Giving Compass' Take:

• Thomas Kalil explains the benefits of the incentive prize model of governance and outlines common pitfalls that can prevent this method from succeeding. 

• How can funders help to develop and improve incentive prizes? 

• Learn what happens when philanthropy contests go wrong. 

What is the argument for increased use of incentive prizes?

I am a strong believer in Joy’s Law: “No matter who you are, most of the smartest people work for someone else.” So you are usually going to be better off if you make it easier for people outside the boundaries of your organization to know (a) what problems you are trying to solve and (b) how they can get involved.

I also believe that a well-designed incentive prize can enable the sponsor to:

  • Set a goal without having to decide in advance which team or approach is most likely to be successful
  • Pay only for results
  • Leverage investment that can exceed the value of the prize purse
  • Shine a spotlight on a problem
  • Encourage fresh approaches by reaching beyond the “usual suspects”
  • Change people’s views about what is possible

Having said that, it is not always the right approach to solve a given problem, and it is certainly not a substitute for more traditional funding mechanisms, such as grants or contracts.

Prizes have been criticized for pulling more time and energy from a field than they return to it. Were there any specific situations from your time in the White House when you argued against issuing a challenge of some kind?

There were definitely instances where:

  • Agencies had not thought hard enough about the problem statement or the victory conditions.
  • The amount of money they had for the prize purse was inadequate, given the resources required to solve the problem.
  • The agencies were really running a traditional grant competition but just calling it a prize competition.
  • They had not thought about what they would do after the competition in the “post-award” phase.

Read the full interview with Thomas Kalil about the incentive prize model by Jeff Ubois at Stanford Social Innovation Review.