An NGO may have adequate annual funding and still struggle to pay salaries or project expenses on time. The problem is often timing: funds may arrive later than the payments they are expected to cover.
A simple 90-day cash-flow forecast helps you identify these gaps early.
Start with your current bank balance. Then prepare a weekly sheet containing:
- Expected donations, grants and programme income
- Salaries, rent, vendor payments and project expenses
- Statutory, administrative and fundraising costs
- The estimated closing balance for every week
Classify expected income as confirmed, probable or uncertain. Only confirmed income should be included in your basic forecast. This prevents optimistic expectations from creating unrealistic spending plans.
Next, identify the week with the lowest projected balance. If it falls below your organisation’s minimum operating requirement, take action early. You could follow up on pending grants, reschedule a non-essential purchase, request phased billing from a vendor or accelerate a planned fundraising campaign.
Update the forecast every week using actual receipts and payments. Compare expected figures with actual results and record why major differences occurred. This makes future forecasting more reliable.
Share a short cash-flow summary with the board or finance committee. It should answer three questions:
- How much cash is currently available?
- What major payments are due soon?
- Is any funding gap likely during the next 90 days?
Service Journal resources can help NGOs strengthen their planning, fundraising and financial communication.