Grant Scams

A couple of years ago I got one of those dinnertime telemarketing phone calls. But as I was getting ready to give my  “I’m not interested” speech, the caller said “You can get $8,000 in free government grants to do anything you want with. And you never have to pay it back.” So of course as a grantwriter I decided to hear him out. He said they would have a local representative contact me, all I had to do was give him my bank account information and mother’s maiden name so they could deduct $299.95 for the service. I made up some numbers and a name, but when I asked questions about a phone number where I could call back or an address he wouldn’t tell me, only that my local representative would give me that information. He did say the name of the company was National Grant Services.

After my telemarketing call I phoned the FBI who took my information and told me there was nothing they could do, but that they get lots of these calls. They referred me to the Federal Trade Commission and Better Business Bureau, both of which said they get thousands of complaints and inquiries. But of course, there’s not much they can do either. According to the New York Consumer’s Board, the Federal Trade Commission has shut some of these down, but of course they keep popping up elsewhere. At work I got a voicemail of a recorded message that said “…if you want to get a piece of the American Pie, now is the time to act. The Foundations have until December 31st to distribute their grant awards and we can help you get your share of free money.”

It’s clear the “grants for everybody” scam industry is getting more aggressive. One indication is the number of calls I get wanting help getting “free money”. As a grantwriting consultant for almost 20 years, I never used to get calls about for-profit businesses or home purchases, now sometimes I get two or three a month from poor souls who have paid dozens to hundreds of dollars to someone who told them about “free government money”. When it didn’t work out they did a web search and called me, thinking that they just need a more professional approach. Other consultants around the country tell me they get the same calls.

The grant scam artists are on every medium. Here are a few of the most visible:

  • The best known is Matthew Lesko, the skinny guy in the question mark suit on late night TV ads. His specialty is books: “How to Write and Get a Grant”, “Free Money for a Better Home”, “Free Money to Quit Your Job”, “Free Money to Pay Your Bills” and a downloadable “Matthew Lesko Federal Money Finder for Business’. These run from $59.95 to $99.95 and are lists of hundreds of state and federal programs from food stamps to enterprise zones, all of which are of course very restricted and most of which aren’t  “grants” for which an individual can directly apply. There’s a long waiting list for these books at my local library. Lesko is also all over the web.

According to a 2004 report of the New York State Consumer Protection Board, Lesko spends $3 million annually on advertising. One of his subsidiary companies, Information USA, sells lists of customers to the telemarketers and  seminar presenters like National Grants Conferences.

  • National Grants Conferences which tours the country doing “Free Introductory Conferences”. They’re also on late night TV and run full page ads in local newspapers, similar to the ubiquitous “Get Rich in Real Estate” meetings. I went to one and the speaker spent most of his time telling us how he’d moved into a bigger house and gotten wealthy using government grants, and how if we didn’t sign up we were losers. He also mentioned some grant opportunities which virtually nobody in the room would be eligible for, referring to them by acronyms and numbers. The pitch is to get you to pay for a two day workshop and buy a “membership” which of course keeps being charged to your credit card.

Again according to the New York State Consumer Protection Board, National Grants Conferences has been a source of consumer complaints for years and has an “unsatisfactory rating” from at least one Better Business Bureau.

  • Then there’s the Internet, which is flooded with “free money” rip-offs. To get a taste of the variety out there, do a Google search for “grants” or “government grants” and look at the banner ads across the top and down the side. There are even a couple (Grants Exposed, Scammer Alert) that warn against the others and advise you to only buy their book.

This of course isn’t actually about ethics in grantwriting, but it’s unethical behavior attached to our profession. These con artists have nothing to do with legitimate grants. They’re in the same category as the Nigerian Oil Money and European Lottery scams, the promise of money for nothing to naïve and clueless citizens. As grant professionals we’re all hurt by this, if only by the wasted time of talking to the scam victims. But I think worse is the misinformation about grants it spreads and the slightly slimy feeling it gives the field.

UPDATE

With the stimulus funds, there’s been an uptick in this activity and there have been a number of mainstream news articles about grant scams lately. Here are a few:

http://articles.latimes.com/2009/mar/05/business/fi-stimscams5

http://abcnews.go.com/Technology/PCWorld/story?id=6993895

http://abcnews.go.com/Business/story?id=7004693&page=1

http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt134.shtm