Although the Nobel Prize in Literature has become the world's most prestigious literature prize, the Swedish Academy has attracted significant criticism for its handling of the award. Many authors who have won the prize have fallen into obscurity, while others rejected by the jury remain widely studied and read. The prize has "become widely seen as a political one – a peace prize in literary disguise", whose judges are prejudiced against authors with different political tastes to them. Tim Parks has expressed skepticism that it is possible for "Swedish professors ... compar a poet from Indonesia, perhaps translated into English with a novelist from Cameroon, perhaps available only in French, and another who writes in Afrikaans but is published in German and Dutch...". As of 2016, 16 of the 113 recipients have been of Scandinavian origin. The Academy has often been alleged to be biased towards European, and in particular Swedish, authors. Some, such as Indian academic Sabaree Mitra, have noted that, though the Nobel Prize in Literature is significant and tends to overshadow other awards, it is "not the only benchmark of literary excellence."
Nobel's "vague" wording for the criteria for the prize has led to recurrent controversy. In the original Swedish, the word idealisk translates as either "idealistic" or "ideal". The Nobel Committee's interpretation has varied over the years. In recent years, this means a kind of idealism championing human rights on a broad scale.
Alfred Nobel stipulated in his last will and testament that his money be used to create a series of prizes for those who confer the "greatest benefit on mankind" in physics, chemistry, peace, physiology or medicine, and literature. Though Nobel wrote several wills during his lifetime, the last was written a little over a year before he died, and signed at the Swedish-Norwegian Club in Paris on 27 November 1895. Nobel bequeathed 94% of his total assets, 31 million Swedish kronor (US$198 million, €176 million in 2016), to establish and endow the five Nobel Prizes. Due to the level of scepticism surrounding the will, it was not until 26 April 1897 that the Storting (Norwegian Parliament) approved it. The executors of his will were Ragnar Sohlman and Rudolf Lilljequist, who formed the Nobel Foundation to take care of Nobel's fortune and organize the prizes.
The members of the Norwegian Nobel Committee that were to award the Peace Prize were appointed shortly after the will was approved. The prize-awarding organisations followed: the Karolinska Institutet on 7 June, the Swedish Academy on 9 June, and the Royal Swedish Academy of Sciences on 11 June. The Nobel Foundation then reached an agreement on guidelines for how the Nobel Prize should be awarded. In 1900, the Nobel Foundation's newly created statutes were promulgated by King Oscar II. According to Nobel's will, the Royal Swedish Academy was to award the Prize in Literature.
Each year, the Swedish Academy sends out requests for nominations of candidates for the Nobel Prize in Literature. Members of the Academy, members of literature academies and societies, professors of literature and language, former Nobel literature laureates, and the presidents of writers' organizations are all allowed to nominate a candidate. It is not permitted to nominate oneself.