Monday, February 18, 2013

It isn't your money

Grant funding, by definition, is to be used "for the public good".  That is the definition of a nonprofit.  If the money were yours to use when and where you wish, you would be a for-profit.

You may feel that any money you receive will ultimately go toward accomplishing your mission, but there are normally very specific expectations for how the funds are used. 

Struggling nonprofits sometimes fall into a habit that at the very least will assure they lose support in the future.  They receive a restricted grant, but spend the money for things other than what they outlined in their grant application.
If you need operating funds, that is what your grant application should request.  If you applied for funding to purchase specific items, or provide specific services, you absolutely can't use it to pay your other bills without the grantor's permission. 

Even some supposedly "unrestricted" grant funding should usually be related to mission-specific spending.  If you suddenly find that you don't need all of the money for the specific purpose for which it was requested, you can either return the excess to the grantor, or apply to them to shift it to another program.  If you have any doubts about what the grantor or donor meant by "unrestricted" you should be sure that you clarify the meaning.

Aside from losing the trust of your grantor, you may also be criminally liable, if the grantor can prove you "knowingly and deliberately" received funds that you knew you were going to spend on something else.  Most courts view that as fraud. 

Tracking the uses of grant funding is a necessity.  Be sure you can prove that you spent it on the right things. 

No comments:

Post a Comment