We love to compete. Contests tap into that need for us to push ourselves to improve and uncover new ideas. Napoleon used contests to develop better ways of feeding his soldiers. Today, governments and corporations—including Google, Netflix, IDEO, even NASA—embrace contests as a way to foster innovation. Grantmakers are also starting to use contests. Knight Foundation was one of the early adopters, and contests actually reshaped how we pursue our mission.

Since 2007, Knight Foundation has funded nearly a dozen open contests, many over multiple years. We have selected 400-plus winners from almost 25,000 entries, and granted more than $75 million to individuals, businesses, schools, and nonprofits. That represents less than 20 percent of our grantmaking, but we’ve learned a lot about how good contests work, what they can do, and what the challenges are. Used appropriately, contests can widen networks, deepen the work that grantmakers already perform, and broaden an organization’s definition of philanthropic giving.

Here are six major ways contests have improved our philanthropy:

1. They bring in new blood and new ideas. The Knight News Challenge—our first competition—exposed our foundation to a host of new talent and creativity from different disciplines. Whereas our traditional grantees were universities and top-notch newsrooms, the contest attracted an energetic community of media innovators, including software engineers, designers, and entrepreneurs. One of the first-year winners included a web developer, Adrian Holovaty, who built one of the early hyper-local sites providing access to public data. Many of the winners would not have applied for a traditional grant because they didn’t think they would be welcome. The openness and simplicity of the contest format changed that.

2. They create value beyond the winners. A good contest is more of a megaphone for a cause than it is a funnel for spitting out a handful of winning ideas. We started the Knight Arts Challenge to find new ways to build on the momentum of an already thriving creative community in Miami. In that contest, more than 40 percent of the non-winning entrants surveyed said that just the process of applying was beneficial. It made them more organized. Half said that they were still pursuing their ideas in some way despite not receiving funding. To get the best out of this “halo effect,” you need to build a contest’s imprimatur so that people associated with the brand benefit whether or not they win.

3. They help organizations spot emerging trends. When you receive more than a thousand applications from a community in an open contest, you get a good sense of what people are thinking about and what’s going on beneath the surface. Miami is strong in visual arts, but through an arts challenge, we saw a growth in performance dance, independent filmmaking, and live music—places we didn’t expect. We are now supporting those trends through our regular arts program.

4. They challenge routines and entrenched foundation behaviors. Contests help create a “safe zone” for risk-taking and experimentation, supporting new ideas and trying out creative ways of funding that, if successful, might spill over into regular grantmaking practices. Before contests, Knight Foundation rarely funded individuals directly. But in the first two years of the news challenge alone, we funded 14 individuals. The excitement of seeing good ideas from new sources caused us to create new funding structures. We began to make different types of grants—among them, expenditure responsibility grants—so that we could serve individuals and for-profit startups as part of our regular grantmaking. We also shortened application forms for all grants and changed our due diligence requests—the shorter contest forms gave us all we really needed.

5. They complement existing philanthropy strategies. In Macon, Georgia, for example, Knight has funded major projects to revitalize the College Hill Corridor—historic and downtown districts seen as keys to citywide renewal. In tandem, we started the Macon Knight Neighborhood Challenge, a five-year, $3 million contest inviting residents to submit novel ideas for improving life in their neighborhood. The projects we subsequently funded, most under $15,000, include restorations and small graffiti clean-ups, a community garden, composting workshop, and local music festivals. These modest projects all take place around the larger community renewal effort, enhancing local development with creative input from residents.

6. They create new ways to engage communities. If a foundation puts new ideas through the old selection mill, nothing really new will emerge. But if people in the community can comment on entries or even help choose winners, they feel engaged, which further promotes the contest. Tapping into the wisdom of the crowd, however, can be a tricky proposition. So in our arts challenge, we added a “People’s Choice” award, creating a short list of smaller arts organization finalists; people voted for the winner by SMS text. We didn’t use this method to judge institutional applications, as it would be unfair for a small art collective to compete for public votes against an established opera or ballet with vast email databases.

Many see contests as a passing fad, the philanthropic flavor of the month. But McKinsey and Company’s report “And the Winner Is…” suggests that contests are becoming ingrained in philanthropy. Over the 10-year period covered in the report, the total value of nonprofit contest-prize growth was 18 percent per year, compared to 2.5 percent for general charitable giving. Indeed, some foundations are doing stellar work in the field of contests, among them the X-Prize Foundation, Case Foundation, Bloomberg Philanthropies, MacArthur Foundation, the Robert Wood Johnson Foundation and the Rockefeller Foundation.

Like many of these organizations, Knight Foundation sees enduring opportunities in contests. They enrich the community of ideas, and appeal to people transforming the physical structure of our cities and the cultural landscape of our society. They are one more effective tool helping us—and helping others—inspire social change.

Read Knight Foundation’s new report on open contests.