Philanthropic Prizes

The great value in this new enhancement of an old idea is that it is forward looking, as reported by the New York Times.

An excerpt.

“NOT long ago, a wealthy philanthropist would be content with having a building named after him or her, or simply donating to medical research. But in the last decade, more of the wealthy have been creating prizes in hopes of drawing attention to a particular cause. It doesn’t hurt that their names are on the prizes.

“According to a report released last year by the consultant McKinsey & Company, the dollar amount for prizes over $100,000 has tripled in the last decade to $375 million a year. There has also been a shift from prizes that recognized past accomplishments to what McKinsey calls “inducement-style prizes that focus on achieving a specific, future goal.”

“The Kravis Prize fits into this category. Established by Henry and Marie-Josée Kravis five years ago, the $250,000 prize seeks to recognize leadership among nonprofit groups worldwide and share their best practices.

“We’re hoping the winners can leverage the prize in order to get additional grants to expand their reach,” Mr. Kravis said in an interview. Past winners have ranged from a project on rural land development to this year’s recipient, Pratham, which educates children in rural India. The group will receive its award on Tuesday in Manhattan at the Museum of Modern Art.

“But creating prizes is not as straightforward as setting aside a pot of money. If the amount is too small, the prize may fail to attract enough high-quality entrants to accomplish the stated goals. If it is too large, it could draw people away from other fields where their skills would be better served. Then there is the cost of administering and publicizing the prize.

“So if you’re a wealthy philanthropist, here are some issues to consider before you decide to create a prize:

“WHY A PRIZE? Prizes are nothing new. Determining longitude at sea was discovered through an incentive prize set up by the British government in the 18th century. But the growth in prizes over the last decade has been driven by the desire to effect change and bring attention to a social issue or a practical problem.”