Grant Funding Models
This use case explains how to model grant funding for not-for-profit and education organisations in Model Reef.
You will:
Represent grants as structured revenue streams linked to specific programs or cost centres.
Model award amounts, tranches, milestones and acquittal conditions.
Distinguish between income recognition and cash receipt timing.
Connect grant funding to program costs, cashflow and multi year planning.
Model Reef does not replace your grant management system. It consumes high level assumptions about grants and converts them into full three statement forecasts.
When to use this pattern
Use this pattern when:
Your organisation depends on grants from government, foundations or donors.
Grants fund specific programs, projects or cohorts.
You need to understand how grant timing affects program viability and cash.
You want grant assumptions wired into your P&L, Balance Sheet and Cashflow forecasts.
It is often combined with:
Program Cost Modelling
Donor or Revenue Stream Forecasting
Multi Program Consolidated Reporting
Architecture overview
Setup and modelling steps
Set up branches for programs and overheads
In the branch tree, create a structure that reflects how you manage delivery, for example:
Organisation
Program - Youth Services
Program - Education Outreach
Program - Research
Central Overheads
Each program branch will hold the program's grant funding and program costs. Central Overheads holds shared staff and overheads that are not tied to a single program.
This allows you to see grant coverage at program level and in aggregate.
Define each grant as a structured funding line
For each grant, create a Revenue type variable in the branch that delivers it, for example:
Revenue - Grant - Youth Mental Health 2025
Revenue - Grant - Outreach Pilot 2024 to 2026
Revenue - Grant - Research Fellowship A
Attach metadata as tags or notes for:
Funder name.
Grant agreement identifier.
Purpose and restrictions.
Key milestones and reporting requirements.
If a single grant funds multiple programs, choose between:
One grant variable at a parent branch plus allocation drivers, or
Separate grant variables per program linked to a common driver for the total award.
Model award amount, tranches and term
Use drivers in the Data Library to capture grant structure, for example:
Total Award Amount.
Start Date and End Date.
Annual or period based allocation percentages.
Tranche schedule, for example 40 percent up front, 30 percent at milestone 1, 30 percent at milestone 2.
Based on these drivers, set the Revenue variable's accrual path:
Evenly across the grant term.
Match to planned program delivery expenditure.
Match to agreed tranche schedule.
As a starting point, many organisations recognise grant income in line with allowable expenditure, especially where unspent funds must be returned. You can approximate this by linking grant recognition to program cost variables in the same branch.
Separate income recognition from cash timing
In the variable timing settings, define cash timing rules distinct from accrual, for example:
Up front payment on award date for a portion of the grant.
Subsequent payments on milestone dates.
Final reconciliation payment or clawback after acquittal.
Examples:
50 percent of grant cash received at start of year 1, remaining 50 percent at mid year.
Quarterly payments in arrears based on expenditure reports.
One off payment after reporting is accepted.
Set delays or explicit schedules so that:
P&L shows grant income in the period it is recognised.
Balance Sheet shows a receivable where income is recognised but cash is outstanding, or deferred income where cash is received ahead of recognition.
Cashflow and Cash Waterfall show when cash actually arrives.
If you need to approximate deferred income, you can use Liability variables to represent unearned grant income and link them to grant recognition and cash receipts.
Connect grants to program costs
To see whether grants fully fund program activity, create program cost variables in the same branch, for example:
Staff - Program Team - Youth Mental Health.
Opex - Travel and Supplies - Outreach Program.
Opex - Venue and Equipment - Education Workshops.
Model these costs using Program Cost Modelling, then compare:
Grant income from all sources per program.
Total program costs.
Net surplus or funding gap.
This comparison is easiest via custom reports and dashboards that show:
Grant funding coverage percentage (grant income divided by program costs).
Amount of unfunded program cost that must be supported by other revenue streams.
Multi year view of coverage ratios.
Model grant pipelines and future funding risk
Beyond contracted grants, you may want to model a grant pipeline, including:
Probability weighted pipeline of potential opportunities.
Renewal risk for expiring grants.
Targeted new funding for existing programs.
Use drivers such as:
Probability of success per grant proposal.
Expected award date and term.
Best case, base case and downside views for key funders.
Represent pipeline items as separate Revenue variables with lower certainty and use scenarios to turn them on or off. This keeps base forecasts conservative while allowing board or leadership to see upside potential and funding risk.
Use scenarios for grant risk and strategy
Clone the model into scenario models to represent different grant environments, for example:
Loss of a major grant for a core program.
Successful renewal of time limited funding.
Expansion of programs with multiple new grants.
Adverse funding environment with delays or reductions.
In each scenario, adjust:
Grant award amounts and terms.
Payer mix between grants, donations and earned income.
Program cost structures and staffing.
Compare scenarios using:
Net funding position per program.
Cash runway and funding gaps.
Ability to maintain, expand or wind down specific programs.
Impact on group level reserves and valuation metrics where relevant.
Check your work
Grant amounts, terms and cash timing match signed agreements or current expectations.
Income recognition policies in the model mirror accounting policies used for reporting.
Program level comparisons between grant income and costs match management views.
Scenario results align directionally with discussions about funding risk and strategy.
Troubleshooting
Related guides
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