The top six myths about grant funding for business and personal finance.
Looking for "free" money for your business or personal needs? Before you spend too much time and even your hard-earned money applying for a grant, read through these six top myths many people have about grant funding:
Myth #1: Anyone is eligible for or can get a grant.
Yes, there are grants out there (mainly federal government grants) that are open to individuals and for-profit businesses. However, some of these grants fall under programs that are so obscure and specialized that most people or businesses wouldn’t be able to fit within the grant’s guidelines or be able to provide the services. There are hundreds of grants for numerous government programs but unless you provide services that fit the scope of work these programs are targeting, you won’t be eligible for this “free” money.
For foundation grants, I would estimate that at least 98% of them will only take grant applications from, and provide grants to, a verifiable non-profit organization or a similar public or private educational institution. So, unless you are willing to start your own 501(c)(3) tax exempt, non-profit agency, or get sponsored by an existing non-profit, you most likely won’t find a grant you are eligible for from a foundation.
Myth #2: You can get a grant for personal reasons: to pay bills, get out of debt, travel, write a book, buy a home, etc.
Unfortunately, the only “grants” I have ever seen that give people money to pay their bills comes from charitable agencies for low-income people who are in financial crisis. And, only then the money is limited and used for short-term assistance for rent, utilities, food, medical expenses, etc.
There are grants out there to purchase property or housing units, but these types of grants (from the federal government) are for rental properties that serve the low-income populations in some way.
There are also grants out there for artists and other creative folks to pursue their creative endeavors, but they are smaller grants and you usually have to have some “history” behind your request. In other words, if you want to get a grant to help you write your book, you need to have already been published in some cases, or have a history of achievement in the writing field. It is also the same for artists in other mediums.
But, on the plus side, some of the grants that aren’t normally for creative purposes might help a creative project if it falls within the grantor’s field of interest. As an example: if you want to write a book on domestic violence for survivors, then you might be able to approach foundations that support domestic violence issues.
Myth #3: The government, large companies, and foundations are required to give away this money.
Yes, they may have money to give away and in many cases are required to do so, but that doesn’t mean they give it away to just anyone. Each funding entity has certain goals behind the money they are giving away and guidelines in place that state which applicants are eligible to apply. And, those applicants are the ones that propose to offer programs, services, products, etc. that further the agency’s goals.
And, most government agencies and foundations have more than enough applicants for that money. They have designated funding amounts in a grant period (usually annually), and in most cases, the request for funding is more than the amount of money they have to give away in that grant period. The grant awards go to the applicants that are in closest alignment with their mission and purpose.
Myth #4: You can get money to start or expand your business.
While you might be able to find grants supporting entrepreneurs or established business owners, it is more rare to find grant funding for this purpose. Most grantors mainly support non-profit organizations that serve the community and are more interested in an established business with history and experience.
Unless you are planning on starting a non-profit business, or a business that falls within the specialized services supported by the mission and goals of the grantor and the grant funds, the best option for those looking for funds to start or expand a business is through a business loan, or perhaps with an application to a government program for an actual contract.
Myth #5: Grants don’t have to be paid back or there are no strings attached.
You must trade value for value. Don’t consider a grant to be free money, but payment for a service or product you provide that furthers the mission and goals of the grantor. You’ll have to demonstrate this in your application to the grantor and it is what you will have to follow through on if you receive the funds. Iin most cases you will have to report back to the grantor about the results (outcomes) of your service or project. Some grantors require only a final report on your grant while others will require periodic reports during the life of the grant or project. So, if you said you would do something with grant money, you had better do it and have results to show for it or you will have to pay the grant back to the grant agency.
Myth #6: Getting a grant is easy.
If that were true, everyone would be applying for and getting grants! Just because a person, business, or agency applies for a grant doesn’t mean that it will be given to them. There is a lot of time, thought, planning, etc. that goes into a project as well as the grant proposal itself – with no guarantee at all of getting the money! And again, there usually are more request for funding than there is money to give away. There is a lot of competition out there for shrinking pots of money, and most of that competition is coming from worthy non-profit (charity) organizations that may have more experience in providing essential programs and more experience in writing, getting, and managing grants.