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Fundraising Nonprofit Strategy Wednesday Whimsy

Two Ways to Get Money: The Proposal and the Prospectus

I just read a prospectus seeking financial investment in a company. It prompted me to think about the major differences between the two kinds of documents designed to attract money. One is the fund-raising appeal. Nice graphics, attractive colors, and warm personal stories abound. And the premise if not promise is clear: once we get the money good things are bound to happen. The second is the prospectus used by businesses seeking capital. The text is long and dense, filled with words and numbers in small type. Lofty expectations are absent and no promises are made.

What if anything can philanthropy and the nonprofit world learn from the prospectus as a template? Here is my take on four prospectus elements I believe would greatly enhance annual appeals, capital campaigns, and the like. In all cases, the italics come from the prospectus I just read.

  1. The latest information. “We have not, and the underwriters have
    not, authorized anyone to provide any information or to make any
    representations other than those contained in this prospectus…
    ” In contrast, nonprofits donors are unsure if the latest information is
    on the website, in a brochure, a proposal, or a report, or on a website like Charity Navigator or GuideStar. And a date that says
    “as of” would be very helpful.
  2. Disciplined use of language “Certain Terms Used in this Prospectus.”
    This section of the Prospectus goes well beyond explaining
    acronyms to define operationally key terms and categories. In contrast, the appeal may use such terms as results, outcomes, and
    impacts interchangeably—often on the same page.
  3. Identification of risk. “Our future success depends on our ability to
    successfully adapt our business strategy to changing home buying
    patterns and Trends.
    ” This is an example of a clear caution in the
    prospectus section called Risk Factors. In contrast, fundraising
    appeals rarely suggest any possible factor that could reduce
    achievement when the money is gone. Investors in nonprofits as
    well as for-profits know that a group that does not identify key risks has no easy way of dealing with them if they occur.
  4. Clarity on past results. We increased our revenues from $490.9
    million for the nine months ended September 30, 2019 o $672.7
    million for the nine months ended September 30, 2020.
    When is the last time you read in a fund-raising appeal that the group increased the number of kids now reading on grade level (or adults getting a job) from x to y? Given that past success is often the best predictor of future success, this seems of vital importance to philanthropic investors.

Come on, nonprofits. Let’s see some experiments to bring in these elements that can nudge us from stating our values at rest in a beliefs or mission statement to reflecting values in motion from what we achieve.

By Hal's Results First

Hal Williams 
Outcome Guide

… is a resource for foundations,
governments, and nonprofit
organizations that seek to define,
track, verify, and communicate the
results they achieve.

One reply on “Two Ways to Get Money: The Proposal and the Prospectus”

This is really very instructive and the nonprofits would benefit from this advice.
The problem with a prospectus is that it usually so dense because of all the regulatory requirements that it is sometimes hard to understand what the investment is f
Perhaps there is a blending of the two forms of requests especially because the nonprofit appeal is supposed to give the reader some sense of the human impact of what it is doing. The prospectus is appealing to an ROI motivation.

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