Grant Writing Newsletter Volume 2 Issue 5

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2 Phil: What are some of the most common grant scam artists that you are aware of? What s true and what s fiction about their specific claims? As I've said before, free money scams are a problem. ~Mathew Lesko What Are Some Of The Most Common Grant Scams? Great question! Recently, I caught up with Michael Wells ( professional grant writer, author and consultant. Here what Michael had to say about this thorny subject. Michael: Well, the sort of longest tenure and best known is Matt Lesko, the guy who s on late night TV with the question mark suite, who talks real funny. He s sort of borderline. He s not probably doing anything illegal but he s pushing books and information about programs that 99% of people aren t eligible for. So, he treats as if it were say food stamps or agricultural subsidies in South Dakota. Well, unless you're a farmer in South Dakota, you don t need that information. He markets his books as if there s all this free money for you to get. The reason I say he s borderline is that he s manages to present information that s not actually fraudulent. It s just misleading. PAGE 2

3 Then going further along the scam spectrum, there s of course the telemarketers. These come and go. Probably a couple of times a month, I ll get a call. Generally, it goes to my voice mail and says something like, Small business owners: there s government money available for you. How much money do you want? And, so forth. These are scams. They ve probably moved on to something else because I haven t heard from them for a while. There is an organization called National Grants Conference that toured the country giving what they called free seminars that were designed to channel people into paid services that then got people into, as you mentioned, memberships that are charged to their credit cards, in perpetuity or until somebody finally gets wise and cancels billing to their credit card. PAGE 3

4 I haven t heard from them for while. I know they were being investigated by a couple of state Attorney Generals. So, they probably just went into some other scam business. These people don t have anything actually to do with grants. They just have to do with any field where people think that they can make a lot of money easy and where people are vulnerable to scams. Phil: You mentioned in Matthew Lesko s case that there is some truth. So, it s more misleading than fraudulent. There s some truth that there is money available. There are grant makers and grant funding. You said that most people will get the impression that they're eligible for that funding but in reality, 99% or more they're not eligible for. Who is really eligible for grant funding? Michael: Well, grants tend to come from two sources; one is government and the other is private foundations. I guess, you could roll into that the third: corporate grant-makers. Private foundations are like the Bill and Melinda Gates Foundation, the Rockefeller Foundation, and thousands of others. They are regulated pretty heavily by the Internal Revenue Service. They are required to only give grants to organizations which are tax exempt under part of the Internal Revenue Code called 501.c.3., which is the basic tax exempt status. That s where foundation grant money goes. Federal government grants often go to nonprofits but they also go to state and local government agencies, Indian Tribes which are local government, colleges, universities, hospitals and so forth. What they don t do, at least through the process of grant writing that I'm talking about, is make money available to individuals. PAGE 4

5 Phil: A flag that should go up that if they're saying that individuals are eligible for those grant funds. That s probably a flag that it s not true. Michael: I would say there are several flags or early warning grant signs of potential grant scams. One is if they approach you. If you're telemarketed, if you see something on the internet, or if there s somebody coming and saying, We ve got free money for you. If they weren t saying something about grants, you would laugh at them. Hey, I've got free money for you. I'm going to get you a thousand dollars. Who would believe that? I'm going to get you a government grant for a thousand dollars. So, the first thing is beware of anybody who approaches you. The second thing is that there are buzz words to watch for that say something like free money, success guaranteed, or you don t have to pay it back. These buzz words are a guarantee that you're dealing with a scam. Phrases like free money or you don t have to pay it back. When the Stimulus Bill went through, suddenly there were a lot more scam artists out there saying things like, Obama wants to give you PAGE 5

6 money, Get your free Obama money, or Get your free stimulus dollars. So, they look at what s out there in the general public and figure out a way to turn it in to a way to steal from people. Phil: In summary, you mentioned some of the early warning signs of scams like 1) if they approach you. Of course, the government doesn t approach you or doesn t call you at night. Then, 2) listen for buzz words or phrases like free money, success guaranteed, and you don t have to pay it back. Great answer! Thanks, Michael! Warmest regards, Phil Johncock Editor PAGE 6

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