A lesson in budgeting - from my gran.

My Grandma lived within her means. She had a little notebook. Starting from the back page she made a list of what she wanted to buy. Starting from the front page she added up the household income. If the household income was buoyant she would add a few things to the back page. If the household income was under threat she would take a few things off the back page. The genius of my grandma’s notebook was the interplay between income and expenditure. In other words, basic housekeeping.

Grandma and Grandad did everything they could to bring extra money into their working-class household. Grandad supplemented his state pension washing cars at the car dealership across the road. Grandma did a few stints in the corner shop. But at the end of the week they would sit down together and reconcile the lists. And, all in all they lived a financially cautious but happy and productive life.

Grandma could easily have written down what she wanted the household income to be at the front of the notebook and carried on adding more things to buy at the back. But that would have been irresponsible. Just because you want more income and write it down in your budget, doesn’t mean you’ll get it. Usually it leads to a deficit. For my Grandma and Grandad that would have been disastrous.

Grandma left school at 13 with no qualifications and then went to work in a cotton mill. No one ever taught her how to run a budget. But through war and peace, hardship and security she did. Brilliantly.

So, why is it that when Fundraising Directors submit realistic, evidence-based income budgets to their well-educated, experienced Chief Executives, fellow Directors and Boards, it is acceptable for colleagues to replace them with what they want the fundraising team to raise? Why do they then raise an incredulous eyebrow at the end of the year when the income doesn’t cover the expenditure and they have demoralized fundraisers who have done everything in their power to grant wishes rather than hit realistic targets. 

My Grandma would say because it’s easier to pin your hopes on a wish than do without. For charities it is much easier to set year-on-year delusional income targets than cut your cloth and bring projects to an end. But that is kicking the can down the road. Instead of making incremental, dynamic adjustments to live within your means you end up making big and painful cuts.

So, as charities go through their budgeting cycles in an increasingly uncertain financial environment this is a plea to CEOs on behalf of Fundraising Directors still fighting delusional ‘stretch’ targets. Please understand that there are two parts to a budget, raising money and spending money. This year please be more like my Grandma and live within your means. Don’t start something new unless you can meet your existing financial commitments. Listen to your Fundraising Director and don’t spend money that they can’t raise. And please don’t get to the end of the year and attribute painful cuts to fundraisers who have fallen short of unrealistic expectations.

I could always tell when my grandma had budgeted well because I would get a jam sandwich as a treat. There was no ‘Jam Tomorrow’ about her budget, it was jam today or nothing at all. No delusion there. 

There’s a lot of debate about the future of fundraising in the sector today. But don’t forget to look to the past and learn from some good, old fashioned housekeeping.