Tipping Points: Strategy and Considerations
This is the first in a series of posts which will delve into the nuts-and-bolts of raising funds on StartSomeGood. We hope you find them helpful! Please add any questions you have in the comments below.
In the earliest days of designing StartSomeGood we debated whether to adopt the Kickstarter-style “all-or-nothing” model or IndieGoGo’s “keep what you raise.” What if, we wondered, we could combine the best features of both and create a model uniquely designed for social entrepreneurs. And thus the idea for the Tipping Point was born.
What is the tipping point and how can design your campaign to take advantage of it?
On StartSomeGood you nominate two fundraising goals: your total goal and your tipping point goal. Your total goal is the dream amount you would like to raise to start the maximum amount of good. The tipping point is the all-or-nothing component of your campaign: this is the target you must reach in order to receive your pledges.
Why is this better for social entrepreneurs?
Because this is what we already do when we fundraise for community projects. I’ve spent my whole adult life involved in this process: designing projects, writing grant applications and fundraising from my community. The target amounts for these campaigns usually represented our dream budget, with everything we felt would give us the greatest chances of success. They were ambitious stretch goals. But there was a second amount we always had in mind: the minimum amount we needed to start good.
For example, if we were trying to raise $15,000 for a project, we might be prepared to launch even if we only raised $10,000, cutting out some of the non-essential elements, or running a more limited pilot. This amount was the minimum we felt we needed to start good, the point at which we were prepared to get out there and make things happen.
The Tipping Point model makes these dual targets visible and transparent.
We ask entrepreneurs to consider how much money is enough for them to commit to starting good? Because however well-intentioned you can’t always start something from nothing. Even with all the volunteer support and community good-will in the world, some things cost money. Which is why having an all-or-nothing component of the campaign is important: changemakers can’t be expected to implement their vision regardless of the support they received. Having a tipping point gives both donors and entrepreneurs security of outcome: your money only goes to the project if they have sufficient funds to deliver on their commitments, and entrepreneurs aren’t expected to work miracles if this support isn’t there.
Why not just have a single all-or-nothing goal?
Because with an all-or-nothing goal entrepreneurs tend to be expressing only this lower, minimal, goal, fearful of aiming for too much, falling short and getting nothing. We want to allow social entrepreneurs to express more ambitious goals without risking everything. This ensures projects can more clearly express the social impact made possible by different levels of funding rather than just a single amount.
Tipping Points must represent the real tipping points in projects.
If your goal is to launch a program in two cities you can easily launch in just one if you only raise half your total goal. But if your project involves the purchase of a bus you cannot simply buy half a bus if you fall short. Hence the Tipping Point.
They also represent the amount of risk you are prepared to take on.
Do you go for the dream amount but risk falling short or identify a more modest goal which would still allow you to start some good? In evaluating this remember that the game dynamic of tipping points is very powerful: with funds already raised on the line your community is more likely to rally around your goal at the deadline to get you over the line. Indeed, no campaign that has got even remotely close has ever fallen short. So far the closest anyone has gone to their tipping point without then reaching it is 33%.
This is partly because Tipping Points work like a matching grant – you use the funds pledged from your initial supporters to inspire your less-fervent supporters to chip in, increasing the impact of their contribution as you approach your tipping point.
We are committed to giving social entrepreneurs flexibility in designing their campaign, trusting that they understand better than us what is required to create the change they seek in their communities. Just as StartSomeGood welcomes all forms of social change initiatives, non-profit, for profit and unincorporated, we also allow each campaign to choose what component of their campaign is all-or-nothing, ie. the placement of the Tipping Point, which can be between 25 and 100% of the total project goal.
We are always here to help you think through these issues and design a campaign that works best for you. If you are ready to start some good please get in touch!
Come Join Our Webinar on Crowdfunding
Come join StartSomeGood co-founder Tom Dawkins present a webinar on crowdfunding Tuesday, July 26 at 7PM Eastern Time! To RSVP for the event (spaces are limited), please email hello@startsomegood.com to receive GoToMeeting log-in information.
What?
Crowdfunding is the term du jour when it comes to fundraising. The success of IndieGoGo and Kickstarter, along with newer players like StartSomeGood, have inspired both social and business entrepreneurs to re-think their strategy around the crowd. However more than 2/3 of all crowdfunding campaigns fail and clear lessons can be drawn about what works and what doesn’t. Come and hear one of the founders of StartSomeGood present lessons about what it takes to succeed and the new ways entrepreneurs are raising funds and building community to turn their ideas into action.
When? (Note these are all the same time, just adjusted for time zones)
Tuesday, July 26, 4PM Pacific Time (San Francisco)
Tuesday, July 26, 7PM Eastern Time (Washington, DC)
Wednesday, July 27, 9AM Sydney, Australia
Australian tour take-aways
I was recently in Australia to attend two weddings and three speaking events in Sydney, Melbourne and Adelaide. Thank you to Vibewire, The School for Social Entrepreneurs Australia and The Australia Centre for Social Innovation (TACSI) for hosting me.
The great thing about these events was the chance, after three years out of the country, to reconnect with the social entrepreneurship sector in Australia and, especially, to meet so many inspiring changemakers. There’s a real energy around social entrepreneurship in Australia, fueled by SSE Australia, TACSI and other groups like the Australian Social Innovation Exchange (ASIX), none of which were operational when I left in 2008.
But it takes more than great peak organizations to fuel a movement – it takes passionate and committed individuals prepared to devote themselves to the hard work of making things better. I met many of those on my trip, their eyes sparking with ideas, their minds ablaze with possibility, their energy engaging and connecting. As is always the case after I have the opportunity to spend time with social entrepreneurs, they made me feel better about the future.
At the crowdfunding panel at Hub Melbourne I was very proud to share the stage with two organizations I admire: Australia creativity crowdfunding platform Pozible and the Melbourne chapter of the Awesome Foundation.
There was a clear interest in crowdfunding from the attendees at the events, as is always the case with anything funding-related, and I thought it would be worth capturing here some of the main questions I got and my responses to them.
• Is crowdfunding new? Not really, although the term is quite new. Crowdfunding has been here for a very long time, it simply describes the act of gathering funding from a larger group of people in relatively smaller amounts to fund projects. People collecting money in mall’s are crowdfunding, but what’s new is first the technology to do this efficiently, second the widespread confident to contribute money online and most recently the addition of game mechanics such as all-or-nothing deadlines.
• Is crowdfunding the right word for what’s happening? I don’t think so. “Crowd” seems to imply some anonymous mass just waiting to shower you with money, and that’s not generally what happens. What’s more common is platforms like Pozible and StartSomeGood provide you with great tools to reach out and attract support from a community you’ve already created. Ie. Your peers.
• Why are there restrictions on who can fundraise on Pozible and StartSomeGood? This question came on the heels of questions about how Pozible and StartSomeGood were planning to build a community looking to support great projects, helping projects find new supporters beyond their existing networks. These are two halves of the same coin: by placing boundaries around our community, defining what our intention and focus is, we are more likely to create a community of at least somewhat like-minded individuals who are more likely to be interested in your project, whether it’s social impact (StartSomeGood) or creative (Pozible). Or Awesome, of course (Awesome Foundation).
• What about ongoing funding? This already exists of course, you can put a paypal donate button on your site and there, potentially, is your ongoing funding. But in practice this is hard and people like donating to specific things, and respond well to deadlines and goals. However once we’re more established the idea of allowing non-project-specific donations on Venture pages is an interesting one.
• What makes people give? First and foremost, being asked. You can’t be too shy to ask. The number 1 reason people don’t give to charity is because no one ever asked them. People who know you will, often, be interested in supporting your project. Ask your family, friends, work colleagues, old school mates. But while being asked is almost a necessary pre-condition to giving what gets people off the fence is an inspiring vision (not just focusing on the problem but proposing a solution), a specific ask (how much do you need and what for), the sense of being part of something and, in the case of us and Pozible, exciting and unique rewards.
• How do you ask? Simply tweeting and Facebook status updating about your campaign is not an effective ask. You can tweet something ten times and still 75% of your followers may not have seen it. Write emails. Pick up the phone. Get people to an event. Make sure they know your campaign exists and why you need their help, or you won’t get the support you deserve.
Thank you to everyone who came out to one of the events and special shout-outs to those who made it to the after-drinks in Melbourne and Adelaide, you know who you are.
Until next time!
