Too many nonprofits use a software program to watch their money come in and go out. They do not watch the ups and downs in their bank account. Their yearly budget may say everything will be okay in the end, yet this does not consider the cash flow (income and expense) changes occurring each day.
Real cash, or what is in the bank, matters more than what any budget or software program states. A nonprofit should look at their cash flow as often as possible. This helps determine when expenses exceed income and vice versa throughout the year. This trend is important for grant writers to help determine when they need to submit a grant.
If a foundation approves the grant request, when the payout occurs is important.
After the deadline, most foundations decide on a grant request after three to five months, depending on the time of year. June to August and December take the longest. After approval, a foundation can take two to three months to write the check.
Money is usually invested somewhere and needs to be cashed out. Also, the funding needs to be processed and accounted for among foundation members and stakeholders. Some foundations also want a ceremony to present the check. A grant writer and nonprofit should plan to receive money five to eight months after the grant deadline.
While a yearly budget is good for long term planning, nonprofits should also have a monthly track of their cash flow. Grant writers can then develop a grant schedule around the cash flow.
I create a grant schedule every January with the nonprofits I help. Along with other criteria, I try to plan for the payout when cash is low for the nonprofit.