3 Tips on Narrative Budgeting

 

Nobody likes administration expenses.  And if your organization owns a building, the same thing goes for repair and maintenance cost. Introducing: Narrative Budgeting.

Imagine running a church in a small community. Not only does it function as a house of worship, it also is a community space for meetings and celebrations. But when the Treasurer announces that the roof needs fixing and the boiler replacing, people only see Dollar signs. The same happens for other organizational costs, such as management salaries, employee benefits, computer and communication expenses.

This is why many faith-based organizations now have turned to Narrative Budgeting. It involves telling the story of how the organization’s resources contribute to its mission.  In the above example, the story would be told about how the building maintenance (of the boiler) and repairs (to the roof) contribute to Community Outreach, which is an important part of the organization’s mission.  Other specific examples could be, e.g. Scouts, Alcoholics Anonymous, and major anniversaries.

The accountant in me wants to say, “Wait, you are just allocating administrative costs to programs based on usage. That’s nothing new; we have always done that.”

That is true from the accounting perspective. The difference is the recognition that for many people a financial document is just a sea of numbers.  They don’t see the relationships between the numbers, and don’t see how the numbers translate into the programs that will fulfill the organization’s mission.  People need a narrative to help them connect the financial picture to the mission, a story they can commit to and support.

3 Tips on Narrative Budgeting:

  1. The narrative and numeric budgets need to be consistent and have the same totals.
  2. Use percentages or a graph to show the proportion of resources the organization is putting into each major goal.  The proportion for each goal should reflect its priority to the organization.
  3. Apply the narrative budget everywhere you use the financial budget:  at the Finance Committee and Annual meetings, in the Annual Report, for staff and volunteers, and with prospective donors.

 

More Information

The following web site is aimed at faith-based organizations, but the instructions are easily applied more broadly:

Finally, in the words of Judith Johnson, a passionate advocate for Narrative Budgeting,

A narrative budget is a key communication tool in a packet of information for visitors and new members, connecting the need for both their giving and their commitment to ministry programming. It is never too early to begin telling a story that draws people into wanting to know more and to become more involved.
[Source:  Narrative Budgeting:  Christian Practice, Purpose and Narrative, United Church of Canada, 2004]

 

What have been your experiences (good and bad) with budgeting?  What worked?  What energized the people? If you want to learn more about how to create a narrative around your organization’s mission, contact Energized Accounting.

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