What your organisation's budget says about you

At its best, a budget should be able to look your stakeholders in the eye and say: This is who we are as a for-purpose organisation, and this is the place we aim to occupy in the world.

If we imagine the budget as a person, what would it look like? It would reflect your values, priorities, organisational culture, vision and risk tolerance. Thinking about a budget this way makes it less about technical skill and more about awareness. A budget is not just a financial document – it’s a leadership tool that both reveals your organisation’s culture and helps shape it.

In that sense, when you present your budget, you wear your heart on your sleeve. The question is: what does it reveal about you?

I value a respectful, calm and positive culture

What outputs do your targets require? If you set targets without a stretch, then you are telling staff you don’t expect any more growth and aspiration and creativity from them this year than they exhibited last year. You risk sending the message that you expect nothing from your people because you don’t believe in them. On the other hand, if you set targets that are too lofty and unrealistic, then your team will enter the new financial year already stressed. High-stress environments resulting from unrealistic targets lend themselves to drama and distraction.

I value delivering our mission, not just funding it

A budget that truly reflects your mission is not simply last year's numbers with a cost-of-living adjustment applied. It asks harder questions: where are we spending more than we need to, and what could we do with that margin? Could we reach more people, or deliver a better product, if we planned further ahead, bought in bulk, or packaged our work so we are not reinventing the wheel every time a similar project comes around? Answering these questions helps you to be purposeful with every dollar so that as much of your spending as possible lands where your mission requires it. Budget time is one of the few times in the year when you can look at the whole picture and ask: Are we being as smart about delivery as we are passionate about our mission?

I value a growth mindset in my people

A budget that leaves out staff professional development sends a clear message: this organisation believes that its leaders already have all the answers and that there is nothing to learn from employees in other roles. I don’t believe that’s the case in most organisations. So, I would advise leaders and business managers to put their money where their mouth is. Everyone needs to access professional development, every year, for their own skill development and for the benefit of the organisation. That needs its own budget line. If you want, you can label that budget item “Work for us. We believe employees can always learn and grow.”

I value both safety and innovation

A budget can reflect the level of risk your organisation is willing to tolerate in many different areas. How much spending you allocate to insurance and what kind of insurance you choose to purchase demonstrates your risk tolerance. The number of outputs you promise for next year compared to this year demonstrates your risk tolerance. New budget lines for new programs, products, inventions and innovations (or the lack of them) communicate your willingness to give them a go or your aversion to this kind of risk.

I value collaboration

Who is in the room when the budget is drafted? Is it a solitary exercise for the finance manager, is it the CEO alone, or does the process itself reflect the values you talk about – collaboration, consultation, teamwork? A participatory budget process says something different from a top-down one delivered to staff as a fait accompli. Each method has its merits, but it’s important to be aware that they will lead to different results.

Are you sitting with each staff member or team leader and asking how this year went, what could look different and what is their vision for next year? Or do you see this as a waste of time? Is your budget informed by staff experience? Are key staff leaders involved as partners in the budget’s creation? If they are, research shows they will be more committed to the targets it contains, work harder to meet them, and take greater ownership of the outcomes.

I prioritise future financial sustainability over spending the whole inheritance tomorrow

The income streams represented in the budget should be diverse and realistic but enough of a stretch to demonstrate the organisation’s ambition and energy. Not too much of a stretch, though, which creates stress because staff can see overwork and failure all over it. Setting too much of a stretch target is problematic for culture, too – it prioritises sucking in money for the sake of a short-term vision without considering what the people who replace you in your role on the board will need to do about income three years from now.

I prioritise the budget as a strategic document

Boards often treat budget approval as a rubber stamp. But the budget is arguably the most concrete expression of strategy the board ever sees. The organisation’s strategy remains words on a Word document until it’s translated into numbers on an Excel spreadsheet. It’s at that point of translation that the vision of where the organisation is heading is translated into how you are planning to get there. This means the board should be interrogating the budget for what it is saying about strategy, and what it is missing. This is the core aspect of your strategic role as a board member.

A budget that’s ready to take on the world

What the budget leaves out tells its own story. Each budget line communicates what you value and what you prioritise. The inverse is equally revealing. The absence of a contingency line, no allocation for community consultation and nothing for board development are all absences that shout loudly.

A bold budget takes calculated risks so the organisation can flourish and pursue its mission in a sector that is constantly changing. At the same time, it gives staff and board members confidence that risks and likely consequences have all been carefully considered. With that foundation, the organisation can step out with shoulders back and head held high to create the change it seeks to achieve.

More resources

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