Challenge.gov, which celebrated its fifth anniversary this fall, is a federal website that showcases requests by government agencies for the public to tackle hard problems in exchange for cash prizes and other incentives. Since its inception in 2010, agencies have run more than 450 challenges to help ameliorate problems such as decreasing the "word gap" between children from high- and low-income families or increasing the speed at which salt water can be turned into fresh water for farming in developing economies.
Although traditional grants provide greater flexibility than a contract for the recipient to decide how, precisely, to use the funds to advance a particular goal, prize-backed challenges like those on Challenge.gov have the potential to reach more diverse experts. Challenges are just one example of innovations in the grantmaking process being tested in government, philanthropy and the private sector. These innovations in "open grantmaking" have the potential to yield more legitimate and more accountable processes than their closed-door antecedents. They also have the potential to produce more creative strategies for solving problems and, ultimately, more effective outcomes.