The time-honored mechanism of allocating funds based on ranking of proposals by scientific peer review is no longer effective, because review panels cannot accurately stratify proposals to identify the most meritorious ones. Bias has a major influence on funding decisions, and the impact of reviewer bias is magnified by low funding paylines. Despite more than a decade of funding crisis, there has been no fundamental reform in the mechanism for funding research. This essay by Ferric C. Fang and Arturo Casadevall explores the idea of awarding research funds on the basis of a modified lottery in which peer review is used to identify the most meritorious proposals, from which funded applications are selected by lottery. The authors suggest that a modified lottery for research fund allocation would have many advantages over the current system, including reducing bias and improving grantee diversity with regard to seniority, race, and gender.