? List each roadblock and brainstorm a potential idea or two for overcoming each: Roadblock Example: The board will refuse to meet their new give/get requirement. 1. A. 2. A. 3. A. 4. A. 5. A. Part 6: Monitoring the Plan Potential Solution(s) Train the board on fundraising to make them more comfortable with their role. It is important that you have pre-defined ways to monitor whether the plan is working. Set up a process to assess how you are doing on the plan. Are activities getting accomplished? Are goals being met on time? Are you raising as much money as you thought you would? Create a system to make sure you track the right things, deliver on the plan, and revise when necessary. Describe how you will monitor the plan in the space below: This is how we will check that our activity due dates are being met: Now, schedule some time to make sure you have an opportunity to monitor the overall plan on a regular basis with staff and board. We will evaluate this plan with staff every We will evaluate this plan with the board every 7

8 Next Steps: You can raise more money, in a more sustainable way, but you need a plan to get there. We ve given you a start at creating your plan. After you have completed this guide, here are some things you can do to make your plan even stronger: If you got stuck and would like some help from Social Velocity to get you back on track us at info@socialvelocity.net. If you would like Social Velocity to guide you through the creation of your earned income stream or social enterprise, let us know. You can read about what is included in our business planning process here and read a case study from one of our clients here. We hope you found this guide helpful. As always, we welcome your feedback about any of the Social Velocity tools you use. Please us at info@socialvelocity.net with questions, comments or feedback. Good luck! This guide was designed to help you transform your nonprofit. If you want a more customized approach, or need help overcoming roadblocks, call us at (512) or us at info@socialvelocity.net. Social Velocity is a management consulting firm that helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. The organizations we leave behind are more strategic, more sustainable, more engaged, more invested and above all, creating more social impact. There is a better way. We d like to help you find it. 8