VA
Insights

Cash award from philanthropic contests as a major income source of social organizations, in general, is a pleasant thing. But Kevin Starr, Director of a foundation and also judge of several philanthropic contests, strongly suggested that we “dump it all” in his article published in Stanford Social Innovation Review. The following are his arguments:

• Entrants waste huge amounts of time working on their entries. Few competitions provide even the most rudimentary feedback.
• There is way too much emphasis on innovation and not nearly enough on implementation.
• Too many juries are composed of unqualified people with no experience in relevant field; Bandwagon effect (Winner-or-very-few-take-all): The more prizes you get, the more prizes you get.
• It serves as a distraction from the social sector’s big problem – lack of efficient allocation of philanthropic and investment capital. There’s no real evidence for the argument that innovation competitions, challenges, and prizes are a vital part of that market and that they drive important advances that wouldn’t happen otherwise.

Although after criticism Kevin Starr himself has admitted some positive impact of these contests, we still may want to ask ourselves: What is the “function” of these contests? How to organize a good philanthropy contest?

Function of Philanthropy Contests

McKinsey & Company noted in a report (Capturing the Promise of Philanthropic Prizes) that the vast majority of current prizes fall into one of the six archetypes: 1) exemplar prizes, 2) exposition prizes, 3) participation prizes, 4) network prizes, 5) market stimulation prizes, and 6) point solution prizes.

We intend to see these six “ideal archetypes” as the “potential” of philanthropic contests. Domestic philanthropy contests still have a long way to go in developing their “potential”, particularly facilitating networking, stimulating market, and solving social problems. If we set our ultimate goal to be solving a social problem rather than holding a gorgeous ceremony, we will realize it. Of course, the premise is that we can organize a good one.

How to Organize a Good Philanthropy Contest?

Back to Kevin Starr’s criticism: a bad contest brings about many problems. In fact, we have seen similar situation in China. Organizing a philanthropic contest requires complex efforts (McKinsey’s report provides a detailed guideline of how to do it). Based on VA’s observation on domestic philanthropic sector and evaluation of award-winning nonprofits, we believe that the following three points need to be stressed in organizing a philanthropic contest:

1. Participants’ benefit at each phase of the contest

• A problem must be asked during the designing phase: Who is the target group of the prize? In addition to social organizations, whether government, community and the public should be included? How to get them all involved in the process?
• Set clear application process and evaluation criteria to save time for contestants and judges.
• Choose professional judges (including opinion leaders from charitable foundations and potential investors); give they sufficient time to communicate directly with contestants, and to provide constructive comments and other support even after the contest.
• Create a network between participants and interested parties (government, foundations, media, etc.) to inspire experience sharing.

2. Efficient publicity and promotion

Apparently publicity and promotion bring comprehensive benefits. What often embarrasses the organizers is budget. Kevin Starr believes that prize must come with a cash award that is at least 20 times the cost of the accompanying award ceremony/dinner. However, the McKinsey report shows that expenses other than bonuses are almost the same with bonuses themselves. In VA’s view, the input-output ratio is key: how promotion finally turns into brand impact and publicity.

3. Follow up after the contest

• Set a baseline for contestants and winners and keep tracking; monitor implementation of the award-winning projects and evaluate efficiency of fund usage.
• If a winning project has an accelerating growth, investors and funders can provide long-term support or integrate it into their own business.
• Connect contestants with network of interested parties (investors, funders, media, etc.) to recommend excellent projects to other resource platforms through seminars, exhibitions, investment platforms, etc.

With the rapid development of philanthropy in China, we will certainly witness a growing “market”. We hope there will be fewer “to-be-dumped prizes”, but more “serious investment disguised as a prize”.