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November 15, 2017; Boston Globe

The nonprofit sector has seen its fair share of pitch competitions in which eager philanthropists search for solutions in an environment similar to the reality show Shark Tank. Steve Rosenthal, a Boston-area executive, recently donated $1 million to the Northeast Arc to establish the Changing Lives Fund and another competition, cleverly called Arc Tank. Arc Tank contestants will present proposals that offer novel and effective methods of service delivery for people with disabilities.

Rosenthal says, “I don’t think I’m going to solve the world’s problems. But if I can do something that innovates and disrupts a bit and helps some people, then I think that will be a good thing. It could really have an impact to change the way this stuff is done.”

But just how effective are such efforts? Have we seen the promised disruptions and breakthroughs after five years of such stuff? Although philanthropists flock to this idea of contest philanthropy, it has its pitfalls. To begin with, the major driver of this style of funding rests on changing “the way this stuff is done,” but it falls short of achieving this goal.

Nonprofits are used to the high stakes of appealing to grantmaking foundations, in which nonprofits complete applications for review by a board or panel of community members. In these Shark Tank-style competitions, nonprofits essentially do the same thing. They present a proposal, as opposed to writing it, and the information is reviewed by a panel. The dynamic between funder and awardee remains unchanged. The only difference seems to be immediate feedback from the panel, which can definitely be helpful, but is not a game-changer.

Moreover, as much as these competitions tout innovation as the goal, there is nothing in the structure of the competition that encourages it. In fact, one of the finalists in the inaugural Arc Tank competition is a team from the Boston Medical Center which had the so-called innovative idea of creating “training videos for health care professionals who interact with autistic patients.” Perhaps more information is needed to clarify how this disrupts service delivery…because on the surface, this sounds like a webinar.

This idea of disruption also assumes the nonprofit sector responds to market forces, which simply is not true. In “More Thinking about Contest Philanthropy: Market-Based Approaches,” Rick Cohen aptly said, “It is a self-reinforcing belief, somewhat at odds with reality, that the market, if left to work or incentivized to work, will find solutions that work for everyone—and that inserting some market-sounding mechanisms into philanthropy will make philanthropy more effective and more democratic.”

Further, while funders seem to encourage collaboration on the one hand, on the other they are encouraging competition through these events. In fact, when NPQ partnered with BoardSource to survey the sector, increasing competition was among the top concerns for responding nonprofits.

In “Wait—What is Venture Philanthropy, Again?” Eileen Cunniffe indicates what the various forms of venture philanthropy—which these dragon’s-den competitions are—have in common. Importantly, they share a desire to effect systemic change and support interventions on a sector scale as opposed to at the organizational level. If this is indeed the goal, we might suggest to Rosenthal, who says he does not know where his thirst for seeing things change will lead him, that pitch competitions are not the way to get there. What we do like about this particular effort is that it was placed in the hands of a nonprofit in the field, and that idea is interesting—if one could lose the misguided reality TV aspects of the thing.—Sheela Nimishakavi