Boards and budgets – getting the balance right

By Jenny Berry, head of leadership development

As the end of the financial year approaches, a chief executive’s mind turns less to thoughts of spring and more towards setting budgets for the coming year.

In tough times for the sector, setting a budget which does what you need it to is often a far from straightforward task. But from what we’re hearing, some charities are having difficulties which stretch beyond this. In particular, it seems there are some difficulties balancing the amount of information – and control – being given to the board. To help you through the coming months, we’ve put together some top tips for CEOs shared by our members.

  1. Take care with the timing

The process starts with getting the schedule for planning and budget setting right – it needs to be clear in advance which board meetings will consider what. Involve your finance committee and plan on the board timetable to have two goes at the budget. Try and get your treasurer onside as early in the process as possible.

  1. Process, process, process

Make sure you have a scheme of delegation in place, and that everyone knows what it says. Before you enter into any discussions with the board, it’s important that everybody knows where they stand. This is particularly key when it comes to understanding when you can make decisions alone, and when the board should get involved.

  1. Conflict resolution

You can’t always avoid all disputes. Sometimes, people will disagree – this is often a healthy part of planning your budget. But such disagreement should not be allowed to run unchecked. Instead, make sure there is a process agreed for addressing any conflicts which arise between key personnel. If everyone is aware of these from the outset, and they are followed properly, you can prevent conflict becoming a destructive force in your organisation.

“[Avoiding conflict] is 60% process and 40% communication.”

ACEVO member

  1. Risk register

One of the major concerns of board members will always be ‘risk’. Whether it’s the risk of losing money, the risk of looking bad publically or even just the risk of losing a key member of staff, this is rightly at the top of the agenda. Rather than getting frustrated at the board worrying unduly, or going over old ground, make sure your risk register is kept up to date and circulated to all board members. You’ve already put the work in to creating this, so make sure it’s used properly.

  1. Information

When it comes down to it, the board does have ultimate responsibility, and you need to make sure trustees are equipped for this – for example, make your fundraising assumptions explicit, and justify them. Give the board a clear commentary as well as just a set of numbers. Make sure they have all the information they ask for, and all the information they need – the two may well be different! But go further than this. Take the time to check that each of them understands what they’ve been given to look at. While this may seem like a lot of work, it will save time on misunderstandings later on.

  1. Don’t shoot the messenger

To do their job, trustees need to have the right information at the right time. Without this, they can’t make well informed decisions. If you avoid delivering bad news, all you’re doing is hampering the effective operation of the board – and through them, your organisation.

  1. Why interfere?

Much as you don’t want to admit it, the concerns of the board may sometimes be justified. Talk to them, and try to find out why they’re getting involved now. If it’s just to help you, then be clear with them where you need their help. Equally, they may feel personally responsible, and thus want to have a degree of control. Communication is key to alleviating these concerns.

  1. Going back

If you’re having difficulties now, it may be too late for this, but make sure you have regular conversations with your chair. Don’t leave it to the last minute to phone them with a problem – this just turns it into a crisis. If you speak every week, or month, then the relationship should build on its own. If your relationship is built on mutual trust and respect, it will be easier to work together to head off any concerns.

  1. Senior staff

Your trustees aren’t the only people you need to keep on side at the moment. Check with your senior staff to make sure none of them have concerns. If they’re worried about a direct approach from one of your board members, this is where you refer back to delegation – make sure everyone knows where they stand.

These aren’t hard and fast rules. Following them doesn’t guarantee you can get your board to do exactly what you want. But over the coming months, bear them in mind as you work with your board to put a budget together. If you want more advice, you can access our Governance helpline and other ACEVO governance support here.

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