This sounds very cool! To clarify, would contributions that are submitted to and/or accepted for publication elsewhere (ie in academic venues) be considered for this prize?
AI safety research is receiving very little federal funding at this time, and is almost entirely privately funded, AFAIK. I agree with you that NSF funding leads to a field being perceived as more legitimate, which IMO is in fact one of the biggest benefits if we manage to get this through.
If you ask me, the AI safety community tends to overplay the perverse incentives in academia and underplay the value of having many many more (on average) very intelligent people thinking about what is arguably one of the bigger problems of our time. Color me skeptic, but I don't see any universe in which having AI safety research go mainstream is a bad thing.