Balancing the budget

Organisations need to decide whether their budget should balance in any given year. In some cases, the organisation might want to project an imbalance of revenue over expenses (a surplus), perhaps because of plans for bigger expenditure the following financial year or just as a safety net. A deficit budget might also be acceptable in some cases, for example if there is an urgent need to spend on a big project, on investment in new staff or on service improvement. Trustees and staff will obviously need to look at the different implications. If they are not happy with expenditure exceeding the income then the organisation would need to rethink the plans. This might involve spending some reserves or postponing some activities.

However, the focus should not just be on whether the figures balance but also how well the organisation’s objectives and wider resources can be best used to impact on the maximum number of beneficiaries.

Income and expenditure

2.2 Sources of financial income