Philanthropists and governments have long used prizes to drive innovation and engagement to produce societal benefit, but the use of this powerful instrument is undergoing a renaissance. Philanthropic prizes are growing in number and size, are appearing in new forms, and are being applied to a wider range of societal objectives by a wider range of sponsors than ever before. Not all of the growth has been positive, however, as the many overlapping prizes and growing clutter of the sector attests. In response, current and potential participants are asking when they should use prizes, and how they can develop and deliver effective ones.
This report by McKinsey & Company addresses these questions by drawing on academic literature, interviews with analysts and practitioners, surveys of prize sponsors and competitors, databases of small and large awards, and case studies of twelve effective prizes to produce lessons from a range of sectors, goals, and prize types. It aims to help improve current prizes and stimulate effective future use by developing a number of simple frameworks and compiling useful lessons for sponsors. While targeting the philanthropic sponsor, we believe these perspectives will also be helpful to governments and corporations considering prizes.