JWR Articles: Commentary - Leadership Grants: A Cautionary Tale (Directors: Arlene Greenberg, David Mandel, Marc Morgenstern) - November 15, 2011
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Leadership Grants: A Cautionary Tale

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Beware the allure of easy financing

Non-repayable contributions (a.k.a. “grants”) require patience and due diligence

Financing any business, not-for-profit or charitable organization can be challenging at any time but perhaps not more so than during the start-up or expansion stage. Attempting the process during our current spate of economic uncertainty can be even more daunting.

Securing traditional loans or lines of credit are relatively straightforward provided you have tangible assets and a good credit rating to support the request. Outright grants, understandably, are extremely competitive. The “art” of successfully applying stems from matching an applicant’s products, services or programs with funders’ guidelines, documentation and reporting requirements.

With over 40 years’ experience on both sides of the granting process (starting a symphony orchestra in 1974 with a successful application to the federal government’s Opportunities for Youth program; securing multi-year six-figure contributions for a variety of health-care initiatives; being an advisor to the Regional Municipality of Ottawa-Carleton’s Arts Advisory Committee), I know full well the exultation of approval and the disappointment of being turned down. Sometimes, organizations would be better off abandoning an application when the stated objectives of the funding program cause “mission drift.” Receiving money that results in the weakening of core activities is—over time—probably worse than getting nothing at all. The key to success is finding grant opportunities that complement the goals of the start-up, or expansion targets of already successfully running operations. In both cases, a comprehensive business plan is an absolute must.

My most recent venture into the realm of application-based funding came from a new organization (2009) whose stated aim is “to provide critical, early-stage resources to small business owners to assist in the development and growth of their enterprise.” Non-repayable contributions ranging from $1,000 to $100,000—with preference given to those who “can demonstrate matching funds”—are promised to be awarded quarterly. The organization, Leadership Grants Organization of Canada (with other offices in Calgary and New York City), uses a social enterprise model (an organization that applies business strategies to achieve philanthropic goals) to raise funds. According to general manager Ethan Roberts writing in a blog, funding is “comprised of introducing our sponsors to applicants that may need the products or services our sponsors offer, and paying us a fee or contribution for doing so.” Essentially, companies such as Canada Business Plans gets referrals via a handoff e-mail from Shelley Barnes (Applicant Support Services) who introduces every applicant and suggests “Canada Business Plans offers business plan consultation and writing assistance to entrepreneurs like yourself and they have special packages and programs for LGO applicants.” Of course, after the free 15-minute consultation, none of the applicants are obliged to pay the consulting fees, but every time someone does, there should be more money in the not-for-profit’s (it would never qualify as a charity) kitty. In a nutshell, LGO provides a steady stream of potential customers to their supporters tax free.

In my own case, I took a slimmed down version of the packages available from CBP then proceeded to send my start-up application into the system, getting the acknowledgement of receipt April 5, 2011. In due course, the further “due diligence” documentation was provided including the all-important proof of matching funds.

The next funding cycle began July 1, so I was in plenty of time. A decision was expected “sometime during September.” After inquiring September 28, Barnes’ reply was it could be another 2 months. Five days later a form letter was sent announcing that “we are unable to accommodate you at this time.” No worries there as my average success rate overall is 70%. On to the next!

Still, trying to turn disappointment into a positive outcome, I thought the next JWR commentary should focus on LGO in hopes that others would have a go of their own and succeed. A request for an interview with Roberts was met with a rigorous demand for my journalistic credentials and a list of proposed questions. Everything was quickly provided. Imagine my surprise when I was told by Barnes that “dangling the pre-text of an 'interview' for a 'business article' to satisfy your own curiosity about your personal application, or anything else, is unnecessary and lacks journalistic integrity.” Having been around the grants arena for so long, I have long since learned to accept outcomes no matter what the circumstances were: nothing will change them.

But my surprise soon turned to incredulity when, researching the background for this piece, I stumbled onto a number of websites and blogs after Google’s auto-complete feature added “scam” as the next most popular word following Leadership Grants.

There’s not space or, frankly, the inclination to summarize the dozens of entries that largely paint an unflattering picture. Suffice it to remind ourselves that if it’s too good to be true, it always is. In the meantime, the offer to interview Roberts remains open. JWR

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