Beware of the Siren Song: Three Keys to Keep in Mind When Reading Incredible Funding Headlines
By : Jane Ramachandran
Categories : funding, loans, small business, grants, not-for-profit |
Time for a little rant. We look out for our clients. We try to give the best information out there, synthesize it, and do the gerbil do-loops until we find out our information is solid. And when we see headlines in articles and websites that are potentially misleading or misinforming, we feel a little protective of those we serve.
After all, how is the average person supposed to wade through this, plus pick out the nuances of what it all means?
Here are three keys to keep in mind when reading wonderful headlines about funding available or awarded.
- Is the headline describing a loan OR a grant funding program?
- What is the source of this information?
- Is this headline re-announcing funding, and not actually announcing a new funding program at all?
The most frequent misnomer I come across is to see loan programs that are portrayed as grants and sometimes literally called grants.
Grants, by their nature, are generally non-repayable. The exception might be if it is a conditional grant, in which case if you don't fulfill your part of the contract you must repay the amount to the funding agency. Of course everyone hopes all goes well, and this will remain a non-repayable grant, but it is always good to know the fine print.
Loans, on the other hand, are generally repayable. And even when there is no interest, if you have to repay the principle, it's still a loan!
I’m not talking about accidental inaccuracies here, we’re all human, and also program information can change and suddenly the once-correct info is now not.
Rather, I have been floored by some not-so-accurate headlines in cyberspace, confusing the funding landscape, inaccurately portraying who can get funding, and some touting a very smooth pitch about how "Mr. and Mrs. Jones got $500,000 and you can too!" But a little investigation reveals that the shining examples did not give the full picture, or the funding was actually independently given.
Thankfully this is not the industry norm, and simply serves as a reminder that if the story sounds too good, take care to apply extra due diligence.
A less experienced eye may look at the headlines and think, “Wow, those funding programs keep coming!” but upon closer examination, it is already in place, or the announcement is simply to let you know that the funding program is now officially “open” and applications can be received.
Mind you, loan, grant, and "combo" programs are hugely important to the economy and support innovators in all sectors. A few examples of funding programs that are grants, loans, or a combination include:
- Northern Ontario Heritage Fund Corporation (NOHFCo): Programs delivered under the NOHFC include grant, loan and conditional grant programs, and sometimes a combination. The extent of loan versus grant also depends on whether you are applying as a for-profit or a not-for-profit.
- MaRS Investment Accelerator Fund: A loan and investment program that provides funding for early stage companies through a repayable loan with interest and an equity position. Definitely not a grant.
- FedNor and FedDev: These regional programs provide repayable and non-repayable contributions, depending on the project and the applicant. As well, if it is likely that your project will generate a revenue upon completion, it is also possible these funders will wish to convert the contribution into a repayable one.
It is important to recognize that this “machine” simply has its own way of communicating. Thus the onus is on the applicant to distinguish what kind of a contribution is being announced and what it really means.
Unfortunately, as humans our optimism often prevails when looking at potential funding for a project that is poised to change the world. We don't see the details relating to that funding until after we have dreamt about how to spend it. As well, the dream-feeding headlines can create mistrust of those serving in this field, sometimes leaving brilliant, entrepreneurial people to never again pursue funding, and to lose out on thousands, to potentially millions, of dollars that could help support really great projects.
Now that we have recognized this potential, and mostly unintentional misinformation trap...what can you do?
- Carefully read the guidelines. I mean really read them. What are the conditions of accepting this funding?
- Go to the source. Funding agencies are always eager and available to clarify any misunderstandings.
- Connect with experienced professionals in this field. People who eat, breathe and sleep this stuff, and who actually enjoy reading this type of information. There are still people out there looking for the public good before profits or publicity.
- Educate yourself. Education is a great way to get a solid footing and know whether what you are reading is real or hype. Our Funding Solutions Training Series helps with just that that (contact us to request a free Funding 101 workshop for your team or community).
Do you have questions about this topic? Observations or advice? Sound off in the comments below. We would love to hear from you, and as always we will continue to look out for our current and future clients, decoding those headlines, and liaising with funders to help you create, connect and grow.
Until next time.
Jane.comments powered by Disqus