Grants, both federal and private, are indispensable to nonprofit organizations. They can fund a project, facility upgrade or simply the day-to-day costs of operation. As a nonprofit manager, you probably know how crucial – and competitive – grants are.
The nonprofit sector is often a place of big goals and bigger hearts. Unfortunately, some people take advantage of the hopes and financial strain that many nonprofits face. Therefore, proceed with caution when seeking or receiving a grant.
Beware fake grants
Scammers target nonprofits in the same way they target individuals. The Federal Trade Commission warns against accepting deals that seem too good to be true.
Watch out for common signs that a scammer is offering a suspicious grant, including:
- The award was unsolicited
- They require a processing fee or account details for a “direct deposit”
- The provider claims to be from the government
- The provider repeats exciting or urgent words, such as “free,” “won,” or “now”
It’s hard to imagine that anyone would steal from a charitable or religious cause, but it happens. The resulting loss can set a nonprofit back significantly if not imperil the organization altogether.
Handle funds responsibly
Grant providers aren’t the only ones who need to act with honesty. On the flip side, recipients also need to abide by the law.
Federal grants particularly set high expectations for nonprofits. Recipients must use the funds exactly as they stated in their application or agreement. Straying from the proposed budget even slightly could have huge consequences.
Avoiding fraud allegations starts with effective governance. Record, store, organize and audit transactions to ensure that all members are practicing good stewardship. Personal or extraneous expenses could otherwise fly under your radar. Before using grant funds, nonprofit managers should understand the legal obligations involved with such a valuable gift.