Prize Philanthropy – A Rising Trend
The concept of prize philanthropy is not new. A foundation or even a private individual can structure a philanthropic gift around the concept of awarding the ‘prize’ for the best idea or initiative.
A 2009 McKinsey & Company Report recommended that, “Every leading philanthropist should consider the opportunity to use prizes to help achieve their mission, and to accept the challenge of fully exploiting this powerful tool.
As far back as 2007, Knight Foundation has run or funded nearly a dozen open contests. And granted over $75 million to the ‘winners’.
Prize Philanthropy is NOT new but it IS gaining in momentum. Many describe the benefits of prize philanthropy as being both local (specific to a certain smaller geographic area) and measureable. The concept involves more than the bequest of money to a charity or a cause. It is about making a difference and pursuing a goal. The trend is toward developing a particular strategy and focusing on a particular cause in a given geographic area.
Prize philanthropy can engage a community and bring individuals within that community to focus on a particular community problem or issue or goal.
Yes, there are winners and losers in the concept of prize giving. In some cases there may be hundreds of applications and only a handful of ‘winners’ who receive funding, or ‘win the prize’.
Prize philanthropy also creates a unique bond or partnership between the donor and the recipients, a bond that goes beyond the giving and acceptance of money and often exceeds any given period of time.
While many innovators might choose not apply for a grant, they would accept a ‘challenge’ to improve their neighborhood, their environment, their area of dedication (arts, education, environment, child welfare are just a few examples.)
Even the ‘losers’ can be winners – during the process of responding to the “challenge” they can become more focused on goals and strategies.
Because Prize Philanthropy is often tiered and there are levels that participants pass through, (sort of like…and the grand prizes go to!…) there evolves a pool of talented individuals, that a philanthropist might never have discovered. And based on achievement there may be a second or third round of funding, which can increase the talent pool.
If you are considering philanthropic giving, there is a strong incentive to consider “prize philanthropy” as a mechanism. Within the area of estate planning, there are numerous vehicles (like a Charitable Trust) that might work very well with the concept of prize philanthropy.
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