1. That depends on what your soil needs.
2. Coffee grounds have about 2 percent Nitrogen and your lawn will need about 2 pounds of Nitrogen per 1,000 square feet per year. Mulch mowing the clippings back into the soil can supply 1/2 of that need. 40 pounds of coffee grounds then would supply about 0.8 pounds of N each application and applying that much every month might be too much. Coffee grounds also contain about 0.6 percent P and K.

Instead of every month should it be every other month or third month?

Once again, how much to apply and how often depends on what your soil needs. A good reliable soil test should help answer that.