grant writing

Cash Flow

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.

In-Kind Costs

There are many definitions for in-kind costs. For this blog post, I’ll define in-kind costs as non-cash contributions from individuals or organizations to a nonprofit for a specific project.

I do not consider in-kind costs as non-cash donations. While the definition between in-kind and donations can be similar, I consider donations as supporting a nonprofit’s operations. Like donating clothing, food, or books. In-kind costs help a project become successful. Such as a washing machine and dryer, a stove, or a bookshelf. Also, in-kind costs can include volunteers and donations never.

On some grant requests, foundations ask for in-kind costs in the budget. I identify these costs in the narratives where I write about the number of hours a volunteer worked or the benefits of a donated product.

I avoid reporting in-kind costs in the budget because putting a value on non-monetary resources is subjective. As an example, what is the salary of a volunteer or should a product be priced retail or wholesale or other? While, there are cost guidelines, they are not exact.

Second, in-kind costs can mistakenly inflate a project’s budget and cause a foundation to misunderstand the need for funding. As an example, a nonprofit may receive less funding if they identify donations as in-kind costs. The former helps with operations, but does not support the long-term goals of the project where funding is needed.

Third, donations are not guaranteed while in-kind costs are obligations to the project. Donations may or may not come. In-kind costs usually do arrive.

In the budget portion of the grant request, I stay away from any costs that can be subjective. I provide only cash figures in the budget and cost areas. All other non-monetary resources I leave to the narratives.

RISK

When a foundation funds a grant request, they are making more than an investment in the nonprofit’s mission. The foundation is also investing their reputation in the success of the nonprofit.

When a nonprofit receives grant money, they receive more than money. They make a commitment to the foundation that the money would achieve success.

Investment and commitment come with risk that success is achievable. While reputations are at risk (including the money), it is the nonprofit who stands to lose the most if some measure of success is not found.

I think most foundations know about risk. It is usually a determining factor when awarding grants. However, I discovered some nonprofits do not understand that their future investments are at risk when receiving a grant.

If a nonprofit achieves success, the foundation will likely continue with future funding. Also, other donors are likely to invest in the nonprofit’s mission. How is success determined?

People evaluate success, not facts and data. The nonprofit staff should ask themselves if the mission caused positive change in people’s lives. I hope it did.

In a follow up post, I will write about measuring success. Most of the time, success is hard to determine and it is never absolute.

Yes, I missed a blog post last week (for December 9). My problem is that I write a blog post on the weekend with a Monday posting. I have ideas to use, but nothing prepared if life envelopes my time. This is what happened last week with a trip to a wedding, painters in the house, and volunteer stuff. I should have several posts ready ahead of time, but I don’t. You think I would learn.

One of the Best Relationships

The best relationships between a foundation and nonprofit are long lasting. This involves years of sharing in the success and accomplishment of the nonprofit’s mission with the foundation’s goals. Many times, this is a challenge to achieve.

Foundation members want to tell their stakeholders how they helped the nonprofit. Staff on the nonprofit want to tell board members how they got money. Both organizations may have a shared belief in the mission, but the goal becomes to promote themselves.

While foundations and nonprofits should use the grant process to self-promote, the mission can become a lower priority. Egos get involved.

People want credit for their efforts. They want others to know they accomplished something positive. While self-promotion provides motivation, the mission should not be lost in the bragging.

Of course, there can be success with only egos. I experienced this while working in the Pentagon. This type of self-relationship assumes a strong level of cruelty and coldness. There can be some level of limited success, yet it is never long lasting.

When egos and self-promotion become too important, the relationship becomes strained and can end. It is a benefit for two organizations to know and understand each other with the intent that both will be around for many years.

A good, long lasting relationship is the most important asset of any organization.