September 05, 2007
Prizes Versus Grants
Is awarding prizes more effective than traditional grant making? Peter H. Diamandis, chief executive officer of the X Prize Foundation, certainly thinks so.
On a blog entry on The Huffington Post, Mr. Diamandis writes that offering monetary awards to meet specific goals in fighting social ills or solving technological problems is more efficient, more results-oriented, attracts more money from other sources, and imposes less constraints — such as budgets or reporting requirements — on competitors than the usual donation or grant.
“How would you like to make sure that your philanthropic donation was actually used to solve your chosen challenge?” he writes. “Not to fund attempts at a solution, not to fund ideas, but to fund THE solution that would be known in history books as a pivotal moment when an intractable problem was conquered.”
The X Prize has achieved success with such an approach, Mr. Diamandis writes. In 2004, the nonprofit group gave its inaugural award, the $10-million Ansari X Prize, to Mojave Aerospace Ventures for successfully launching a spacecraft capable of carrying three people on a suborbital flight twice within two weeks.
Mr. Diamandis writes that his organization is currently considering offering prizes in “education, life sciences, exploration, global entrepreneurship (poverty), energy and the environment” and he foresees a day when it will have 10-15 awards worth more than $250-million.
Read The Chronicle‘s article on the X Prize Foundation and its president, Tom Vander Ark, who joined the group this year.
What do you think? Is prize philanthropy more effective than grant making? Will such an approach work with societal problems, rather than technological ones? Share your thoughts by clicking on the comments link below.
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I wish. I love the idea – turn solving the problem into a profit opportunity, so it can reasonably get financed by loan capital. The problem is the measurement. Most of the things I care about most are just too hard to measure, and involve too much subjectivity … any hard-and-fast metric we came up with could be gamed, by people whose only goal was to take him the prize.
I’d love to be proven wrong, but I just can’t see a prize like this for closing the achievement gap or saving lives in Africa. However “success” is defined, I think it would result in more harm than good.
— Holden Sep 5, 10:55 PM #
I think that prizes or awards can be useful if the focus people or groups of people on specific goals. E.G. if someone put up $10 million for a cure for cancer, would that motivate more people to do the research?
However, I don’t think this helps the small or medium size non profit, or the start up with a great idea. Most innovation is done into ambiguity. I know the problem I’m trying to solve, but with out lots of trial and error I can never come close to a solution. Having a $10 million prize won’t help me get the years of funding that it might take me to come up with a solution.
Grants and awrds are not the solution either, because in both cases there are too many loosers and too few winners. Furthermore, the winners are most often the organizations with the money to pay professional writers, researchers and fund developers who do nothing all day except research and write grants.
In the smaller oganizations, the leader is the janitor, the evaluator, the volunteer recruiter and trainer, the program leader and the grant writer. Too many people compete for a limited number of grants and awards and too few win consistently.
Maybe an X prize should be devoted to finding a better way to increase and distribute operating revenue to the thousands of small charities operating in locations throughout the US and the world?
— Dan Bassill Sep 6, 07:29 PM #
Prizes are really just rewarded objectives. Objectives are a natural outgrowth of competent strategic planning. The reason prizes must be objective is the same reason one establishes objectives within in business or military strategic planning.
Attempts to water-down prizes with more or less subjective “grand challenges” as has the Gates Foundation, is the wrong way to go and illustrates incompetence in the handling of that foundation’s money.
— James Bowery Sep 8, 12:06 PM #
Billy: “Mommy, are spoons more effective than forks?”
Mommy: “Well Billy, that depends on what you are eating and your whole dining aesthetic.”
Billy: “I think we should only eat with sporks we get at KFC”.
Mommy: “Well, lets give it a try. There is no harm in sporking”.
— Tidy Sum Sep 10, 12:19 PM #