How can you improve cash flow analysis and reporting for non-profit fundraising?

1 1. Define your cash flow categories

When setting up a non-profit, it is essential to define your cash flow categories. These categories may vary depending on the size, structure, and activities of your organization, but typically include operating cash flow (cash generated or used by core programs and services), investing cash flow (cash spent or received from long-term assets), and financing cash flow (cash raised or repaid from borrowing or lending money). By categorizing your cash flow, you can gain an understanding of your non-profit's liquidity and solvency. It will also help you to analyze how your organization is generating and spending its money.

2 2. Use a cash flow statement

The second step is to use a cash flow statement, which is a financial report that summarizes your cash flow categories over a specific period of time. This statement shows the changes in your cash balance from the beginning to the end of the period, and can help you monitor your cash position, evaluate your cash flow performance, compare your actual cash flow with your budget or forecast, and adjust your cash flow strategy and goals accordingly. To create a cash flow statement, you can use a spreadsheet software, an accounting software, or even a specialized cash flow tool. You can also use a template or a sample from another non-profit as a reference.

4 4. Analyze your cash flow trends and ratios

The fourth step is to analyze your cash flow trends and ratios which can provide insight into the stability, sustainability, efficiency, and effectiveness of your cash flow. Furthermore, you can benchmark your cash flow against peers or industry standards and identify any strengths or weaknesses. Common cash flow trends and ratios to consider include cash flow growth (the percentage change in your cash flow over a period of time), cash flow margin (the ratio of your cash flow to your revenue), and cash flow coverage (the ratio of your cash flow to your debt service). By analyzing these trends and ratios, you can gain a better understanding of how well you are managing your cash flow.

5 5. Report your cash flow results and impact

The fifth step is to report your cash flow results and impact, which are the outcomes and achievements of your cash flow management and fundraising efforts. By doing so, you can inform stakeholders about your financial situation, communicate accountability and transparency, showcase success and impact, as well as build and strengthen trust. To report your cash flow results and impact, you can use various formats and channels such as dashboards to monitor performance, stories to illustrate solutions, and testimonials to validate results.

6 6. Review and improve your cash flow processes and practices

The sixth and final step is to review and improve your cash flow processes and practices, which are the systems and habits that you use to manage and report your cash flow. This can help ensure your cash flow data is accurate and reliable, streamline tasks and workflows, enhance skills and knowledge, and optimize tools and resources. To review and improve your cash flow processes and practices, you can use audits to verify and correct data, seek feedback from staff, donors or stakeholders to identify issues or opportunities, provide training for staff or volunteers to improve skills and knowledge, or conduct research on best practices from other non-profits or experts. By following these six steps, you can improve your cash flow analysis and reporting for non-profit fundraising, so that you can ultimately achieve your mission and vision.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?