The Truth About Grant Money and Non-Profits

This article is dedicated to anyone in the community who wants to open up a non-profit corporation and obtain grant money.

A non-profit corporation which many call “nonprofit organization” is a corporation formed to carry out a charitable, educational, religious, literary or scientific purpose. A nonprofit can raise much needed funds for important causes by receiving public or private grant money or donations from individuals or companies.

Everybody has great ideas for their non-profit corporation. They want to turn their vision into a reality; they want to open a wayward home for girls and boys; they want to feed, clothe and shelter the homeless; they want to stop domestic violence and stop people from going to jail.

These ideas are all great but are these people setting themselves up for failure?

What is the truth about grant money? Could it be that there is “no grant money” for certain people to open a non-profit corporation? Don’t get me wrong. I am not saying that there is no grant money available for non-profit organizations. But what I am saying is that there is very little grant money available for certain people and certain purposes. Everyone should do extensive research before opening their doors.

Grant money is extremely hard to retrieve because it comes from the state and federal government; therefore, it’s closely monitored. Even after filling out stacks of paperwork about your potential goals for your non-profit, it’s like winning the lottery. And if you are one of the lottery winners, there’s no guarantee that you will ever win it again.

You have to dig for this money and many people are not willing to do that. They are also not willing to pay others to do it either. Others will tell you they will dig for it for a fee only to get your money and your hopes up and leave you at the end with nothing.

Once you accept funds with your 501C3, the Internal Revenue Service (IRS), (http://www.irs.gov/) aka “the government” has a hold on you.

The IRS is not there to assist you! The IRS is in a position to: 1) audit you at anytime, 2) close down your non-profit venture, or 3) send you to jail if they feel like it.

People who work in the non-profit sector make very little money and continue to have that “poor man’s mentality.” The only action plan they have is to open up these non-profit organizations and start to beg for grant money.

The grants that are passed out to a very few non-profits are so small that when these organizations run out of money, they refuse to pay their employees for 90 to 120 days.

Non-profits are just that not-for-profit. That means chances are you are going to end up spending your own money to make your non-profit work.

The options should not be to open a “not-for-profit” corporation but it should be to open a “for-profit” business.

The only way you will succeed with a non-profit corporation is to write a business plan and run it like a business.

Many people have actually put their lives on hold because they seriously think they can receive grant money. So in other words they have set themselves up for failure.

No one should ever depend on grant money to open or run a non-profit corporation.

Cathy Harris is a motivational speaker and business consultant. She is the author of book series “How To Take Control of Your Own Life” (http://www.howtotakecontrol.com)

The Truth About Grant Money and Businesses

Urban legends, old wives tales, community myths, misinformation, and misconceptions – no matter what you call it – they continue to plague the community.

We've all seen the headlines: "Millions in free government money for your business." Late-night infomercials, reference guides and websites promote the availability of grant money to entrepreneurs for starting and expanding businesses. Does it sound too good to be true? Well, it is! Your small business resource, the U.S. Small Business Administration (SBA) (http://www.sba.gov/), has valuable information to help turn your entrepreneurial dream into a thriving new business.

Would-be entrepreneurs often ask the Small Business Administration “Where can I get find grants to start a business?” And, sadly, some of these individuals pay big money to attend business financing seminars that travel from city to city focusing on “free” government money for their business. All you have to do is pay these folks up front and they will fill out some paperwork for you to apply for these “grants.”

The trouble is the rare few grants that are available are so highly specialized in research fields that the odds of getting them are astronomical. In other words, it’s a dead end. Forget about government grants to start a new business. It won’t happen.

The truth is that federal and state governments do not provide grants for starting and expanding small businesses.

The Small Business Administration or banks will not give money to anyone unless they meet a certain criteria. They have several lending programs, which makes it easier for a small business to borrow money. SBA administers these three separate, but equally important loan programs: 1) The 7A Loan Guarantee Program, 2) The SBA Low-Document Program, and 3) SBS 504.

To apply for an SBA loan, you need to visit your local participating bank or lending institution. General lending criteria for the Small Business Administration include: 1) outstanding credit history (FICO/Credit Score of over 700), 2) cash flow adequate to service the debt, 3) collateral, 4) equity, 5) character, and 6) experience.

Banks do give out loans, but they typically aren’t a good source for new companies unless you have built a relationship with the banks.

The four main types of loans that banks offer are: 1) Installment loans, on which the business makes monthly payments over a certain number of years, 2) Term Loans, with which the entire loan is paid off after a predetermined term (usually one, two, or five years), 3) Asset-based loans, which might be for inventory or equipment, and 4) Revolving lines of credit, which businesses can draw upon when cash is low and then pay off when cash flow is high.

Remember that 90% of all start-up money for a business comes from private sources such as moonlighting jobs, working part time, divorce settlements, child support payments, yearly income tax returns, 401K’s and other private and government pensions. Over 25% of all companies are started with less than $5000.

Raising money for your company is hard work and it can be completed only with careful planning and research. And again, don’t wait around on grant money to start your business.

Successful steps to opening a business is listed at (www.angelspress.com/businesslevels.html) Top business mistakes are listed at (http://www.angelspress.com/10topbusinessmistakes.html).

Cathy Harris (http://www.cathyharrisspeaks.com/) is a motivational speaker and business consultant.

Copyright © 2007. Cathy Harris. All Rights Reserved