Funding innovation to make the world a better place is hard, because breakthrough ideas often seem counterintuitive at first.
Take vaccination, for example — the idea of deliberately infecting people to protect them seems crazy until you see that it works and understand why.
But Nesta has predicted that more organisations will begin to experiment with a new approach in 2019: randomly allocated research funding.
Applying for funding, particularly for research, is really time-consuming, which means that people waste years bidding for funding they might never get. Not only is this a waste of researchers’ time, but it’s also a waste of time for funding organisations, and that is time that could be better spent delivering for their supporters.
Second, the way that research is currently funded is at risk of bias. The recent Grant Givers’ Movement report on bias among grant-makers raised important issues about a lack of diversity in the leadership of grant-giving organisations, and a perception that this leads to bias against ethnic minority-led organisations.
This bias might in turn affect how funders work with minority-led organisations, which, beyond the need to do so for its own sake, is why improving diversity among funders is likely to have a positive impact on those charities.
The report echoes the concerns about research funding that is a function of many charities. For example, evidence from The Guardian showed that fewer than 7 per cent of research grants in 2016/17 went to teams led by women.
A recent Nesta report highlighted the "Matthew effect", whereby research carried out in locations (currently primarily London and the south-east) with existing track records is favoured for funding over others.
This creates a feedback loop that attracts the best researchers and creates the best facilities, thus drawing even more funding.
Finally, the existing funding system can often ignore the most innovative ideas to tackle problems.
Research suggests that peer reviewers who know a subject area well tend to mark down more novel proposals, while reviewers also mark down research in fields further from their own.
This inbuilt conservative bias can discourage creativity and could easily miss world-changing ideas in their infancy.
An alternative system for choosing which projects to fund is to allocate money randomly. One model would be to divide proposals into three categories: a top category that is always funded, a bottom category that is never funded and a middle category where funding is allocated by lottery.
This approach would help because often the proposals in the middle are the hardest to assess.
A process like this could dramatically reduce bias. It would be shorter, freeing up time for both researchers and funders. And it would combat the tendency towards familiarity in the existing system, allowing more innovative research to be funded.
Randomisation wouldn’t solve everything. It might not be needed in circumstances where projects are easily assessed.
There are also concerns about how randomised funding would work when funders want to tackle particular strategic issues, such as ageing or inequality.
There are worries about how researchers could churn out as many proposals as possible to maximise their number of "lottery tickets", and there are questions about how thresholds of funding are set. With careful thought and planning, these concerns can be overcome.
The third sector is often accused of conservatism, of sticking to the way that things have always been done.
Randomised funding would be a bold experiment to help reduce bias in who receives funding, including against minorities, and could equally see support for great new ideas that would otherwise be ignored, all the while reducing the burden of time on grant-makers and grantees alike.
For that reason, we predict that in 2019 randomisation might be an idea whose time has come.
Laurie Smith and Teo Firpo are senior researchers at the innovation charity Nesta