Controversy Over Grant-Maker Competition Exposed Divide Over Role of Markets

After the Council on Foundations planned an experiment to host a $40,000 pitch competition to identify new organizations and approaches to drive social change, the recent feeding frenzy of articles criticizing the move wasn’t the normal tussle between grant seekers and grant makers. Instead, the controversy exposed a deep divide in the nonprofit world, and its discomfort in embracing the best ideas of commercial markets.

If markets do nothing else, they have an uncanny way of being candid; they send signals about what consumer wants companies need to pay attention to and adapt to if they hope to thrive, if not survive.

The council’s competition was a signal of what the market — in this case, grant makers — wanted to see: fresh ideas about how to jump-start the economy. The council suggested that the best way to stimulate brainstorming was to hold a competition and offer a prize for the best ideas, and to play out the competition in real time at the group’s annual meeting.

But the criticism that erupted over the idea was so severe that the council decided to cancel the pitch competition. Instead, it will host a discussion on the merits and drawbacks of new approaches to grant making.

We’ve learned that fresh approaches are urgently needed to solve global challenges.

That’s why we’ve tested programs like the Make It Your Own Awards, the first campaign to open up a part of the grant-making process to an online public vote. And the America’s Giving Challenges (in 2007 and 2009), which mobilized some 150,000 donors to give $3.8-million to more than 14,000 causes, most of which were small and scrappy. That’s why we created the Be Fearless campaign; because we believe that in order to create more innovation in our approaches to social change, we must all take risks, embrace and learn from failure, and make big bets. And that’s why we consistently provide catalytic funding to partners that are experimenting with new approaches and hoping to find breakthrough solutions and collaborations.

We’ve long championed the potential for prize and challenge programs — including initiatives like pitch competitions — to discover breakthrough innovations.

We know that sometimes the people with the most innovative solutions to big problems will be found in unlikely places. Take Jill Andrews, the fashion designer who played a critical role in using what she learned designing wedding dresses to dramatically improve the design of the Ebola protective suit worn by health-care workers treating the disease. She got involved in the protective-suit design thanks to a challenge hosted by USAID’s Global Development Lab.

The U.S. government has broadly embraced the use of prizes and challenges. The Summit on Innovation that we co-hosted with the White House in 2010 led to the creation of Challenge.gov, which hosts hundreds of prize and challenge competitions across 50 federal agencies.

And we were proud to join some of the philanthropic sector’s leading innovators — Bloomberg Philanthropies and the Joyce, Knight, Kresge, and Rockefeller foundations — in publishing a 2014 report on the ways that incentive prizes are transforming the innovation landscape.

We love to see new ways of getting ideas from the crowd, pooling resources, disrupting old ways of doing business, testing new approaches, and publicizing the search for new ideas that work. That’s essential because, quite frankly, too little evidence exists about the most effective ways to transform society for the better. We shouldn’t swing the pendulum completely toward prizes, challenges, and other experimental approaches, but deploying tactics that can help us discover new ideas from unlikely places is desperately needed.

So what if, instead of trashing the Council on Foundations for trying something new, we embraced the effort as a fearless attempt to disrupt the status quo in the hope of finding a better way?

Sure, we might each want to tweak the approach our own way to make it better (for example, it might have been wiser to have a panel of judges, not the audience, vote on the winner). But as a tactic, the pitch competition had the potential to expose innovative people and ideas to a broad community of foundations, many of whom might have decided the ideas were so impressive they would have been willing to pool their resources for greater and faster impact.

We look forward to the discussion on the merits of new grant-making approaches at the council’s conference. But we’ll be wondering wistfully what it would have been like to have the pitch competition in full swing — tapping into the "wisdom of the crowd," fully embracing of the idea of democratizing philanthropy, and making it easier for anyone to participate in efforts to solve the world’s biggest problems.

Allyson Burns is senior vice president for communications and marketing at the Case Foundation, where Sheila Herrling is senior vice president for social innovation.

Editor's Note: This piece is adapted from a post that appeared on the Case Foundation’s website. Read responses to this piece by Cynthia Gibson, a consultant to nonprofits and foundations, and Paul Light, a professor of public service at New York University, and join in the conversation in comments.