Just like you don’t want to read a whole book to decide if it’s the one you want to buy, investors generally can’t spend hours gathering basic facts about your organization to make investment decisions. Enter the prospectus, a powerful fundraising tool that serves as the “CliffsNotes” version of your organization’s story for investors.
Like CliffsNotes, the prospectus is a short document that provides a summary of the most relevant aspects of your business venture. A prospectus outlines what your organization does, your vision of the future and the resources you need to achieve that vision. It is the next logical step once you have refined your business pitch. The prospectus can be used as an introduction to your organization and a leave-behind at investor meetings and presentations. There is no template that you need to follow when writing your prospectus, but every strong one should include the following:
Overview of your organization: This is your hook – in just a few sentences, tell your organization’s story and vision for future growth. You could include your mission statement, target audience, and programs or services offered.
Need for Change: What problem are you trying to solve? Use specific facts that clearly illustrate the need in the community or marketplace, and demonstrate why this issue is important not only for the clients you serve but also society at large. For an example, take a look at the prospectus Social Impact Architects recently helped Rainbow Days craft for its training division, The Trans4m Center. This section of the prospectus illustrates the need for services by showing the increasing number of at-risk children and the struggle other service providers face in meeting that need. (Can’t find the statistics you need? Check out this new tool!)
Opportunity for Social Impact: Make the case for how your organization can solve the problem you described above—what makes your approach different or more effective? Show your accomplishments, such as awards, a client success story and other evidence of your social impact.
Financials: Investors want to be sure that your program is financially stable and that your budget is realistic and calculated. In this section, it is helpful to include the following:
- Evidence that you have revenue to sustain the program; for example, discuss major grants you’ve received or progress you’ve made in securing revenue streams that make your financial plan more viable.
- A vision for how additional funds will allow you to grow, strengthen or improve your program. Be specific! For example, “The Trans4m Center’s goal is to train 3,800 individuals a year and become self-sustaining.”
Program Goals and Evaluation: How will the investor know that your program has been successful? Describe the metrics you use to assess both program performance and social impact.
- Performance Metrics: Examples could include current and projected attendance, hours of service provided, number of additional volunteers or increase of in-kind donations.
- Social Impact Metrics: For example, “95% of participants will be highly satisfied with The Trans4m Center’s trainings.”
We hope you feel inspired by the Social Impact Exchange’s business plan competition and start refining your own business pitches or prospectuses! It was an honor to serve on Tuesday as a judge for the Social Impact Exchange and we wish to congratulate Friends of the Children for winning the newly-named Greg Dees Scaling Social Impact business plan competition. Nonprofits have been successful at using these tools to garner support for their initiatives, and we invite you to share your successes with us. Please join us next week when we report from the U.S. Conference of Mayors.