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« Unreal Time | Main | Turning the Tide at Ave Maria Law School? » October 02, 2007In Every BoxI recently watched Tyler Cowen's intriguing speech to Google on prizes and grants. I think prizes are tantalizing, so it is an important message about when, where, and how they can be most useful, or at least moreso than grants. I was particularly struck by how prizes can obviate one of the main criticisms of grants, namely, that it is impossible to give money away for free. The common argument goes like this: a granting institution announces $10,000 ready for distribution to the worthy applicant. Ten organizations apply for the grant, each spending $1,000 on the effort. This particular example if a zero-sum game, but it illustrates the hidden transaction costs that lower the efficiency of granting. Prizes, on the other hand, can have runner-up awards, and even non-winners may have done work that has broader applications, i.e., positive externalities. Toiling away at a grant application is wasted effort if one doesn't get the grant. Toiling away at the prized activity can accomplish something even if one doesn't win. Posted by Zach Wendling at October 2, 2007 08:05 AM CommentsThe problem, obviously, is that with a grant you have capital to work toward whatever you were granted it for. With a prize, raising capital is something that is put on the seeker of the prise. This does closely mirror small business style competition. Presumably, most of the time the grant-seeker is a non-expert in the seeking of capital. Would his time be better spent trying to raise capital or just doing the work that was granted? I can see arguments for both sides - I think it depends on the number of grantees who might be available to apply. Posted by: Dave S. at October 2, 2007 08:01 PM | permalink I went to school with a number of people who were getting degrees in non-profit management. Grant-writing was a taught and highly-prized skill, so there are experts in the seeking of this particular kind of capital. Posted by: Zach Wendling at October 3, 2007 07:41 AM | permalink Post a comment |
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