The main writing organizations sponsor contests to generate operating funds. The National Romance Writers of America and their special interest chapters such as the Faith, Hope and Love chapter sponsor contests. The American Christian Fiction Writers sponsors writing contests for the published and unpublished.
And why is that important? Think about all that these organizations and chapters have to offer aspiring and published authors. They offer workshops that teach writing skills, they sponsor conferences which give us opportunities to meet editors and agents, they share industry news, they offer opportunities to meet other writers and network. Many of these organizations publish newsletters and magazines Many have websites with a wealth of information about the writing business. All of these things require money. some of the events pay for themselves. But an organization needs cash on hand to initiate conferences and workshops. Websites and newsletters cost money, not to mention postage. And don't you love to go to meetings and talk to other writers? Without these organizations, we wouldn't have that opportunity.
So if you enter a contest and do not place, you still haven't lost. You have supported the continuation of organizations that make the life of a writer easier, better and more fun.