Equal Opportunity for Entrepreneurial Solutions?

My most recent professional experience was in corporate philanthropy, and I hope to make my way back into philanthropy at some point in my career. When reading through the “X Prize Foundation” article, I became a believer in Thomas Vander Ark's model of prize philanthropy. Prize philanthropy spurns innovation, and only rewards winning (successful) solutions to problems (so far, only technical, not social). McKinsey & Company gathered data from 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. The 2009 report acknowledged the importance of prize philanthropy as a true and proven method for tackling tough solutions and igniting innovation. As was referenced in the “X-Prize Foundation” article, the Google Lunar X Prize attracted interest from more than 125 teams in more than 25 countries. All evidence points toward a healthy and thriving method for innovation;However, I am slightly troubled by the economics of opportunity to engage in prize philanthropy.

When I was a senior in college, my economic thesis studied gender behaviors related to competitive environments. As a longtime athlete, I though it would be interesting to test the stereotype that men are more competitive than women. Throughout conducting an economic experiment that tested risk profiles of men and women athletes, and after controlling for demographic information, I found a statistically significant relationship among male athletes and their increased likelihood to enter into competitive situations as opposed to female athletes. As a disclaimer, this analysis is restricted to the population sample taken from my undergraduate college. However, I couldn’t help but think about the type of person, or type of entrepreneur or social innovator, who is more prone to capitalizing on prize philanthropy, such as the X-Prize. Are prize philanthropists inclusive of all types of innovators? Should prize philanthropy be all-inclusive?

If the assumption is made that women are more risk averse, and will behave accordingly, this could result in less entrepreneurial solutions for social problems, since prize philanthropy is said to motivate increased innovation. A risk-averse individual would probably prefer to continuously apply for traditional philanthropic funds, knowing there is a greater chance of receiving a grant award. On the other hand, a high-risk profile individual would be willing to forgo an expected financial payment in favor of an even greater monetary award celebrated with prestige. So, how to test this theory? In a June 2010 Erasmus Report for Young Entrepreneurs, it was found that only 39% of new entrepreneurs are women. Evidence shows that females are underrepresented in riskier professions – what will be the consequences for the social sector, and how might this impact access to diverse and innovative social solutions? Is there a way to encourage entrepreneurial thinking and innovative mindsets in a less competitive and risky approach? How should traditional philanthropy evolve to force the citizen sector to become more solution- and results-oriented?