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Budgeting Approaches - Narrative & Presentation

The budget process was described earlier in the Budget section as the way an organization goes about building its budget. In this, the fourth of a four-part series on good budgeting approaches, we discuss ways to present the budget for maximum understanding and clarity.

Provide narrative notes to explain budget assumptions to the board.Board members and other readers will appreciate explanations to help them understand the underlying thinking behind the numbers in the budget. Notes might anticipate questions such as: What were the assumptions for staffing or other key expense drivers? What degree of risk or uncertainty is present relating to any elements in the budget or the economic environment? What controllable expenses have been identified that could be reduced if a grant is declined? The narrative might also address significant year-over-year variances, changes to program or infrastructure initiatives, shifts in priorities, or other elements that would provide clarity and transparency regarding budget composition.

Include charts and graphs in the narrative to show expenses by category or activity, revenue by source, and comparatives to prior years. These visual representations of data can enhance a reader’s understanding of the organization’s business model and how it is trending in terms of growth, contraction, or revenue/expense concentrations.

It's best to use spreadsheet software to build budgets, but if notes are too many or too wordy to fit conveniently into spreadsheet cells, the notes could be written in a word processing document. Whether or not narrative notes are in a separate document, be sure to add letter or number keys to associate each note to the related spreadsheet line.

It’s best to use the right tool for the right job and let the software work for you. Please, never use word documents for budgeting (other than for notes). The spreadsheet will do a more efficient and accurate job of adding those numbers up and will automatically revise the totals when changes are made.

Pay attention to the presentation formatting.
Your budget could be brilliant, well-researched, and well-documented, but if it is not reader-friendly, your work will be undermined. Well-formatted budgets help the reader to focus on the most important elements and to better understand content and implications. Characteristics of good formatting include the following:

• Columns and rows are well-labeled using font size, boldface, and underlines to create emphasis and for clarity.
• Colors used for shading are chosen with black/white printing in mind, as not everyone will have a color printer. When using shading, it’s best to use lighter color shading with dark fonts, or light font         colors for darker shading. Dark fonts over intense colors are sometimes not readable if printed on non-color printers.
• Column headers and row labels are carried to any second pages.
• Enough detail is included, but not too much.
• Narrative notes are given when appropriate and are letter-keyed to the data they refer to.
• Print parameters are double-checked before sending out electronic copies to avoid paper waste.
• Footers include the file name and the work sheet name to assist with locating electronic versions.
• Consistent file naming protocols are followed to assist with version control. For example, “ORG FY27 Budget v 2026-09-21” would indicate the organization name, budget year, and version date (Sept         21). For later updates, save a new version as ORG FY27 Budget v 2026-10-05 (Oct 5), and so on to have the latest version stack last in the Budget folder.

Return to the Budgeting & Financial Planning Introduction  page for other content and downloadable resources pertaining to budgeting.

© 2023 Elizabeth Hamilton Foley


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