Inside Entrepreneurship: No need to pay to find free money

Q: I am a single mother starting a retail clothing franchise business. Are there any legitimate ways to find out about government grants for minority-run small businesses? I have been inundated with e-mails from companies wanting me to pay them for lists. Are any of these resources worth my money?

Rebecca S., Jacksonville, Fla.

A: Yes, we have all seen the bold advertisements. On television and online, marketers encourage consumers to pay money to learn where they can get "free money" in the form of student scholarships and government and foundation grants.

Instead of paying money for access to information about government grants, how about researching free sources first. Check out grants.gov or the Catalog of Federal Domestic Assistance at cfda.gov.

Seattle-based grant funding expert Renee Bourque says consumers should be cautious about grant database services. "Unfortunately, many fee-based database services give the impression that anybody can get a grant," Bourque says. "Only the best, most competitive proposals tend to get funding. Also, individuals can find essentially all the same information by going to government Web sites."

Bourque is right. Government and foundation grants are not for every type of organization. The most common requirement is organization as a 501 (c) (3) non-profit corporation or community service mission. While some ardent shoppers praise the therapeutic, mood-enhancing benefits of buying a cool gadget or new pair of shoes, I doubt your proposed clothing business would match most government grant initiatives.

One of the reasons why foundations and government agencies don't favor for-profit organizations for grant awards is the assumption that they can turn to commercial lenders and private investors for startup and small-business expansion capital.

Bourque notes that there are several worthwhile, fee-based online corporate and foundation grant databases such as Foundation Center and Metasoft Systems' Big Online America. Metasoft offers a broad range of services including support for organizations with global service initiatives. Metasoft's services can also include personalized database search customer support and fundraising consulting services.

Are there more cost-effective ways non-profit organizations and small businesses can learn about foundation and government grant opportunities? Yes, most public libraries subscribe to one or more of these databases.

Within Washington state, there is another highly regarded information treasure for non-profit organizations and small businesses seeking grant funding. Her name is Jeannette Privat, a librarian at the Redmond branch of the King County Library System. Privat has developed the Nonprofit & Philanthropy Resource Center and serves as a personal guide for individuals who want to learn more about non-profit management, proposal writing, endowment programs, government grants, trends in philanthropy and so much more. At the Redmond branch, individuals can also access the Foundation Directory Online, a database of 80,000 foundations and corporate giving programs for free.

Another avenue worth exploring is your state's congressional offices. Not all congressional representatives pay much attention to small budget non-profit organizations or business inquiries about government grants. You really have to call to find out. Within Washington state, Sen. Patty Murray has dedicated an office staff member to help organizations pursue relevant grant funding opportunities. Murray's Web site also offers guidance and links that may be useful to first-time government grant seekers.

As you research your startup business plan, it is important to appreciate that most businesses today obtain startup and ongoing working capital through multiple sources. It's rarely one grant, one investor or one type of lending facility that provides the financial foundation for sustainable business growth.

Come back next week to learn about one of the largest government grant initiatives that awarded more than $1.8 billion to small, for-profit businesses in 2005.