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About challenges

What is a Challenge?

Challenges are an open innovation approach, meaning that they are designed to crowd-in innovative ideas and solutions from a wide variety of actors and sources to expand the Government’s problem-solving abilities. Challenges are designed to have a “look and feel” that is different from the types of funding programs that governments and their stakeholders are accustomed to running and participating in.

Challenges provide incentives (both financial and non-financial) to encourage a broad range of innovators to tackle problems where solutions are not apparent, or current responses are not achieving the desired results. Incentives are typically structured through a stage-gated approach, where challenge participants receive incentives at different stages of the challenge.

Challenges can act as “pull mechanisms”, where a sponsoring organization, such as government, identifies a problem, publicizes the criteria, and awards innovators if and when they can measurably improve on a given outcome that the sponsoring organization is looking to achieve.

Challenges aim to solve big problems and accelerate progress towards ambitious goals and have a history of producing major breakthroughs in human knowledge and practice. They do this by shining a powerful light on an issue or opportunity and providing an incentive for innovators to prioritize the challenge goal.

Examples of International Challenges

Ansari X-Prize

A $10 million prize for the first non-government organization to launch a reusable manned spacecraft into space twice within two weeks to help accelerate the development of low-cost spaceflight (modeled after early 20th-Century aviation prizes that spurred transatlantic flight and managed by the X-Prize Foundation).

Learn more

Nesta Challenge's Longitude Prize

A £8m prize to stem the tidal wave of antibiotic resistance through the creation of a novel, rapid, point-of-care diagnostic test to reduce and/or better steer the use of antibiotics

Learn more

At Impact Canada, we use Challenges to reward the best solutions to some of Canada’s biggest problems.

By offering incentives, more innovators are encouraged to participate in the problem solving process.

This helps us to more rapidly achieve outcomes that matter to Canadians.

Running a challenge also helps to:

  • draw attention to an issue area,
  • attract and develop talent, AND
  • build new partnerships & networks.

So far, we’ve launched over 12 challenges and initiatives with our partners, including:

  • an opioid Drug Checking Technology Challenge, offering $1.75M in prizes for an accurate and accessible drug checking device,
  • a Smart Cities Grand Challenge offering $300M to improve the lives of Canadians using data and connected technology, AND
  • a $1M Accelerator to help women cleantech entrepreneurs advance their breakthrough ideas and grow their businesses.

Learn more about some exciting new solutions at

Benefits of Running a Challenge

Challenges have a set of inherent features meant to attract new talent and new ideas, and accelerate progress towards solving problems that matter to people. In terms of public policy benefits, challenges can:

  • Provide a targeted mechanism to shine a powerful spotlight on important public policy issues and enhance public awareness;
  • Open up problem-solving by creating opportunities for government to attract and collaborate with non- traditional stakeholders and innovators in the private, academic, and not-for-profit sectors to pursue solutions of mutual interest using streamlined processes;
  • Unlock strategic investments in areas where no natural incentive for innovation yet exists or where the risk of private investment prohibits a solution from being developed;
  • Develop a pipeline of new innovations (e.g. programs, services, technologies, products) that can help address complex policy challenges and/or fill important market gaps with tangible impact; and
  • Introduce an outcomes-based orientation to government programming by linking payments to progress and achievement, as opposed to paying only for expenditures and activities.

A more detailed look

For a more detailed outlook on how challenges can lead to positive results, please consult "Logic Model and Narrative - Impact Assessment of Challenges under Impact Canada" (March, 2020) publication.

Types of Impact Canada Challenges

Impact Canada challenges can be broken down into three basic types. This typology is based on the last three years of work and is expected to evolve over time. While there are some similarities in design elements across models, this typology provides a basis to help understand how challenges can tackle a wide variety of problems from different starting points.


Challenge prizes offer an outcomes-based funding award to whomever can first or most effectively meet a defined challenge or solve a specific problem according to a set of verifiable and pre-determined criteria. They focus on attracting innovators to help accelerate progress to address an identified gap – such as a lack of innovation in a particular area of the market.

Nesta Challenges is a leading international organization focused on the use of challenge prizes. Its Challenge Practice Guide (2019) is a comprehensive resource that can provide useful information to learn about and apply this approach.

Examples of Impact Canada Challenge Prizes:


Grand challenges use open and thematic competitions to fund a broad range of potential innovations on a prospective basis, often at an early phase. Problem statements are typically more open and less targeted to encourage a wider range of potential solutions and applying broader evaluation criteria.

As such, these types of challenges place a higher degree of emphasis on evaluation of solutions once implemented in the field. The innovations that prove to be successful based on rigorous evaluations of effectiveness can be candidates for scaling funding and/or could provide a demonstration effect to support replication of successful solutions in other contexts.

The Bill and Melinda Gates Foundation, along with Grand Challenges Canada, have been leading organizations in promoting this approach.

Example of an Impact Canada Grand Challenge:


Accelerators provide intensive and time-limited business support for cohorts of early stage enterprises (e.g. start-ups). Accelerators typically accept entrepreneurs on a set of strict criteria, but do not typically use competitive mechanisms to propel innovators towards achieving particular outcomes.

A creative application of challenges in an accelerator context sees prize funding (financial incentives) layered into traditional accelerator business supports to create a pull mechanism to reward enterprises that make the greatest progress towards a stated goal.

Example of an Impact Canada Competitive Accelerator:

Delivered by MaRS Discovery District as a pioneering organization in this field.


Innovation Initiatives

Impact Canada has also explored new models for Indigenous innovation as part of a broader Government of Canada effort to seek new approaches to build partnerships with Indigenous communities to improve outcomes.

Indigenous initiatives open a door to exploring ways to operationalize a Nationto-Nation relationship with Indigenous peoples in Canada, partnering directly with Indigenous experts to address barriers and explore ways to effectively accommodate cultural perspectives with sensitivity, humility and compassion to re-shape the colonized approaches that historically defined Canada.

Borrowing elements from challenge-based approaches, Indigenous innovation initiatives under Impact Canada rely less on the competitive aspects in favor of a more holistic, community-oriented frame that values interconnection and communal values over individual triumphs. Impact Canada is currently examining the features of these approaches that are both similar and distinct from traditional challenge-based programs.

They aim to bring forward ideas inspired by Indigenous knowledge, regardless of their stage of development, while finding pathways to develop these into sustainable solutions that can have meaningful, positive impacts on Indigenous communities.

As more initiatives are developed over time, Impact Canada will commit to documenting lessons learned to inform a growing demand to adopt creative approaches and partnerships.

Example of this model under Impact Canada: