Podcast – Fraud: Grant Recipients Aren’t the Only Culprits

Fundraising HayDay’s annual “Ripped from the Headlines” is one of my favorite podcast episodes to record. Not because I relish the mistakes of others, but rather it is a reminder that failings in grant management come with a price, and sometimes that price is a steep one.

Sadly, it doesn’t take long to prepare for this episode, because there is never any shortage of grant fraud. But as I started this year’s search, I noticed a theme: grant fraud was accused, but there was either no evidence to back it up, or it was turned into a highly charged political nightmare.

That’s right, the federal government weaponized claims of grant fraud to halt funding that didn’t align with its new policy focus. Hear the stories on the latest episode of the Fundraising HayDay Podcast HERE.

It infuriates me to no end that anyone would use false claims of grant fraud to stop the work of organizations that are doing exactly what they are supposed to as spelled out in their award agreement. Because grant fraud is no joke. It happens, and it should be taken seriously. But when the accusation’s used falsely, it’s like the boy who cried wolf. At some point, nobody is going to believe it’s happening anymore.

For example, in March 2026, 49 out of 50 organizations that previously received awards through the United States Department of Agriculture’s (USDA) Increasing Land, Capital, and Market Access grants were terminated (close to $300 million in total) with the explanation that the program didn’t align with the agency’s current policies. (Note: This was a grant program created by the Biden administration; and now the Trump administration is terminating the grants.) Shortly thereafter, Steven Peterson, the USDA’s associated administrator of their Farm Service Agency) shared that grant fraud (to include purchasing gazebos, massages, campers, and large office supply budgets) were the reason for the termination.

Turns out, the USDA had zero documentation to back these claims, and the accused organizations said they were spending the money correctly. You can read all about it HERE.

Twenty-four of the 49 agencies whose grants were terminated joined a lawsuit with Earthjustice, Farmers Justice Center, FarmSTAND, and the Southern Environmental Law to challenge the fraud claims, because they tried to go through an appeals process with the USDA, but were told the decisions were not appealable.

The good news? The judge in the case ordered the Trump administration to restore the awards to all 24 agencies involved in the lawsuit. You can read all about it HERE.

Here’s the deal. The lawsuit claimed that the Trump administration used a simple search for words tied to DEI or climate change to determine whose grants would be terminated. But since that’s not currently a legitimate reason for terminating grants with current grant awards, the administration simply claimed fraud.

If you’ve been paying attention to the proposed changes in the Uniform Guidance (you can read all about it in last week’s blog post HERE), you’ll recognize that the Office of Management and Budget is working to make what happened legal. There is a proposed change that grants can be terminated at any point simply if the government’s policy changes and focuses have shifted. Also, no grant funding will be allowed if associated with DEI policies.

Right now, agencies like those mentioned in the article have the law on their side. In a few months, that may not be the case. And how scary is that?