Family Philanthropy Playbook for Community Foundations

Unit 1: Getting Started

This unit grounds you in basic concepts in financial modeling in general and in the business models of community foundations and their family philanthropy services.

READ: Basic Terminology

What are the differences between a business plan, business model, and financial model?

In their book The Nonprofit Business Plan, consultants from La Piana Consulting write that a nonprofit business plan “tests the proposition that a particular undertaking—program, partnership, new venture, growth strategy, or the entity as a whole – is economically and operationally viable.”

This whole Playbook site and the Business Model Canvas tool are tools for business modeling. The La Piana Consulting team wrote that “The nonprofit business model is the interplay of an organization’s scope (geographic, programmatic, and customers served) with its economic logic (how it structures and pays for itself).” They note that a good business plan reassures its readers that the business model “really does makes sense and has a high likelihood of success.” What is a Business Model? by Harvard Business Review’s Andrea Ovans adeptly summarizes 10 years of evolving thinking on the definition and structure of a business model.

This Module focuses on the underlying financial model—the “economic logic”—of a business model. The financial model forecasts revenue streams and cost structure over time and articulates the assumptions made about both.

READ: Philanthropic Services Business Modeling [members only]

Community foundations face tough choices about their overall business models and the financial models for specific products and services. This white paper summarizes insights on those choices from inside and outside the community foundation field. It may be particularly helpful to staff and volunteers newer to the field of community foundations.

BORROW AND ADAPT: Family Philanthropy Services Financial Model Template [members only]

NCFP developed this Excel template to help you estimate a financial model for your family philanthropy services. It includes a tab with instructions, a tab with a start-up year and three years of cashflow projections, and a tab with more detailed assumptions.

DO: Other Business Modeling Tools

Community foundations have two tools available for deeper business modeling work.

CF Insights – the Foundation Center’s suite of resources for activity-based costing to assess your products and services, economic scenario planning, peer analysis, and more. The basic tools and instructions are free if you want to do the work on your own. Foundations subscribe to obtain guidance and the tools and customize peer benchmarking reports.

Sustainability Costing Tool (Indiana Philanthropy Alliance, Council of Michigan Foundations and Philanthropy Ohio, 2016) – an Excel template and instructions developed for small and mid-sized community foundations, the tool is simpler and quicker than the tools offered by CF Insights. It costs $50 for foundations that are not members of one of those associations.