A Tool to Spur Innovation and Create Awareness
Posted on September 11, 2014
by Mark Neithercut
The recent Breakthrough Prize in Life Sciences established by tech giants Yuri Milner, Sergey Brin, Anne Wojciciki, and Mark Zuckerburg has been awarded to 11 scientists doing innovative research. At $3 million for each scientist, these awards are more than twice the amount of each Noble Prize. The buzz surrounding these awards has shed light on a giving method that is growing in popularity: prize philanthropy. This giving method can be a useful tool for philanthropic leaders who are especially interested in bringing about radical new innovations or increasing awareness about a cause. But don’t close down your foundation or throw your giving plan out the window yet. Prizes are often more challenging to plan, advertise, and award than traditional gifts or grants. Prize philanthropy is not a replacement for traditional philanthropic tools, such as grantmaking, but can be a welcome addition to a philanthropist’s toolbox.
What is Prize Philanthropy?
- Prize philanthropy is a form of philanthropic giving in which a competition is set up by an individual, foundation, or corporation through which individuals, teams of individuals, or organizations compete for a prize.
- Prize philanthropy is the nonprofit sector’s answer to innovative Research and Development in the for-profit and public sectors. Those who award donated prizes “incentivize breakthroughs perceived as having some sort of broad social or philanthropic intent.”
- Prizes are usually monetary, but a competition can also have other benefits such as providing a platform to showcase a new project or program or putting the prize winners in contact with people who can help them; for example, a partner that can help turn a winning prototype into a product.
- A prize may or may not be funded by the same individual or organization that designs and runs the contest. A foundation or individual may make a grant or gift to a nonprofit that is set up to award prizes to ensure a prize is tax deductible. A foundation may also award a prize on its own as a non-taxable expenditure, but strict IRS guidelines regarding prizes must be followed.