We’ve been talking about how to organize a non-profit endeavor. I’ve brought you information in previous articles and tried not to be too long-winded. But on the subject of grants, I need to rant.

Many people have heard of “free grant money.” I receive in my email numerous messages about available grant money, in the form of government, corporate, and private grants.

I also hear first-hand accounts from people that were “sold a bill of goods” from a company that “specializes” in helping organizations apply for available grant money.

Too many people have lost money trying to get a “free” grant, so I want to share with you some things to watch out for when you consider applying for grants.

Grant Truths

These statements are true:

• Grant money is available.
• It’s money that you don’t have to pay back.
• It’s money that governmental agencies, private companies, or public companies hand out to organizations that fit specific criteria, set by the group giving out the money.
• Those groups give out the grant money and then claim it as a benefit on their own tax return.
• They set the criteria for the organizations that receive the money.

More Grant Truths

When you are thinking about applying for grants, you have to use some common sense. While it is possible to apply for and receive a grant, the grant industry as a whole is not completely forthright about how it all works.

Not everyone who applies for a grant is going to receive one. The companies that are giving grants not only have a set of criteria for the kinds of organizations they like to support, they also have a set of criteria they must follow so that they get their tax benefit.

Timing is important too. Grant applications have deadlines by which you must apply for each grant. If you miss the deadline, it doesn’t matter how great your organization is; you won’t be able to get the grant.

Who Gets the Grants?

Many of the grants out there must be given to non-profit organizations that are recognized by the Internal Revenue Service as a tax-exempt entity; otherwise, the company giving the grant cannot use the write-off on their own tax return. Grant companies and their salespeople don’t always tell you that. They will let you try to take a for-profit business through the process; after they have collected your money they will tell you that if you set up a non-profit organization, your chances will improve. Then they will sell you non-profit structuring services.

What is the Grant Writing Industry?

Applying for a grant is like many bureaucratic processes: you have to do a lot of paperwork. The paperwork can be really time-consuming, especially if you don’t know how to do it. You can hire grant writers to prepare all of the paperwork that you send in to apply for a specific grant, and a good grant writer knows the steps that are required and how to complete them.

The grant writing industry has grown substantially in past years, and it will grow even faster as we keep working through our economy problems. Business owners are looking for solutions to their financial problems.

A Great Telemarketing “Business”

Typically, businesses are contacted through telemarketers or online advertising followed with a telephone consultation. At the phone consultation, the business owner is told that many grants are available for their type of business and in their geographical area. The consultant will advise the potential customer that he will run the owner’s information through the “database of available grants” and then call them back with possible available grants.

After that, the consultant will lure the prospective customer with some dollar amount of grants that came up on the database search, telling the business owner that all they have to do is write the grant applications and apply.

Of course, the grant company will take care of all of the grant writing and applications for a modest fee, usually somewhere between 1500 and 5000 dollars. (I did work with one client who paid 20,000 dollars for the grant writing services).

Is it Really a Scam?

How these grant writing companies stay on the fringe of legality is by charging you a fee for doing all of the paperwork for you without any guarantee of your receiving a grant.

How these grant companies take advantage of you is by hyping up the idea that you can get a grant that is just waiting for a business like yours.

They will explain to you that it can take a year or two for you to get approval on a grant, depending upon the calendar schedule for specific grants and how many people are applying each year for those grants.

If you don’t get the grant, it won’t be because the paperwork was not filled out correctly. That’s how the grant writer is absolved.

They will also promise you that if after the first year, you haven’t received a grant, they will continue to help you during the second year. This of course, is not that hard because they really don’t have to do anything.

How to Spot a Scam Artist

Knowing when you are talking to a legitimate grant writer and a sketchy company is a hard to determine. Most of those companies employ decent, and sometimes great, salespeople. The potential client wants to hear how easy it’s going to be to get a grant. That makes the sales guy’s job even easier.

The thing to watch out for is how you and the grant writer find each other. If you were contacted by an automated dialer that asked you to push “1” if you are interested in free grant money, chances are it is not a good idea.

If you are contacted through an email that showed up in your junk email folder with a subject line that says something like, “Get your free government money”, chances are it is not a good idea.

Do Your Research

Always remember to look for bad press on the grant writer and do your research.

• Check with scam alert websites, the Better Business Bureau and with other consumer protection sites.
• Check with the governmental agencies or companies to see if they really are giving out a grant for a group like yours.
• Look to non-profit organizations that help non-profits with applying for grants.
• Ask the grant writer for references.
• Ask how long the grant writer has been in business, how many clients he has, and what percentage of grants he writes actually receive a grant.

It’s important to work with companies that you trust and that you feel good about. That’s true when we hire any professional to help us. If you don’t trust the person selling you on the service, it’s possible that you don’t have a good fit. Look for another company.

If it sounds too good to be true, it probably is!

Honest grant writers will not need to oversell you; honest grant writers will explain to you how grants really work, and that you might want to think about other funding options along with the possibility of getting a grant.