We got a great email from a reader that I thought I’d share.
“Dear Suzanne, we are working with a ‘big-fish’ entrepreneur and instead of a grant, she is asking us for a prospectus. We have researched this term and don’t see how to apply it to our nonprofit. Can you help?”
This is a great question. In the world of for-profit entrepreneurship, a prospectus is an easy way for investors to size up a company and decide whether they want to invest. As the social sector shifts from a donor model to an investor model, prospectuses are a handy tool to have in your back pocket. They can be your lucky charm and help business leaders understand nonprofits in a new and different way.
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 and program tool that serves as the abridged version of your organization’s story for investors.
The prospectus is a short document that provides a summary of the most relevant aspects of your organization or venture – whether a program or a social enterprise. A prospectus outlines what your organization does, your vision for the future and the resources you need to achieve that vision. It is the next logical step once you have refined your business model. The prospectus can be used as an introduction to your organization and a leave-behind at investor meetings and presentations.
The good news is that if you can write a grant, you can easily write a prospectus. We suggest five components to a social sector version of a prospectus.
- Organizational Overview:
This section showcases the who behind the project. In 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:
This section describes your why. Answer the question: what problem are you trying to solve? Set up why there is a problem using facts that clearly illustrate the need in the community or marketplace. Then, demonstrate why this issue is important not only for the clients you serve, but also for society at large. For example, take a look at the prospectus Social Impact Architects 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:
This section defines your how – make the case for how your organization can solve the problem. Don’t forget to show how your approach is different or more effective. Show your accomplishments, such as awards, a client success story and other evidence of your social impact.
This section delineates your what – what kind of financial support is needed and what your vision for sustainability is. It is important to identify how investors can support your need. For example, “The Trans4m Center’s goal is to train 3,800 individuals a year and become self-sustaining.”
- Programs Goals & Evaluation:
This section outlines when and how you will measure your success. This shows how investors will know when you are successful. Describe the metrics you use to assess both program performance and social impact. For performance metrics, examples could include current and projected attendance, hours of service provided, number of additional volunteers or increase of in-kind donations. For social impact metrics, an example could be “95% of participants will be highly satisfied with The Trans4m Center’s trainings.”
Prospectuses are a very effective tool to sell to entrepreneurs because they are in a format and language they understand. The key to a great prospectus is “thinking like an investor” and selling them on both social and financial results. If you decide to use a prospectus to land your next “big fish,” keep us posted on your success – we cannot wait to hear about it! Also, if you have a question for us, please let us know. We welcome your ideas, questions and feedback.