If you’ve worked in the nonprofit sector long enough, you’ve likely encountered these stories—and they may have even happened to you: The Board increase the revenue goals for next year but provide no additional investment in fundraising staffing or infrastructure to support those lofty targets. Or how about when you’re halfway through the year and the leadership announces that a $300K government contract has failed to pay, leaving payroll at risk and that the Development Director need to call up a some individual donors to magically fill the gap?
When revenue goals aren’t met or cash flow issues arise, the blame often falls on development. But these are not development problems. These are revenue model and finance strategy problems, and no development plan in the world can fix them. If your nonprofit’s revenue model isn’t sound or its financial planning is shaky, your fundraising team is set up to fail—leading to unmet goals, burnout, and eventual turnover.
This is why, when I was asked to teach a course on Development Plans for the People’s Nonprofit Accelerator, I insisted on starting with a session on Revenue Plans and Finance Strategies. Development plans assume a sound financial strategy and an appropriate revenue model. If that assumption is flawed, the development plan is useless. As the examples above illustrate, so many challenges with development plans stem not from the plan’s integrity but from poor financial strategy or an inappropriate revenue model.
Let me say it again: You can’t solve problems through a development plan that are actually caused by an inappropriate revenue model. Understanding your organization’s model is essential to aligning resources and budgeting appropriately.
The Model of Success
Running a successful nonprofit requires a clear understanding of how your Revenue Model fits within your broader Business Model and how your Financial Strategy is built from that foundation. A Development Plan, in turn, is simply the structured compilation of strategies and tactics designed to achieve your goals within a specific timeframe—typically one year, though it can extend across multiple years for initiatives like campaign planning. Here’s how it all comes together:
For the Business Model framework, while many templates exist, I prefer the one from Public Interest Management Group, which includes five components: Theory of Change, Operational Framework, Value Proposition, Programmatic Approach, and Revenue Model.
A revenue model describes how an organization plans to fund the services it provides. A revenue model essentially functions as a pie chart of how money comes in—a combination of foundation grants, individual donors, government contracts, ticket sales, etc.
Signs Your Revenue Model Needs Work:
- Over-reliance on a single donor or a small group of donors.
- Revenue streams that don’t cover actual costs.
- Funding that’s too restricted to support core operations.
Often, revenue models develop organically and opportunistically but take years to stabilize. Importantly, the organization’s core capabilities must match its revenue model.
Based on my personal experience, I once encountered an organization that relied on individual donations for 15 years. When state funding became available, they pursued and won millions in grants but nearly went bankrupt because they lacked the systems to manage restricted funds or cash flow. Since most state and federal grants are paid on a reimbursement basis, they had to secure loans to cover the up-front costs of scaling the program. Unfortunately, they didn’t adequately track hours worked or manage receipts. When it was time to submit their reimbursement report, they could only claim a fraction of the funds they had been awarded and had huge debt to pay back.
Another example from my experience is a startup nonprofit designed to rely entirely on government grants. But when the government they depended on was unreliable and failed to pay, they faced significant trouble. They called me to help secure individual donors, but they didn’t even have a website, a payment gateway, or any communication materials! I am relieved to say that we were able to create all of these, and that in 9 months, we secured enough donations from individuals to continue the program as planned.
Financial Strategy
Financial strategy involves how a nonprofit deploys revenue and manages expenses. It’s not just accounting—it’s a forward-facing look at the money needed to run programs sustainably into the future. It involves deliberate decisions, such as whether to grow the team, build reserves, take on debt, or grow only when funding allows. Financial Planning Includes:
- Understanding the full cost of programs and operations.
- Forecasting income and expenses over 3-5 years (pro-forma budgets).
- Managing cash flow to avoid financial emergencies.
- Building reserves to weather unexpected challenges.
If financial planning is off, the development plan will reflect that. Unrealistic goals, misallocated resources, and constant stress are inevitable. Instead, align fundraising strategies with a clear, informed financial plan.
From my personal experience, the top issues I see in financial planning include:
- No pro-forma budget: Grants take 9-12 months to secure, major gifts take 18-24 months, and government funding often pays on a six-month delay. Yet many nonprofits only budget annually.
- Neglecting fundraising capacity: Organizations hire program staff when funding increases but fail to invest in fundraising staff, assuming more revenue will magically follow.
- Overestimating windfall gifts: Unexpected $1M bequests are not recurring. Organizations must plan for sustainability, not rely on rare events.
Development Plan
With a defined revenue model, the development plan outlines how you’ll secure revenue. It includes fundraising strategies, tactics, goals, and infrastructure requirements. While I’ve described the purpose and pitfalls of development plans in other articles, here I’ll emphasize this: If your revenue model is shaky, no development plan can save you.
A Good Development Plan Includes:
- An overview of the organization and current initiatives
- Revenue sources and amounts from the past two years
- A forecast of revenue projections for the duration of the plan
- Summary of 3-5 core strategies to secure that funding
- Annual calendar of key dates and milestones
- Acquisition, cultivation, and recognition tactics
- Infrastructure and resource needs
Aligning Fundraising and Finance
Successful nonprofits understand that fundraising and finance are two sides of the same coin. Fundraising strategies should flow from a well-designed revenue model, grounded in a solid financial plan and business model. When these elements are in sync, your development plan becomes a powerful tool for growth—not just another document gathering dust.
So, the next time you’re staring down a development plan that isn’t working, resist the urge to fix it with a quick fundraising hack. Instead, look upstream, align your strategy, and remember: fundraising isn’t just about bringing in money—it’s about supporting the financial health and mission of your organization.
