Yes, You Can Get Banned by Grant Funders!
A cautionary warning to all grant applicants so you don’t end up being banned by grant funders. While grants are “free money,” they do come with strings attached. A failure to abide by the stipulations set forth by the funding source can result in severe consequences.
No grantor wants to see their funds wasted, abused, or used fraudulently. So, in order for the funding source to ensure that organizations are lawfully using the funds, they must provide periodic programmatic and financial reports.
The programmatic reports answer questions such as:
- How and why did you use the funds?
- Did you experience any challenges in the use of the funds?
- What major successes occurred?
On the other hand, financial reports tell the same story through financial statements:
- Did you employ any new workers? What has the labor cost?
- Did you serve more (or less) clients during the programmatic period?
- How much did the necessary equipment cost?
It’s very important that both of these summaries are in accordance with the proposal and budget that you provided in the beginning. The grantor can ask for proof of your expenses and request receipts at any time.
To help manage the grant funding, most grantors will provide you with a list. This list usually includes allowable/unallowable expenses, invoicing/reporting timelines, and other specific formats for you to follow.
What actions could result in a ban?
There are usually strict guidelines on what you can and cannot spend your awarded money on. If you spend it on something else, you may have to return the grant.
However, failing to abide by the guidelines and regulations will result in hefty fines. Additionally, you face the possibility of being banned from future grants and funding opportunities.
After winning a grant, you need to stay current with financials that relate to your day-to-day operations. This includes providing timely and accurate reports. Any misrepresentation through delinquent and insufficient reports will result in unannounced site visits and auditing.
Moreover, if the funding source finds discrepancies, they may reduce, withhold, or withdraw the grant funding. If this happens, then the organization has made it onto the “banned” list for future grants.
Furthermore, if an organization is found guilty of committing fraud or other abuse violations, it will warrant a federal suspension, as well as jail time.
How can you avoid ending on a ban list?
In summary, it is important to remember that grants, by definition, come with restrictions. Once you’ve landed a grant, your organization is making a promise to use the money in certain ways, follow reporting procedures, and demonstrate programmatic progress.
Break that promise, and you could lose that money, as well as future funding opportunities from that grantor and others!
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