Challenge Prizes – The Future of Research Funding?

The XPRIZE Phenomenon

Many will recall the $10 million Ansari XPRIZE offered to the team XPRIZE Challenge Prizesthat could get a commercial vehicle into space, which was won in 2004. Today, the XPRIZE Foundation continues the tradition of challenge prizes started in 1919 by Raymond Orteig, who offered $25,000 to the first person to make a non-stop flight between New York and Paris. The XPRIZE Foundation develops “large-scale, monetary award given to the first team to achieve a specific goal… which has the potential to positively impact humanity.”

Certainly the large cash prizes offered by the XPRIZE Foundation challenges are attractive, however, as noted in the XPrize Foundation Wikipedia entry, from the $400,000 that nine teams spent to win the $25,000 Orteig Prize in 1927 to the $100 million that seven teams spent for the $10 million Ansari XPRIZE in 2004, one thing is clear. As valuable as winning one of these prizes may be in terms of publicity, winning one requires significant up-front funding from other sources for the opportunity to try to win the prize.

So while the XPRIZE may be a great way for a research team to become famous – and to have a good funding base for the future if they win – they aren’t solution to funding the initial research. Nonetheless, challenge prizes seem to be all the rage lately.

InnoCentive hosts mostly privately funded challenges. InnoCentive says, “Our methodology is called Challenge Driven Innovation, an innovation framework that accelerates traditional innovation outcomes by leveraging open innovation and crowdsourcing along with defined methodology, process, and tools to help organizations develop and implement actionable solutions to their key problems, opportunities, and challenges.” They report having awarded over $40 million across more than 1,500 awards since 2001.

US Government Challenge Prizes

The US Government is into challenge prizes as well through their official website, Many federal agencies, including NIH, NASA, EPA, DOD, DOE and others, sponsor challenges. Some of these challenges are non-monetary, but many do offer cash awards. For example, GSA awarded a grand prize of $35,000 for a challenge to ‘[d]esign and create an online, interactive tool that utilizes federal travel data to increase transparency and accountability.” And NIH is offering $5,000 – $10,000 prizes for ‘New Methods to Detect Bias in Peer Review” and “Strategies to Strengthen Fairness and Impartiality in Peer Review”.

Indeed, the US Office of Science and Technology Policy (OSTP) recently published “Implementation of Federal Prize Authority: Fiscal Year 2013 Progress Report”, its third annual report on results from the implementation of the America Competes Act of 2010, which describes the use of challenge prizes and competitions “to spur innovation, engage citizen solvers, address tough problems, and advance” the missions of Federal agencies. In this third year, 25 federal agencies hosted 87 prize competitions with 11 prizes of $100,000 or more. HHS offered a total of $1.2 million in prizes during 2013.

SciFund Challenge is another resource worth exploring. In an analysis of its round 4 funding, Zen Faulkes notes that 23 projects were funded with over $55,000, brining total funding through this effort to over $300,000.

Are we witnessing the birth of a new approach to funding science research – using crowd funding and challenge prizes to augment declining US federal research support? How effective will these approaches be in filling the gap? I wonder too whether faculty and institutions will find these methods of funding research more or less burdensome than traditional government or foundation awards. Perhaps we can seek crowd funding or someone will establish a challenge prize to fund research administrators to examine these issues more thoroughly!

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