Nobody likes administration expenses. And if your organization owns a building, the same thing goes for repairs and maintenance. Imagine running a church in a small community. Not only does it function as a house of worship, but it also is a community space for meetings and celebrations. But when the Treasurer announces that the roof needs to be fixed and the boiler replaced, the people only see the big number in the expenditure column. You get the same reaction for other costs of running the organization, such as management salaries, employee benefits, computer and communication expenses.

Many faith-based organizations have turned to narrative budgeting as a way to connect expenditures to mission. Narrative budgeting 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 and repairs contribute to community outreach, an important part of the organization’s mission. Specific examples would be mentioned as well, such as meeting space for a host of organizations from Scouts to Alcoholics Anonymous.

For many people a financial document is just a sea of numbers. They don’t see the relationships between the numbers.  They don’t see how the numbers translate into the programs that will fulfill the organization’s mission. They need a narrative to help them connect the financial picture to the mission, a narrative they can commit to and support.

As you bring your fundraiser’s storytelling skills to the creation of a narrative budget, here are some points to remember:

• The narrative and numeric budgets need to be consistent and have the same totals.
• 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.
• Use the narrative budget everywhere you use the financial budget: at the Finance Committee and annual meetings, in the annual report, for presentation to staff and volunteers, and with prospective donors.

More information

The following web sites are aimed at faith based organizations, but the instructions are easily applied more broadly.

Building a narrative budget - http://www.centerforfaithandgiving.org/Resources/AdministrativeResources/BuildingaNarrativeBudget/tabid/950/Default.aspx

Narrative budgets - http://thegoodsteward.ca/parishes/narrative-budgets/

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.]

Bill Kennedy is a Toronto based Chartered Accountant with Energized Accounting, focusing on financial and reporting systems in the charitable sector. He blogs at www.EnergizedAccounting.ca/blog/. Find out more at www.EnergizedAccounting.ca; follow Bill @Energized