Government Grant Writing for Beginners

Grant writing’ as the name suggests is the writing of a grant in order to raise grant or funds for one’s organization or project. Many a non-profit or individual organizations rely on these grants to run their work.Visit at http://gov-debt-grantbenefit.blogspot.com

 There are several types of grants and the reasons for taking them. Such reasons depend on the need of the organization seeking the grant.

Reasons and Types of funds:

Some organizations seek funds to operate their organization successfully. This sort of fund is known as operating money. The operating fund can be granted by a foundation

grant, a corporate grant, a direct mail campaign, or interest from an endowment.

Then there are funds for special projects, which include undertaking a new project, expansion of existing project/s, etc. The government, corporations, foundations etc. are ready to grant money for this cause. Besides this there are capacity seeking funds meant to enhance staff, financial ability of a company; capacity funds which should be sought for in cases of renovations of buildings, making a new building etc. Here again money can be taken from corporations, government agencies, foundations and can also be raised through a significant gift campaign. Endowments are slightly different kinds of funds.

They are those grants which are often given as long term gifts to certain organizations.

Government a reliable and evergreen source:

Government is the best source to look for grants for any purpose. Statistics reveal that government provides more than $ 350 billion grants annually. Government provides funds in various forms. For instance there are direct grants meant for nonprofit or individual organizations. There is immense competition to take the ‘direct grants’. Many organizations apply every year through their proposals and letters. Similar to this there are ‘competitive grants’. Organizations compete for a single share of this grant. The ‘pass through’ grants are relatively less competitive since they are confined to any state. The money for pass through grants is given by the federal government to the individual states for distribution. The organizations seeking grants can apply for it in the state agency. The government also provides ‘project funds’ for a specified period of time.

The entire information can be collected via CDFA i.e. the Catalog of Federal Domestic Assistance which splits government grants into 20 primary categories. It includes almost all the significant details from the name of the grant distributing agency to the eligibility plus evaluation criterion and the documentation required. CDFA also provides with a list of its past funded organizations and their respective objectives.

The Writing Matters:

At the end of the day what matters is the kind of proposal a loan seeking organization sends to the government or any funding agency. The proposal should be such that it clearly brings out the needs and objectives of the organization. An effective proposal acts as a mirror of the organization’s desires and the goals that it seeks to achieve. The more impressive a proposal is the greater are the chances of getting a good amount of grant. So while writing a grant proposal some vital points should be kept in mind.

There are two types of letters in this case- the letter of intent, which is a brief summary of the project and the aims desired to be achieved through it. The needs of the grant seeker must be specifically highlighted along with the manner in which these funds will fulfill these needs. Second is the letter of proposal, which delineates the entire project and the requirements, which are to be met by the funds. This letter how so ever long should not be devoid of a cover letter, a proposal summary, nearly ten pages of proposal text, the objectives and goals decided and appendices providing more details of the project.

Any agency or government granting the loan has particular criteria to select the organization and the amount of grant to be given like interviews, observation, past record and the like. However a proposal can be too helpful in providing an impetus to these later activities.

If you are looking forward to a grant then don’t hesitate in doing to slog for a little hard work done now will bear incredible benefits in the future…Visit at http://gov-debt-grantbenefit.blogspot.com

There are several definitions for corporate governance. However, the most appropriate definition which is more relevant to small and medium size enterprises (SMEs) describes corporate governance as “a set of rules, regulations and structures which aim to achieve optimum performance by implementing appropriate effective methods in order to achieve the corporate objectives”. In other words, corporate governance refers to internal disciplines or systems which govern the relationships among ‘key players’ or entities that are instrumental in the performance of the organization. Moreover, it supports the organization’s sustainability on the long term and establishes responsibility and accountability.

The guidelines of corporate governance aim to achieve greater transparency, fairness and hold executive management of the organization accountable to shareholders. In doing so, corporate governance plays a pivotal role in protecting shareholders and, in the meantime, duly consider the interest of the organization at large without prejudice to employees’ rights. Whilst executive management should have reasonable level of power to run the business, corporate governance ensures that such powers are set to practical dimensions in order to minimize misuse of authority to serve objectives not necessarily in the best interest of the shareholders. Therefore, it provides a framework for maximizing profits , promoting investment opportunities and eventually  creating more jobs.

In general, corporate governance highlights two major principles:

Oversight and control over the executive management’s performance and  strategic directions Accountability of the executive management to the shareholders

For that reason the principles of corporate governance apply on those who assume the ultimate responsibility for success or failure of the organization. On the other hand, it is imperative to understand that the proper implementation of good corporate governance does not necessarily guarantee success of the organization. Meanwhile, a bad corporate governance practice is certainly a common syndrome causing failure in many organizations.

It is interesting to know that a recent survey revealed that more than 48% of investors are willing to pay additional premium over stock prices for companies known to implement sound corporate governance practices as opposed to other companies which may have same level of profitability but characterized with inefficient management or a record of poor governance practices.

The misconception about SME’s stems its roots from the size and contribution of this segment to the economy. The reality is today SMEs may appear small in size but likely many of them have potentials to grow and become big entities in future. Sadly, this prophecy still not well realized and as a result, implementation of good corporate governance practices continues to be ignored.

SEMs in Egypt form large segment of business activities. Generally, they take the form of private companies owned by small number of shareholders. Often have less than 100 employees. Such companies are usually family-owned run by family members where the authorities and powers are generally held by an individual normally the major  shareholder. For that reason the owners commonly consider themselves as running their personal properties.

Perhaps the question that strikes the mind of business owners and directors of small and medium size companies as well as the executive management team ” why should we opt to choose to introduce new systems and internal rules which impose limits on the way we do business and our business conduct?”. The answer is simply corporate governance plays a significant role for SMEs since it defines the role of shareholders as owners on the one hand, and as business managers on the other hand. This is best done through a process that spells out governance rules and guidelines. These aim to assist all parties to understand how to manage the organization. As a result, internal conflicts would be better managed and more attention given to achieve growth objectives and support profitability.

There are at least three reasons for small and medium size companies to show greater interest to implement corporate governance principles:

The good governance practices pave the way to companies to grow or attract additional investors as alternative to raising capital through borrowing from banks at high cost. Additionally, companies may consider going public through IPO. Sound governance practices lead to improved internal control systems which results in more accountability and higher profitability. The latter is attributed to enhanced controls which minimize the likelihood for fraud losses. Corporate governance framework ensures that shareholders are freed from executive and administrative duties. As a result, conflicts among business owners who assume management roles in the organization would be reduced to a greater extent particularly in organizations owned by few number of shareholders where the distinction between ownership and management capacity is blurred.

Raising capital has been for a long time  seen as the major challenge facing SMEs.  The real challenge is absence of good corporate governance practices in such organizations. Consequently, it would be difficult to access sources of finance from banks or investors.

Adoption of corporate governance framework is not common not only in Egypt, but also in most developing countries. This is mainly due to lack of awareness about what corporate governance is about and its relationship with corporate performance and objectives. Besides, the widespread fallacy that implementing corporate governance entails high costs coupled with doubts that such costs would not generate the envisaged benefits to the organization.

The biggest challenge for small and medium size companies in Egypt  is about how far they can cope with the external business conditions and internal problems which threaten their ability to survive. Surveys indicate that one-third of this category of companies collapse after three years for the following reasons:

Absence of planning and forward thinking Inadequate leadership and management skills at senior management level Lack of future business plans for growth and new investment plans Problems with cash flows Inability to innovate, present ideas for business development and cope with ever changing business environment and economic conditions Inadequate access to technical assistance

If we consider the main reasons why small and medium size companies fail, we may conclude that implementing corporate governance contributes to a far extent to support chances for these companies to perform well, grow and adopt better process for decision making. For family owned businesses, corporate governance improves management efficiency, limits internal conflicts and helps in making transition of ownership to heirs a smooth process.

Practically speaking, we need to realize that SMEs may face several problems in implementing corporate governance framework which may often seen costly exercise. Consequently, it is essential that consideration should be given to reduce the relevant requirements for compliance and disclosure and introduce less expensive financial and administrative alternatives which such companies can afford.

In order to help small and medium size organizations to implement corporate governance, we recommend that the competent state authorities issue a code for SME’s corporate governance similar to that issued by General Authority for Investment in collaboration with Cairo & Alexandria Exchange. Particular attention should be given to the following:

Transparency (strategies, organization chart, processes etc) Role of Advisory Board and relationship with other entities Risk management system and planning Human resources function with focus on succession plans for senor management

Finally, we propose a shor
t prescription to deal with the challenges and assist in implementing corporate governance framework for SMEs:

Separate ownership from management duties and specify clear roles and responsibilities for business owners, partners and other stakeholders Create a balanced board and invite non-executive directors who would add value to the board (replace the board of director with an advisory board for companies that are not legally required to establish a board of director). Non-executive directors play an important role in ensuring integrity of the financial data provided to the board and to protecting shareholders’ interest. They also exercise control over executive management and reduce the risks arising from poor management practices or gross negligence Introduce Code of Business Conduct Raise corporate culture with a focus on  benefits of corporate governance Develop senior management’s administrative and technical skills particularly in areas such as strategic planning and leadership Create clear organization charts Establish independent internal audit function (or employ an internal auditor based on the size of the organization) Create job descriptions which establish clear responsibilities and reporting lines Introduce succession plans and rules for conflicts of interest

Corporate Governance, once relegated as a nice-to-have, has never been higher on the agenda of companies than it is now. Tough new regulations have been drafted, originating in the US, to try and restore investor confidence that has been eroded not only by the volatility of the stock market but by a string of public governance failures such as those at Enron, WorldCom, Martha Stewart etc

The Sarbanes-Oxley Act (the Act), named after the two US senators who proposed the bill, is designed to restore investor confidence through the implementation of strong prescriptive measures centered around Corporate Governance.

The most important outcome of the Act is to make Directors personally and criminally liable for infringements of the Act, notably the misstatement of information within financial statements (referred to as Section 404), and roles and responsibilities of a firms Board of Directors.

Evidence of the enforcement of this Act is best illustrated by a number of high profile cases, brought to court prior to the Act’s enactment, such as the ex-CFO of Enron, Andy Fastow, who has had his assets frozen and has been indicted him on 78 federal charges of money laundering, fraud, conspiracy and obstruction of justice.

The Act affects all companies listed on any U.S. Exchange, including non-US companies, but is being adopted throughout the world by countries such as Brazil, Mexico, Canada and to a certain extent almost every other country in the world. Companies hoping to list or be acquired would also do well to adopt many of the tenets within the Act if they wish such a move to be fruitful.

Though the Act is seen by many as a knee-jerk reaction to the scandals that have plagued the markets in recent years, much of what is being recommended is just good business practice with the oversight role of a companys board and its audit committee in achieving an effective control environment being promulgated by the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework. COSO details that the control environment is influenced significantly by a firms board of directors and audit committee.

Boards should, and must, be held accountable for their actions and the influence they have on the ethical behaviour of Company employees.

The Cost of Compliance

The cost of the Act to all businesses has been high. Many firms have had to increase the size of their internal audit departments to cope with the provisions of Section 404 or recruit more members to the Board to comply with the governance requirements. Key-man or Directors & Officers (or Professional Indemnity) premiums have risen between 200 and 400% to guard insurance companies and underwriters against the increased likelihood that lawsuits may be brought against Directors.

Audit fees have jumped between 15 and 30% to cover auditors costs of increasing the size of audit teams needed to perform audits with extra assurance and to guard themselves about making incorrect judgments regarding the accuracy of financial statements.

For a start up business why is this important?

Traditionally in a start up phase the direction of a company is guided by its founding fathers. In the case of BioTech companies these are usually scientists with a basic understanding of finance. In order to gain the trust of either the market or Venture Capital firms an experienced financial practitioner, such as an ACA or CPA should be sought to add credibility and to enact control over the organization. The Act stipulates the need to have an expert on the Audit Committee with an expert being defined as someone who has the knowledge and experience to give assurance over both the internal controls and financial reporting environment.

It is never too early to start enforcing controls in spending at an organization. The inability to control costs or to come up with a sound business plan has caused the downfall of many firms. Most notably this has been seen in the dot-bomb bubble where billions of dollars of Venture Capital was spent on companies who had no experience in drawing up business plans that would ever generate a profit or had no controls over how the capital raised was to be spent.

Building a Board of Directors who have industry expertise and business acumen is just good practice. Diversification of these risks will only enhance a firms ability to navigate its way to success and avoid the pitfalls that plague start up firms.

The importance of good governance

1. Reputational impact mitigants – Reputational risks in terms of ethical behavior, restatement of financial statements (and any failures caught by Venture Capital firms in their due diligence work) can adversely affect a companies valuation

2. It will easier to attract good non-executive directors if they perceive that the likelihood of loss arising from taking a position is small (as they can be legally liable for non-ethical behavior of a firm). In fact there is a severe shortage of good non executive director candidates because the potential cost to them in case of legal actions outweighs the benefits associated with the position (i.e. the salary)

3. Good governance and a disciplined approach to financial controls can save you money (especially in control of expenditure)

4. Leads to potential reduction in both audit fees and insurance premiums through changing the control mindset of an organization

5. By implementing a more formal methodology for evaluating business risks and controls will enable CEOs to run their business more efficiently and effectively whilst reducing the likelihood of operational breakdown, litigation and fraud