Is it time for an X Prize for fundraising?

Howard Lake | 16 February 2017 | Blogs

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Charity fundraisers continue to raise more for charities, to hit or exceed their targets. But is gradual growth enough? If the world’s charities are to have a transformational effect, should we not be considering how to transform fundraising and giving on a grand scale? If so, then it could be time for an X Prize for fundraising.

We’re often told that fundraising and charitable giving need to be transformed or overhauled. We could do things better, adopt more business-like procedures, promote giving methods to the public, or lobby for more tax-effective giving legislation. 

But these are all gradual, linear processes. They are not going to bring about logarithmic transformation of income for charities and therefore charities’ abilities to bring about rapid change on a massive scale.

An incentive prize, like the X Prizes for technology and business, might offer a chance to achieve this.
 

We need more, much more, from charities

While there are many positive trends for public health, longevity, absolute poverty, child mortality, death through violence and so on, there are still many great humanitarian challenges, not to mention the occurrence of natural disasters. There is a clear and substantial need for the work of social good organisations like charities and social enterprises, in partnership with government and business of course. 

But they never have enough money to achieve the volume or speed of change that is needed. Of course, skill, voluntary support and passion change a lot, but as charities know, money is needed to bring about change.

You could argue that charities and social good organisations are facing even greater challenges now, with political instability in many regions, distrust of institutions and political leaders, and never-ending austerity. Even those are trumped, pun intended, by the imminent threat of climate change.

So, while there has never been a time when charities were doing rather nicely thank you in terms of sufficient income, there is an argument that a major stride forward is particularly urgent now.

Incidentally, I am not fixated on ‘charities’ as a term, but instead am using that term to cover any organisation working for social good.
 

What is an X Prize?

The X Prize is “a highly leveraged, incentivised prize competition that pushes the limits of what’s possible to change the world for the better. It captures the world’s imagination and inspires others to reach for similar goals, spurring innovation and accelerating the rate of positive change.”

Current prizes include:

• Women’s Safety X Prize
• Water Abundance X Prize
• Adult Literacy X Prize
• Qualcomm Tricorder X Prize

Past prizes include:

• Ansari X Prize
• Wendy Schmidt Ocean Health Prize
• Archon Genomics Prize
• Wendy Schmidt Ocean Clean Up X Challenge

The X Prize is one in a series of incentive prizes designed to solve a major problem.

The Longitude Prize

In 1714 Parliament offered £20,000 to the person who could accurately measure longitude at sea. The Longitude Prize was designed to prevent the large loss of life and shipping that were the result of this inability to measure precisely where a ship was. (Innovation charity Nesta has created a new Longitude Prize, inspired by the original – see below).

In 1795 Napoleon I offered a 12,000 franc prize to enable food preservation for the army that was marching on Russia. The winner invented a method of preserving food in sealed cans.

The French government offered a 6,000 franc prize in 1823 for the first large-scale commercial hydraulic turbine. The winning design was used to help grow the French textile industry.

The Orteig Prize

The Orteig Prize of $25,000 was offered in 1919 “to the first aviator of any Allied country crossing the Atlantic in one flight from Paris to New York or New York to Paris”. After many attempts by others, some of them fatal, Charles A Lindbergh claimed the prize on 20 May 1927.

According to Gregg Maryniak, pilot and director of the McDonnell Planetarium, because of the resultant investor and public interest in flight:

“we can draw a direct connection between [Lindbergh’s] winning of the Orteig Prize and today’s three-hundred-billion-dollar aviation industry”.

Why incentive prizes work

Incentive prizes can be powerful spurs to transformational change for several reasons.

• They focus public and individual attention on a particular challenge, generating anticipation and involvement.
• They introduce a wider audience to the issue and challenge. Who beyond fundraisers would think that the funding of charities and social change might be wholly transformed?
• They provide focus and constraints – limited time, no guarantee of funding, and usually the requirement for small teams.
• Competition can boost the risk-taking involved, and lead to greater progress.
• Competition drives the rate at which innovation is developed.
• They are a cost-effective method of driving innovation: the prize funder only pays for success. Those who don’t win cover the research and development costs themselves.
• They often breed a whole sector of similarly-focused initiatives, a new industry. Some of these initiatives will also succeed.

We’ve had incentive prizes for the charity sector that have helped it transform some of its work. Some of the X Prizes mentioned above have supported work in the areas of environment, literacy and poverty. More X Prizes for social good were announced in October 2016.

Innovation charity Nesta created The Longitude Prize, a £10 million incentive prize, “to help solve one of the greatest issues of our time”. It was awarded to an initiative that is tackling antibiotic resistance.

However, none have focused on transforming fundraising or the income generation of charities and social good organisations. Yet this is a key to even greater, faster change. 
 

What is not big enough for an X Prize?

Has the charity sector not demonstrated remarkable success and transformation, despite recessions and broader challenges such as levels of trust reportedly dropping? It has. 

Has it not already spawned some major developments that might count as transformational? Arguably not.

There have been welcome initiatives that have changed the sector, and helped it grow. And most of these have been digital, and with their own platforms, which means they have the potential for exponential growth.

These would include the likes of:

• The Giving Campaign – the government-funded initiative to promote charitable giving
• Crowdfunding – the new (if familiar to fundraisers) industry that lets individuals as well as organisations fundraise for projects and people that matter to them
• JustGiving – the social giving platform that spawned many other online giving platforms and transformed the order in which fundraising events income was received ie. before the event had been run!
• Kiva – microloans and the notion of recycling money again and again for social good is arguably one of the most transformative ideas of the last two decades.

But, impressive as these are, none of them have changed the situation (yet) for all social good organisations and their beneficiaries. And hardly any have been global in reach or impact.

I’ve been hoping to see the exponential development of fundraising through digital tools for quite some time. I’ve not come across it yet, and I have been looking hard.

But then fundraising is an industry that has not yet truly experienced disruption. Would an incentive prize for giving stimulate such disruption? Or would it just be one reflection that it was underway?
 

What might an X Prize for Fundraising winner look like?

So, what might an X Prize winning idea or solution for fundraising or philanthropy look like? First, we need to define the challenge and its scope. And the scope needs to be global and applicable to as many nonprofits and donors as possible.

Secondly, we need to define whether it’s about fundraising or giving and philanthropy. Giving is something familiar to everyone whereas fundraising is a profession and combination of techniques and skills.

Thirdly, it will be digital. In terms of low costs, exponential scalability, rapid development, and measurability the winner will use.

We might well have to leave out the word ‘charity’ or ‘nonprofit’ as they don’t have a monopoly on doing social good. Which is good – an incentive prize is explicitly the opposite of ‘business as usual’.

Which might well also mean that the people behind it are (or should be!) different from traditional or professional fundraisers. Who has been left out of the debate for all the wrong reasons?

What would the prize’s finish line look like? An endowment fund for every nonprofit? While that might yield independence and the ability to plan investment over a longer period, it could also mean that charities with poor leadership might be unduly rewarded or not have sufficient incentive to improve.

So, some initial suggestions for a winner might include:

• Blockchain
• Something hiding in plain sight
• A behavioural insight application
• A fintech development
• An AI development

But even those are the product of my cognitive biases of course. It could be something quite different, and much bigger and better. Or, conversely, something surprisingly simple that has just not been considered.

One of the exciting elements of a X Prize for fundraising winning solution is that it will almost certainly not come from within the established fundraising sector. It could come from business, a donor, a grantmaker, a group of school children, an academic, or an entrepreneur. Imagine a group of projects being developed by such people, all with an interest or experience of giving, but with such different skills, ideas and experiences.

If you’ve read ‘Abundance: The Future Is Better Than You Think’ by Peter H Diamandis and Steven Kotler, you’ll appreciate where some of my suggestions and inspiration have come from.

SEE ALSO: Environmental Earthshot prize launches to find solutions to the planet’s greatest issues (6 January 2020)
 

Why might a Fundraising X Prize not work?

Is a X Prize-type competition not applicable to fundraising and philanthropy? An examination of the criteria for an X Prize suggest that it does meet them. 

It would be audacious but achievable, target market failure, be winnable by a small team, have a bold and audacious goal, and of course provide vision and hope.

Yet there are arguments that an incentive prize might not be appropriate for giving.

• can a single change apply globally, working in different cultures and different tax regimes?
• because it focuses on the wrong element. Not fundraising but giving.
• is giving too complex a process to be ‘improved’ or ‘solved’ by a prize?
• because there is not necessarily a product or invention at the end – it could simply be a process.
• because true expansion is more likely to come from borrowing from the fintech or technology sector’s developments

There might be more reasons why an incentive prize for fundraising might not work.

However, being told “it can’t be done” is often the perfect spur to far-thinking, creative, disruptive entrepreneurs.
 

Your thoughts

• Is there an incentive prize for fundraising already in operation?
• Are you working on something that has the potential to transform giving?
• Would a Fundraising X Prize work?
• Would a funder support such global transformation?

More on giving growing on an ambitious scale

• Good Innovation reports on new models for generating income (18 October 2019)
• Growing charitable giving on a massive scale (October 2019)
• Who is thinking about the future of fundraising? (2 December 2019)

About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale. He is the founder of Fundraising Camp and co-founder of GoodJobs.