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Talking by my personal experience, contests have helped me to make new clients, and some of them have become very good and keep hiring me.
It is true that the risk exists but if you do this as an extra and not as your main business, it is something you can deal with.
Also if your design is not chosen you can use it some other time or sell it somewhere else.
A solution could be that TF receives the money before the contest starts and in case there is no winner, that money can be used to promote internal contests or maintenance.
Just ideas