Applying for Grants

September-October 2017

Who Applies for Your Grants?

If someone in your organisation wanted to siphon a bit of money away for themselves, having grants paid into their own bank account would be one of the easiest ways to do so.

When thinking about the risk of fraud in their organisation, people often worry mostly about money going out. The bigger fraud risk by far, both in business and not-for-profit situations, is income never making it into the organisation’s accounts.

A grant maker has only very limited tools to ensure that the grant is paid to the organisation, not an individual. An individual could quite easily set up a personal bank account and give it your organisation’s name as a trading name – that way they would have a legitimate deposit slip to give to a funder when applying for a grant.

Many funders require a resolution by the committee. If genuine, this would ensure that the committee is aware that a grant has been applied for, but the document is easy to forge. If it is genuine, it would still require the committee to enquire from the person applying what happened to each application, i.e. whether it was successful or not.

So, how do you protect yourself from fraud with grants?

Your best option is to separate certain duties. This means the person applying for grants should not be the same person that does your bookkeeping or banking. Your bookkeeper or administrator is the most likely person to notice when a grant is ‘missing’, or maybe a funder that has been used in previous years doesn’t seem to be used this year.

Where resolutions are required for grants, it is a good idea to make it a committee member’s job to follow up on the success or otherwise of this application. This is mostly an issue for the smaller grants from gaming machine funders or private trusts and bequests. Larger, annual grants would leave too big a hole not to notice.

These kinds of measures much reduce the likelihood of fraud, but they are not bulletproof. An organisation needs to be able to trust their fundraiser’s integrity probably more than any other person’s in the organisation, and this is a position that may have to be vetted to find out whether there is a history of dishonesty. After all, if you lose your funders’ trust, the economic basis of your organisation may be in danger.