By Dan Hubbard and Kevin Schadick, Esq

FRAUD - noun - ˈfrȯd
Fraud consists of an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him/her or to surrender a legal right and fraudulent means acting willfully and with specific intent to deceive or cheat, ordinarily for purposes of either causing some financial loss to another or bringing about some financial gain to oneself.

SCAM - transitive verb - ˈskam
To deceive and defraud (someone): to obtain (something, such as money) by a scam.

If you have spent any time on social media as a nonprofit, you have read these posts: “WHO NEED A GRANT?” or “Who needs a List of 2024 Grants to get their business off the ground!!! NO PAY BACK!!!”

It’s infuriating, but moreover in virtually every case they are red flag invitations to be defrauded or scammed.

Years ago, the federal government rolled out regulations commonly known today as “Know Your Customer (KYC)” and “Anti-money Laundering (AML).” The requirements under these terms were at first placed solely upon the financial sector to curb electronic fraud and money laundering, and hit hard at organized crime. But today, nearly every business adheres to KYC and AML practices, with an important add-on: “Know Your Vendor (KYV).”

The nonprofit sector however has been slow to adopt the three very important practices, and thus a lot of red flags are missed.

LET’S TALK ABOUT IMMEDIATE RED FLAGS THAT NONPROFITS SHOULD LOOK FOR

No Website

No LinkedIn

No Professional E-mail

No Non-disclosure Agreement

No Professional Services Agreement

Money is One of the First Things They Want to Discuss

If your nonprofit encounters any of those conditions, RUN!

SECONDARY, BUT CRTICAL RED FLAGS

A grant writer should want to know about the person engaging them on behalf of your nonprofit, the management structure, and the Board composition. While you do want a diverse Board, the members need to be able to understand the need, mission, and how to be effective. If your nonprofit is tackling financial toxicity in cancer care, and providing emergency financial relief to cancer patients, your grant writer should want to see a nexus to your Board. If they don’t drill down on that, it’s a red flag.

It’s generally a bad sign if a grant writer does not offer to meet with you and your Board so they might thoroughly understand your mission, programs, and group dynamic. An avoidance from in-depth engagement means they're likely focused on taking your money without investing time in furtherance of meeting objectives. If a grant writer states they will review your online presence to learn all they need, it indicates they are not committed to capturing the unique details of your program, which are crucial for a standout proposal.

A legitimate grant writer will not want to fail in securing you a grant because their track record of success matters! So, you will want to read from them this question, “How many participants do you serve monthly and annually, how do you measure your organization's impact on the community, and do you have documented evidence?” For your organization to receive funding, a grant writer must demonstrate that you have made, or can make, an impact. If they do not seek that information and go over it with you in detail, then it’s a red flag!

The grant process should always begin with a writer taking your list of potential grantors, coming up with their own list, and discussing which may present the best opportunities for success. Grant submissions are made online. Most fortune 1000’s use one of five third-party platforms to receive grants and proposals. Some of the best results however come from direct solicitation to businesses local to your nonprofit and the population it serves. In those instances, contact generally begins and ends with email, and sometimes a web form. In either case – third-party platform or email – a LEGITIMATE grant writer will not make the submission on your behalf. Instead, they will draft a document or document set (many of which are quite large), disseminate and brief them to your Board, allow for gestation, make changes as appropriate, and then provide those changes to you for your official submission. If this doesn’t happen, it’s a red flag!

There are three truths of grants and grant writing. First, the process is a marathon, not a sprint. It requires preparation, an enduring spirit, and it takes time. Second, the marathon landscape changes. Five years ago, any cancer NPO could obtain a grant from most of the fortune 1000. Today, it is far less, and many companies have moved away from one-off donations toward more strategic and long-term philanthropic initiatives. They focus on aligning their charitable activities with their core values and business objectives, that are typically expressed in their ESG, DEI, and CSR publishing's. A legitimate grant writer will be able to tell you about the business you are soliciting. Third, grants are an expensive endeavor. We utilize Candid FDO Professional and GrantStation to identify traditional grant opportunities, CyberGrants for identifying and managing data and submissions, and Qualtrics BI tools for research and analytics to pinpoint niche grant opportunities and better align your submissions with what grantors want to fund. If your grant writer cannot tell you about the paid tools they use on your behalf, it’s a red flag.

Nonprofits are unfortunately seen as easy prey for fraudster grant writers. They know that we need money to push our mission, and they not only sense desperation, they push desperation as part of their scam. Why do we write “we?” Because we serve as Director and Board members for nonprofits. We have seen the tricks, we have felt the pain of time wasted, and that’s one of the reasons we formed PreparedNonprofit.com.

Have a question? Contact us today!