Everyone knows that grants mean money, but many fail to understand the risk that comes along with the cash. Mismanaging a foundation grant can eliminate the possibility of future funding and sully your organization’s name. Mismanaging government grants, especially federal awards, can result in more onerous red tape, funding termination, and even criminal prosecution.
“Mismanagement can occur in any phase of the grants process, from proposal development to program implementation,” said Barbara Floersch, grants expert and author of You Have a Hammer: Building Grant Proposals for Social Change. “But whether it’s intentional or carelessness, the results are the same.”
When developing a grant proposal, take care to use solid, up-to-date data from authoritative sources. It’s not ethical to cherry-pick data that supports your case but doesn’t show a truthful picture. Don’t use old data that supports your case when more recent data tell a different story. Funding awards are based on the information you present. Using misleading or fabricated data is fraudulent.
Be sure your organization has the capacity to deliver the services laid out in grant proposals. If you get the money but can’t deliver the goods, there will be repercussions. Funders may terminate awards, place your organization on a list of high-risk grantees, ask for refunds, and for egregious, intentional violations may take you to court.
Your organization can only use grant funds for purposes defined in the grant proposal. The proposal is the blueprint for action. Don’t move large amounts of cash from one line item to another without the funder’s approval. If you don’t spend all the grant money, don’t use the remainder for unapproved purposes. If you need to make substantive changes in the budget, you’ll need to negotiate with the funder.
Some funders require grantees to maintain written, up-to-date policies and procedures governing various operations (i.e., procurement, financial management, grievances). Don’t say those documents are in place if they are not. Solid policies and procedures are a telling indicator of your organization’s ability to accept and manage grants.
“Grant funding can be the rocket fuel to help your nonprofit pursue its mission,” said Floersch. “But this fuel is combustible. Handle it with care.”
