The Narrative Budget

If the budget is viewed as a pointless exercise inflicted on a company by its accountants, then that is all it will remain.  If a budget is viewed as a plan, a blueprint for the future, then that is what it will become.

Nobody was born with the innate ability to budget. It is a discipline and, like all disciplines, the harder you work at it, the better you become. Experience, intuition and skill combine as you get better and better at honing in on what can reasonably be accomplished in the next twelve months.

Budget Weaknesses

A common weakness with budgets is that they just have columns of numbers with the focus on the bottom line. But what if more attention were paid to the story behind the numbers?  The numbers by themselves will not energize a department or motivate a team, but a story can.
  • If we hit our first quarter sales goal, then there will be money for getting that hot new prototype into production.
  • If we make our cost reduction target, then we can pay bonuses.
  • If we all support our environmental initiatives, then we can be both responsible and profitable.

A budget weakness specific to the nonprofit world is that meeting the budget just says that the organization controlled expenses and collected revenues in the year.  It doesn’t say whether the organization met its goals in terms of helping its community.  There needs to be measures of success in addition to the dollar figures, such as the number of public health appointments, people housed, volunteer hours used, or community gardens built.

Budget Research

In 1999, an Interchurch Stewardship Committee of eight major churches looked at church budgeting and realized that the mission was getting lost in the numbers. Church budgets did not engage church members. In their publication “The Narrative Budget” , they made some powerful points that speak to organizations of every size and type:

  • A budget should tell a story.
  • A budget should reflect your statement of purpose.
  • When people feel that their involvement is vital to the success of the organization, they will actively support it.

Bottom Line

What then is a narrative budget?

  • A budget with descriptions, not just numbers.
  • A demonstrating how the community is being supported, not just how the organization will meet its financial needs.
  • A way of helping people relate their time and talent to the ongoing mission.

Narrative budgeting doesn’t replace the numbers; it supports them. Normally budgets are broken down by department, which is necessary for departmental reporting. Having done that, try recasting the budget in terms of goals. Support the goals budget with a narrative describing how everyone’s contributions add up to achieving those goals.

Final words: be patient and persistent. These are new muscles that you’re asking people to stretch.

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