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Avoiding Grant Scammers

Nov 12

Written by: Grants Office, LLC
Tuesday, November 12, 2019  RssIcon

By Elizabeth Evans

Great news! You’ve won a grant… you just need to send us your information and some money first.” That statement sounds rather ludicrous to those of us who are veteran grant professionals. After all, why would you need to pay someone who wants to gift you funding for a program or initiative? For folks new to grant seeking and the nonprofit sector though, they might not realize that this type of statement should raise an immediate red flag. Especially when they don’t even remember applying to the supposed funder in the first place!

Scammers are clever. They’ll contact you repeatedly and lie… whatever it takes to get your money. Some scammers have even gone so far as to pose as legitimate grants consulting firms or grant makers. Such an instance was recently brought to our attention, wherein a non-profit therapy horse organization had been contacted by a scammer. This scammer informed the organization that they had been awarded a $10,000 grant, but that they would first need to send in $1,000 by money order via Western Union to cover processing and legal fees associated with the supposed award. After several exchanges by text message, fortunately, the woman from the nonprofit realized something was off and asked for the supposed funder’s physical address and phone number. The address provided was that of Grants Office LLC. Upon googling our offices, the woman found a different number than the one the scammer had provided and decided to call it. BOY ARE WE GLAD SHE DID! We were able to confirm that her hunch was correct, and she had been contacted by someone looking to trick her into giving them money.

Sadly, many unwitting citizens as well as organizations are not as fortunate and end up losing their hard-earned funds as a result. It’s for this reason, that we want to dedicate a few pages out of this issue to offer a few simple reminders and tips related to grants and grant scammers.

Legitimate grants have a formal application process for which you must apply. Whether it’s through an online submission portal or mailing in your proposal packet – grants require applicants to fill out forms and draft narratives around both their needs and plans to address challenges faced. A legitimate grant funder will never tell you that an application was not required or that you won an award via a raffle or some other means. If you don’t recall doing any work to proverbially “toss your hat into the ring” for funding, it is definitely a scam.

Legitimate grants have allowable and unallowable expenses. Grants are awarded for specific reasons – whether it’s for research on links between genetics and cancer, pilot testing an innovative approach to early literacy, or mitigating congestion in high traffic areas through use of smart city analytics technology. Government-funded (state, federal, local) grants are subject to specific federal regulations around the use of funds. Private foundation grantmakers have more flexibility, but most will still set clear guidelines around what sorts of budget line items they expect awarded dollars to go towards. Scammers will try to hook you by telling you that you’ve been awarded unrestricted funds to use however you see fit.

Note: Check out the White House’s Office of Management and Budget Circulars for information on how federal funds can and cannot be used: https://www.whitehouse.gov/omb/circulars/

Legitimate grant funders use traditional means of professional communication. Like all other professional entities, State, Federal, and Foundation grant makers will communicate with you via email, phone, or posted mail. While there are many wonderful platforms that now connect the public to various agencies and organizations, formal business is still conducted via traditional channels. This means that the grant maker will likely notify you of award by both email and mail. If they telephone you, you are well within your right to ask for email or mail confirmation of whatever you discuss. Facebook, Twitter, LinkedIn, and other social media platforms are usually reserved for informal communication, such as congratulating an awardee, thanking a funder, impromptu project updates to stakeholders, or PR photo opportunities. Texting, Snap Chat, Instagram, WhatsApp, etc. are not professional means of communication for organizations. Anyone who tries to move official, professional conversations to these, or other social media platforms, likely does not have your best interest at heart.

Legitimate grant funders have a paper trail. State and federal grants are part of the public record and information related to them is subject under the Freedom of Information Act (FOIA). As such, you’ll be hard pressed to find a legitimate state or federal grant program that isn’t google-able. Head to the supposed agency or department’s website and poke around a bit. Make sure the information they’re telling you matches with what you see online. Most major corporate or nationally-focused private foundations also maintain websites which can easily be located online. But what about when you can’t find their website? There are countless small “mom and pop” family foundations all across the country that don’t have a web presence and instead advertise available funds in local news media, community bulletins, or through word of mouth. Regardless of whether or not the foundation has their own website, they are still required to register with the IRS to maintain their tax-exempt, grantmaker status. This means that their tax files (e.g. 990s and 990PFs) are part of the public record and can be found on the IRS website or through other clearinghouse services such as GuideStar.org or FoundationCenter.org. If you can’t locate the supposed funder’s paper trail you should probably cut off contact immediately. 

Legitimate grant funders don’t expect you to pay them money. Grantmakers accomplish their missions through providing funding to other organizations who align with their values and priorities. Once you’ve been awarded a grant, that funding is yours to use as described in your proposal. It’s for this reason that most grant funders, whether government or foundation-based, don’t allow for pre-award expenses to be reimbursed using grant dollars. This often includes compensation for the writer who pulled together the application! Because grant funders want to see you use their money  towards project success, to suggest that they expect you to also pay them after they have selected to give you money is a complete and utter contradiction with the reason for making grants in the first place.

In all our years working as a grant professional, our team has only once encountered an exception to the “legitimate grant funders don’t expect you to pay them money” rule. During funder prospecting research for a client we found a local foundation who required applicants to pay a submission fee in order to apply. The fee was less than $15 and was justified by the funder as necessary to help them cover the costs associated with the application submission and processing software they used. As a small foundation, they realized that the expense of the grants management software was biting into their ability to make awards. However, this software was also necessary to help them manage the large number of requests that they receive. Therefore, the funder’s solution was to pass the burden of cost, partially, along to applicants. This funder took the annual cost for the software, subtracted what they were able to comfortably cover out of their administrative allowances budget, and then divided the remaining amount by the average number of proposals they received each year. The resulting number is what they then decided to charge as part of the application fee. We won’t make any assertations as to the ethics of this practice, but we do respect the funder’s candor by providing a rationale, and want to note that they were also very forthright with interested applicants as to what to expect when applying (i.e. that there would be a fee for submission).

So what can you do to keep yourself safe?

Be skeptical. There are little to no protections available for those have fallen victim to a scammer. Those systems that are in place through state or federal agencies involve a long and complex process in which victims receive little support navigating. While it isn’t fair to expect you to be 100% on guard against those interested in taking advantage of you or your organization (talk about exhausting!), the best thing you can do to minimize risk is to be aware of warning signs. If it sounds too good to be true, it probably is! So, if you’ve been contacted about an unsolicited grant award, take down their information and tell them you’ll call them back.

Note: If you think you may have been a victim of a government grant scam, file a complaint with the Federal Trade Commission online, or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. You can also report grant-related scam attempts to the Health and Human Services (HHS) Fraud Hotline at 1-800-447-8477.

Google, Bing, Yahoo – whatever your favorite search engine – type in the organization’s name as provided to you (verbatim) and the name (first and last) of the person who contacted you. Make sure that the organization is real and named exactly as stated, and that this person shows up on an employee directory. If they don’t have a publicly available employee directory, confirm that the number they are contacting you from matches with what you see on the legitimate organization’s website, or that the email address is similar in format to other email addresses on the site.

Never provide your personal information to the funder. The funder will have requested whatever information from you they needed at the time of application. Occasionally they may need certain details clarified (e.g. lingering questions related to your proposed project budget, or a technical aspects of the project), but they should never come back and say they need your social security number or home address to finalize the award payments to your organization.

Interested in some additional reading? Check out the grants.gov learn grants blog for other posts related to how to avoid grant scammers: https://www.grants.gov/learn-grants/grant-fraud/grant-related-scams.html.

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