If you’re a nonprofit or business leader, you’ve likely heard about all the different kinds of planning you need. There are business plans. Strategic plans. Project plans. Marketing plans. A donor might ask you for a proposal. A client might ask for a prospectus.
It’s a lot to keep track of—especially when you’re busy running an organization. That’s why it’s important to get clear on the purpose of each document, what it should include, and how to use it successfully.
Today, let’s start by comparing two different products that can be easy to confuse: the prospectus and the strategic plan.
Prospectus vs. Strategic Plan
What is a prospectus?
The term prospectus has different meanings based on the context. In its most general sense with businesses and nonprofits:
- A prospectus is a printed booklet or brochure that serves as a promotional piece. The purpose is to provide stakeholders such as donors, investors or clients with a polished and compelling overview of an organization.
Some sectors have even more specific definitions:
- In research, a prospectus is a preliminary plan or proposal for a research study. This is designed to demonstrate the value of the research project and garner support for undertaking it.
- In finance, a prospectus refers to a formal document that the Security and Exchange Commission requires of companies seeking public investment. For example, whenever a company makes an initial public offering, they will have filed a prospectus with the SEC in advance. This is designed to help potential investors evaluate the opportunity.
Across these meanings, however, a prospectus still shares some commonalities:
- A prospectus is designed for audiences external to an organization (clients, investors, research committees).
- A prospectus provides an overview of an opportunity (to work with an organization, to invest in a company, to sponsor a research project).
- A prospectus provides functional information (research methods, company financials).
What is a strategic plan?
In contrast to a prospectus, a strategic plan has one primary definition, though it may be expressed in different ways.
- A strategic plan is a written roadmap for where an organization is going, how it will get there, and specific ways to determine if the organization has “arrived” at the destination. A strategic plan generally covers a 3-5-year period, and includes vision and mission statements, goals, objectives, outcomes, and measures of success.
A strategic plan serves several purposes for an organization:
- A strategic plan is designed first and foremost to set internal organizational strategy.
- A strategic plan should be used to prompt and guide strategic decision-making on an ongoing basis.
- A strategic plan is generally informed by stakeholder input, which may include staff, board, volunteers, clients, and more, as well as assessment tools like a SWOT analysis.
- A strategic plan is the result of a process designed to create alignment and shared focus across an organization.
Yes, a strategic plan can be shared with external audiences, but its first and primary purpose is as a tool for organizational leaders.
Difference between a prospectus and a strategic plan
Despite their very different purposes, a prospectus and a strategic plan may include several similar pieces of information. Such as an organization’s:
- Vision and mission
- Goals and objectives over a defined period
- Strategies planned to achieve those objectives
- Examples of past successes
- Financial information
But that’s where the similarity ends. Because each tool is designed for a very different function:
- A successful prospectus inspires external audiences.
- A successful strategic plan guides an organization’s leadership in achieving shared goals.
So, could these two tools work together?
What Comes First: The Prospectus or the Strategic Plan?
The best practice is that organizations align on internal strategy before publicizing it with external audiences, such as clients, investors, or donors.
Which means the natural flow of work would be to first undertake a strategic planning process that will align your organization’s leadership—as well as staff, board, volunteers, etc.—internally. Then, with your strategic plan in hand, create a prospectus that tells an irresistible story about the work your organization is poised to accomplish.