I’ve overheard many folks lately discussing what sort of charity most deserves their money. They consider the plans of various charities, and try to analyze the chances that such plans will lead to good outcomes. Most folks I’ve heard have been favoring various intellectual charities, where the money goes mostly to pay intellectuals to develop and communicate ideas. And most of these folks also seem to spend lots of time consuming intellectual ideas. They read a lot, and have many opinions about what previous ideas were interesting and useful.
Such folks would do well to review the advantages of prizes over grants, and consider becoming charity angels. Let me explain.
Consider a donor who seeks to encourage or induce some sort of result in the world. With a grant, such a donor must decide ahead of time who seems to have a promising ability and approach. But with a prize, a donor need only decide after the fact who seems to have achieved a lot. Once potential awardees see a pattern of achievements being rewarded by prizes after the fact, they will gain an added incentive to achieve, an incentive roughly proportional to the prize amounts being offered. And the prize process avoids much of the added waste of grant proposals, review, search, etc. (Promising potential winners who are strapped for cash might obtain resources by selling their future prize rights in capital markets.)
Since it is much easier to evaluate what has worked than what will work, folks who read a lot of intellectual work and who are inclined to support future intellectual work via charity should consider making a habit of just giving money to those who have already accomplished something noteworthy. Most intellectuals have some resources at their disposal and look for promising future directions on which to spend such resources. Your awards for previous achievements should increase the incentive to all intellectuals to achieve similarly praiseworthy results in the future. This will better target your goals because you can better judge what past work has promoted your goals than which future people and approaches might do so.
Of course you may have other goals for your charity than encouraging a result in the world. You may, for example, want to signal your personality and allegiance by donating to a familiar brand name that others will recognize. You may want to affiliate with a high status organization and with high status others who donate to the same cause. You may want to more directly affiliate with the doers who are the recipients of your donations, and to put yourself in a dominance role of control over them, and to take credit later for having believed in them when others did not. You may also prefer to affiliate with new and upcoming doers rather than old and past their prime doers. And you may want to signal your confidence in your judgements about promising people and approaches. For all of these other purposes, grants are probably your better bet today. Which is of course why there are so few prizes.
But if you think yourself one of the rare exceptions, whose primary purpose is to actually encourage changes in the world, consider just finding a person who you think has already made a substantial contribution to your cause, and just writing them a check. (And maybe encourage him or her to periodically post summaries of donations received.) No further complication is required. (Should you think I deserve such an honor, a donate button is now available on this page. )
Added 11a: If you think risk-aversion creates diminishing returns in donations, i.e., that there’s less to gain by giving more to someone who’s already got a lot, then focus on neglected prior doers – those who have received too little attention and reward for their good accomplishments.
Added 12a: If you think some promising intellectuals lack resources, then buy shares in their future prize winnings. If you think there are insufficient prizes in some area, then by all means create such prizes. Just don’t confuse rewarding past intellectual accomplishments with investing to gain future financial returns.