The purpose of the prize is fully outlined here, and summarised as follows:
The Templeton Prize honors a living person who has made an exceptional contribution to affirming life’s spiritual dimension, whether through insight, discovery, or practical works. Established in 1972 by the late Sir John Templeton, the Prize aims, in his words, to identify "entrepreneurs of the spirit"—outstanding individuals who have devoted their talents to expanding our vision of human purpose and ultimate reality. The Prize celebrates no particular faith tradition or notion of God, but rather the quest for progress in humanity’s efforts to comprehend the many and diverse manifestations of the Divine.
The title of the prize is now "the Templeton Prize for Progress Toward Research or Discoveries About Spiritual Realities". The prize tries to draw attention to the idea that progress in spiritual information and spiritual discoveries is just as feasible as progress in medicine, science and cosmology. In fact, spiritual progress may be more important than all of these other areas. Therefore, the name of the Prize was changed to inspire greater attention to research or discoveries of a spiritual nature. Spiritual realities refer to matters of the soul that are universal and apply in all cultures and to all peoples. Examples would include subjects like love, purpose, infinity, prayer, and thanksgiving. These realities are non-material, transcendent or metaphysical areas about which many people have intuitive perceptions. The inspiration behind the prize is the idea that all people have a spiritual dimension to their lives, and it seeks to celebrate progress in this dimension.
The 2013 recipient of the Templeton Prize is Archbishop Desmond Tutu. Quite rightly it appears to me, it is Archbishop Tutu's work with the Truth and Reconciliation commission in post-apartheid South Africa that is at the heart of the reasons for the award. This bears witness to spiritual values of truth, forgiveness and reconciliation and the way in which these values can overcome the temptation for revenge.
While I think there is undoubtedly grounds to justify the award to Archbishop Tutu, and the nature of the award is such that one might not always agree with everything advocated by recipients, Catholics might nevertheless welcome the award with a certain caution. A video on the Templeton Prize website shows Archbishop Tutu arguing that it is only through relationship that we become human, defining humanity only through this relationship with others. This is at best a partial perspective, at worst a seriously flawed conflation of a potentiality that defines human nature with the actual act of that potentiality.
More significantly, Archbishop Tutu's advocacy of abortion and contraception - see report here from May 2012, and there are others - would put his outlook at odds with a Catholic point of view. Archbishop Tutu is also reported to be a supporter of gay marriage (here). From a Catholic point of view, it is possible to recognise the extent to which Archbishop Tutu has borne witness to spiritual values, and that in a manner that has an international impact justifying an award of the Templeton Prize; but there will also be a recognition that he holds a significantly flawed view of the wider spiritual values of the human person.
[Any verification or otherwise of the views attributed to Archbishop Tutu received as comments will be published - my own sources are secondary.]