Prize competitions are useful tools for philanthropists interested in sourcing or scaling innovative solutions from a broad array of perspectives and innovators that operate outside of their immediate network. Going beyond the “usual suspects” allows for a variance of ideas and, ideally, prototypes for novel social solutions. By providing a concrete incentive, competition sponsors can inspire participants to devise promising solutions to widespread, intractable problems.
While only one or a small number of organizations will receive the philanthropic prize—usually a monetary gift, network recognition, or an employment/business development opportunity— a repository of the vetted, unselected funding proposals can advance the philanthropic ecosystem by broadening donors’ knowledge of prospective grantees. This can make the ROI of prize philanthropy often higher than with traditional grant making. For instance, by offering a $10M prize, the outcome includes the benefit of applicants’ collective work, which could be worth orders of magnitude more than the prize purse itself (i.e. $100M worth of testing and ideas).
In addition to their potential for social impact, prize competitions are a flexible tool that can:
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be tailored to meet diverse donor interests and resource availabilities
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generate publicity and raise awareness of specific issues
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spur additional private or public funding
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expand philanthropists’ familiarity with nonprofits not previously on their radar
When are prize competitions appropriate?
Not every cause is suited for a prize competition, and this tactic may not be a good fit for every philanthropist. Prizes are particularly useful for issue areas where there is stagnation or no clear path for progress. This practice entices individuals to investigate a problem that may be under-resourced or historically overlooked, so causes that already have widespread involvement and traction likely do not need a prize to further incentivize progress on this topic.
Prize competitions are most fitting when they meet at least one of the below conditions:
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A problem is new
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A problem is stuck and requires new thinking, technology, and/or innovators
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Capital is not sufficiently available
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Society believes a problem cannot be solved
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Unawareness inhibits attempts at a solution
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There is not already a prize competition in place
Since prizes promote creative solutions and innovative approaches, a philanthropist behind this effort should be comfortable with some level of unpredictability. They should not have a solution in mind prior to launching a competition. Indeed, philanthropists underwriting prizes should be open to adaptation, iteration, and exploration. Undoubtedly, they should also be relatively tolerant of risk.
How are prize competitions designed?
Philanthropists can design and administer prize competitions on their own or partner with an outside facilitating organization. Competitions can be held across any number of charitable issues but are best suited when they can “unstick” a stuck problem or solve for a current societal market failure. Each competition should be centered on a well-defined problem (rather than a predetermined solution), along with clearly articulated application requirements and selection criteria. It should be structured to include a number of benefits to a cause, including the creation of measurable standards, generation of useful data, finding and including new voices in the field, etc. To ensure credibility and objectivity, an independent board of experts should be selected to review entries and select the ultimate prize winner(s).
A prize competition is a tool that must be designed and managed with intention; it cannot simply consist of a highlighted problem with a prize purse waiting for new ideas to flow. As such, prize sponsors should take note of the following design elements:
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The problem must be framed based on research and close consultation that includes a range of experts, as well as the communities the solution will serve.
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The prize amount and duration must be commensurate with the specificity of the problem.
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Clear processes and guidelines must be established in advance.
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There should be substantial benefits for competitors, beyond the monetary prize (additional incentives are listed below)
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Winning ideas should be supported throughout and after the process to ensure maximum impact after the competition is over.
How can competition designers maximize participation?
To draw a wide pool of applicants, prize sponsors should take strategic measures to publicize the competition and be intentional about how and where they publicize, and to whom. For example, make sure you are reaching diverse audiences in other countries, promoting to youth, etc. Because prize competitions can be time consuming and resource intensive for the donors and the participants, competition designers should take care to ensure that corresponding prizes are enticing enough to attract the most qualified participants. Common rewards include monetary gifts (sometimes upwards of $10 million or more), network recognition, potential employment, and/or business development opportunities.
Incentives beyond the prize purse itself are essential, and should include opportunities for:
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Networking and partnerships
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Honing/learning skills
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Media attention and prestige
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Operational resources
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Introduction to funders and help with fundraising
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Legitimization of the industry
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Opportunity to be a part of helping solve a major global challenge
How much time, money, and energy should a donor expect to invest in a prize competition?
Across every stage, it is resource intensive to build prize competition infrastructure, generate publicity, and recruit an independent review committee. Before deciding to pursue a philanthropic prize competition, funders should ensure they have the capacity, resources, and willingness to undertake this effort.
From designing the competition to selecting prize winners, the entire philanthropic prize process can take about two years, or longer. In general, designing the prize and writing its specific rules can take 3 months, and another 3-6 months to recruit teams and give them opportunities to learn, grow, and prototype. There should be at least one round of judging before a finals round, along with some serious testing and analysis of proposed outcome and data.
Additional Resources:
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View one prize competition in action: the Milken-Motsepe Innovation Prize Program.
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Learn how one philanthropic prize facilitator, Levers for Change, approaches social impact competitions.
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One of the biggest values of philanthropic prize competitions is its sourcing of vetted proposals for other funders to potentially support. One of the most notable proposal databases is the Bold Solutions Network.