By comparison, the Bollingen Prize, a biannual poetry award also administered by Yale, pays its winner $100,000, as does the annual Ruth Lilly Poetry Prize. The Pulitzer Prizes and the National Book Awards are each worth $10,000. Overseas, the Man Booker Prize in Britain comes with an award of roughly $80,000, while the Impac Dublin Literary Award is about $140,000.

The judging for the new prizes will happen in two stages, Mr. Kokot explained: a steering committee will solicit recommendations from a group of nominators, and the final selection will be made by a panel consisting of Mr. Kokot; Jeffrey Peabody, his co-executor; and two longtime friends of Mr. Windham, Robert A, Wilson, a rare-book dealer, and Bruce Kellner, a retired English professor. They will be aided by a group of additional judges.

The prizes are meant to reward both established and promising writers, and Mr. Windham, who never went to college himself, specifically requested that writers with no academic affiliation be considered.

Mr. Windham was a minor but well-regarded author who at 19 came to New York from his native Atlanta, virtually penniless by his own account, and quickly became friends with Tennessee Williams, with whom he collaborated on a play, Truman Capote and Lincoln Kirstein, a founder of the New York City Ballet. He wrote short stories and novels, including one, “Two People,” about a married New York stockbroker who falls in love with a teenage Italian boy, that was probably too frank for its time when it came out in 1965. But he is best known for two memoirs, “Emblems of Conduct,” about his days in Atlanta, and “Lost Friendships,” about his relationships with Williams and Capote.