Chills, Thrills, and Dollar Bills, Part 1

Here’s Why Cash is King for Your Nonprofit During the 2020/2021 Economic Crisis

The Benjamins. That bankroll. Can you tell we’re talking about CASH? Keeping a keen eye on cash flow goes hand-in-hand with creating a meaningful budget for your organization. [Shameless plug, check out our blog post on How to Create a Fairly Meaningful Budget for 2021]

Our CEO, Chantal Sheehan, at Blue Fox recently spoke on the topic of how cash is king at Nonprofit Hub’s Cause Camp conference in October. Her urgent advice to nonprofits is to pay special attention to cash flow specifically during this economic downturn in order to survive. Why?

​A cash flow forecast is a projection that shows the strength of your cash position over time. Because a projection like this shows you where you’re going to be in 6, 9, 12, or 24 months from a pure cash standpoint, we feel it’s a nonnegotiable tool. 

So what does a cash flow forecast look like? The good news is that they aren’t that hard to build most of the time!

We typically build our forecasts out in a spreadsheet. Rows detail cash inflows and outflows, and columns list out each month in the period you’re forecasting. 

So imagine: your current cash position (i.e. balances of all your cash/bank accounts) is at the very top. Then cash inflows (revenue, receipts from invoices, investment income, etc) follow.  Finally, your outflows (i.e. expenses, debt payments, capital purchases) are listed at the bottom. 

For example, say you start with $100,000 in the bank, then you make $50,000 in Month 1, while  you spend $25,000 in the same t month. Your cash position at the end of Month 1 would = $125,000. ($100,000 + $50,000 - $25,000) 

So your cash flow forecast shows you where you started, what money you took in and what went out.   This type of projection is extremely useful when built out for 12 months or longer. 

Pro tip: The most financially stable and sustainable organizations pay attention to cash flow because they know it affects everything from their events to payroll.. 

Now that we’ve covered the importance of cash flow, we're going to dive deeper in our part 2 of this series and cover 12 ways to steward your organization’s position during tough times. 

In the mean time, if you’re looking to dive deeper into planning your 2021 budget and cash flow, our friendly team at Blue Fox is here to help! Give us a call at (321) 233-3311 or email us at [email protected]. We’ll get you sorted! Then you can focus on what really matters: your mission and serving your community.

You can also schedule a free budget consultation: https://calendly.com/chat-with-chantal
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