Write better grants. Make more money.

WARNING: Spend Grant Money as Promised or Pay Dearly

Let’s say you get a grant for a proposed program, and then once its awarded, the program has ended, changed or another financial obligation seems more pressing than what you proposed. Something like paying rent of taking your staff on that Caribbean Cruise Team Building Retreat. You ask yourself if you can spend this money as you see fit, in other words on something that was not in your proposal, and justify it by saying that the Funder supports your organization in general, and would be happy to pay the rent if it means you will otherwise close your doors, right?

WRONG! You are under a legal and moral obligation to spend awarded grant money as you proposed to spend it in your application. If you do not, you will pay the price. Certainly, you can count on the Funder never considering you for an award again. Additionally, you may be responsible for reimbursing the for funds misspent and/or face legal penalties. A few examples of creative money movers who paid dearly:

In 2006, Miami-Dade social service programs lost their eligibility for future Community Development grants and is forced to pay back $12 million, for breaking federal funding rules. Miami Today News

In 2006, the federal government filed a lawsuit against Cornell claiming that the university had been awarded federal funding for research that never happened. Reader’s Digest

In 2005, The Mayo Foundation, parent organization of the Mayo Clinic, has paid the United States $6.5 million to resolve allegations that it charged the government under federal grants for research costs unrelated to the research projects sponsored by those grants. Department of Justice.

Spending grant money for expenses that were not outlined in your original application is illegal and these cases only highlight the need to keep detailed budgets and expenditure records for all grants received. If you do have programmatic changes that necessitate a change in spending, contact the Funding agency first. They do have the right to ask for the money back, but if you can present a case that the next spending will also accomplish their mission, they will appreciate your candor and may be willing to be flexible.

About Katie

the editor of Find Funding. Her writing about grants & nonprofits has been published in Charity Channel's Grants & Foundation Review and NONPROFIT WORLD.

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