What Went Wrong With Grants: Waste & Fraud

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What Went Wrong With Grants? Part 1: Waste

While many grant programs exist, most have become victims of bureaucratic bloat and private interest issues. Additionally, many of the grant funding ecosystems were designed with the funders in mind, with little thought given to the end users.

For this reason, despite consistent increases in both public and private funding, returns on investment are decreasing.

In the public sector, 20% of grant funds are spent on admin expenses. In the private sector, around 30% of grant funding never reaches its intended target.

Funders (governments, foundations, and individual donors alike) have neither access to modern tools, nor the bandwidth to process applicants, so they are very prone to incidents of unintended favoritism, waste, and even fraud.

Inefficiencies in this ecosystem kill healthy competition, slow innovation, and reduce equitable access, causing economic strain and social unrest.

Public grant programs in the U.S. are divided into two main categories: federal and non-federal. While there is a centralized authoritative source for federal grants at grants.gov, this does not include state- and locally-managed grants.

The Catalog of Federal Domestic Assistance (CFDA) sources for non-federal grants are more scattered, with some companies providing centralization for a fee.

Even though there is some degree of centralization, the lack of clear communication paired with the complexity of the search, application, and reporting processes creates a user experience that is unbearable for anyone without deep expertise in the field.

It looks more like legal due diligence than a funding process. Hence, the industry has become a rather closed and protected ecosystem that breeds inefficient consulting services to help find, apply to, and manage grants.