Looking for money to start a business? Find out if “free grants” are legitimate sources of capital or just another scam.
Dear Janet,
Have you ever heard of the [name omitted] Foundation? I’ve seen ads for it in several advertising card packs I’ve received in the mail. The cards all say something like, “Get a free directory of organizations issuing grants.”
I am looking for grants because I very much want to turn my apartment-based book finding business into an open bookshop. So, I mailed in one of the cards.
Six weeks later I got an envelope in the mail from this foundation. On the front of it, printed in all capital letters, was this statement:
“FREE MONEY! NEVER REPAY CASH GRANTS FOR PERSONAL NEEDS, MEDICAL BILLS, EDUCATION, BUSINESS, DEBT CONSOLIDATION AND MORE”
I opened it. Inside there was a letter offering 7 publications for $29.95 plus shipping. The page was stamped ” WINNER OF THE PRESTIGIOUS EXCELLENCE IN PUBLISHING AWARD.”
There was a 90-day money back guarantee that read in part: ” THE SPECIAL LIMITED EDITION NATIONAL DIRECTORIES OF PRIVEATE FOUNDATION AND GOVERNMENT GRANT PROGRAMS.”
And there was an order form that read:
“YES! I will take action now and apply for the Grants I am entitled to.
Please send me immediately the 7 PUBLICATION SPECIAL . . . I enclose only $29.95 plus $7.95 for shipping and handling (Total $37.90) and my Check Certificate of $200.00.”
Can you tell me if this foundation really exists? Or if it’s a scam, can you please help me find legitimate sources of small business grant money?
Dear Kilted,
I can’t comment on the legitimacy of any specific business. However, based on the information you’ve provided here, in my opinion, you’d be foolish to send this company any money. Here’s why:
Everything about the offer–from the use of capital letters to the misspellings–make it evident that it was not prepared by a professional. No legitimate foundation would ever send out a mailing like that. In fact, I don’t know of any legitimate foundations that send out advertisements asking people to send money to get a list of available grants.
There are other big red flags, too. Phrases like “free grant money” are pure advertising hype. Grants don’t have to be repaid; thus there’s no reason to call them “free grant money.” Furthermore, no organization is going to give grants for personal debt consolidation, or to pay for other personal needs. Grants are usually given only to serve a social good such as bringing jobs to an area, training under-employed youth, preserving a bit of history, etc. In fact, every legitimate granting source has very specific requirements about who might qualify for funding.
Unless you are trying to locate your bookstore in an area that has been targeted for economic rehabilitation, or there is something about your personal circumstances that make you part of a targeted population, you are likely to spin your wheels trying to find a grant to start your business. If you want to try anyway, one place to start is by searching the Catalog of Federal Domestic Assistance. That publication lists all of the grant programs funded by federal agencies, and it includes information about who is eligible to apply. You’ll find that on the web at
http://www.gsa.gov/fdac
You should also check with a regional or state economic development office to see if they know of grant programs for which you might qualify. Finally, be sure to visit your public library. Ask a librarian to help you find reference books describing foundations and the criteria they use in awarding grants.
Finally, given the stiff competition in the book market, consider carefully whether a retail walk-in store is the right way to go with this business. The savings in overhead costs might make it more practical for you to set up shop on the Internet and keep your business at home.
Good luck.
