What is a Budget Narrative? Plus 4 Tips to Create One Yourself

If you’ve spent any time within a nonprofit setting, you’ll understand how important it is to share your story. Whether a simple blog post, email newsletter, or direct mail marketing campaign, you should look for every opportunity you can to share your story.

Did you know you could tell your story on your annual budget? A narrative budget is a unique type of budget which helps you to shed light on the ‘why’ behind the ‘what’ in your organization. Not only can you tell facts and figures about your financial situation, but you can also share the impact you have on your community.

In this article, we’re going to be looking at:

What is a Narrative Budget?

Narrative budgets allow you to share more than fact and figures

A narrative budget is a useful document which goes after both the head and heart of your donors. It shares unique line items for the costs in your business, explains how these costs were estimated, and also provides a budget justification for the cost. Basically, it’s a document which can help to shed light on your expenses by providing a why to the what, the purpose behind the money that you spent.

It also allows you to share the results of the work that you did, highlighting the success that you had.

Narrative budgets can play a unique role in grant applications and donor support letters. They provide you with the ability to be honest and transparent with how you’re spending the money that is being donated, as well as giving real, tangible goals to reach for.

Key Elements of a Narrative Budget


Every narrative budget starts off with an introduction, a short piece about how your year went. Think of it as a year end review. This is the place for you can use stories from throughout the year to add flavor to the document. Be sure to tell your story in the introduction by pointing to specific instances where you’ve seen success.

Mission and vision

People want to know what your goals are and how you’re going to achieve them. This is where including a short section about your mission and vision is important in a narrative budget.

This is especially important if you are trying to attract new donors or you’re including a narrative budget in a grant application. For those organizations who don’t know you very well, it’s a good idea to describe succinctly the guiding principles behind your business.

Maybe your goal is to tackle homelessness in your city. Then share your vision for a holistic approach to tackling homelessness. It’s okay to get passionate here, and people appreciate honesty and sincerity when you’re sharing your message.

Overview of programs and services

Be sure to give an excellent overview of all the programs or services that you provide to your community. By including a detailed description of what you do, people can see the full effect that your organization has on the surrounding people.

Financial information

Next, include financial information, including line items around specific expenses. You should also explain and justify the expenses that you have, providing detailed descriptions of how each individual line item helps you to achieve your overall goals.

Outcomes and Impact

This section is a lot of fun because you get to do something that most people never really get to do: brag about yourself and your organization. Come ready with some impactful stories from the previous year, and even ask for testimonies from volunteers that have helped you, people affected by your organization, or community members like city councilors or your mayor.


You should conclude your narrative budget by going through the trajectory of your organization’s spending once more. You shouldn’t be adding any new information to your conclusion, but point to some things that you brought up in the previous sections.

What Are the Benefits of a Narrative Budget?


financial, analysis, accounting

When you’re in charge of a nonprofit, transparency is key to building trust with donors and volunteers. You want to make sure that you lay all your cards down on the table and show that each expense has a budget justification. Whether it’s salaries or the cost to run your business, you need to make sure that you have all the information upfront for people to read through.

Donor engagement

hand, man, watch

One thing that I like the most about narrative budgets is that, when done well, you can even include these with promotional material that you send to your donors. If you are in constant contact with your donors, then chances are you’ll be sending out newsletters throughout the year to keep them connected with your organization.

A narrative budget actually helps to engage donors in two impactful ways:

  1. Showing that your organization is making a difference by telling impactful stories.

  2. Describing your overall plan to grow your business and to keep in mind costs.

I like to refer to this as dreaming and doing, telling your audience your aspirations while grounding them in concrete, financially stable goals. Both show that you are leading an organization which is making a difference, and that you’re confident in your role as a leader.

Impactful storytelling

fantasies, books, traps

Storytelling is key to not only nonprofits but also for for-profit businesses. The entire core of marketing is storytelling, and the brands that tell a better story are the ones that get more attention and customers.

With a narrative budget, you’re able to take what could be a boring document—a simple budget—and add flavor and life to it by telling really interesting impactful stories. If your organization is funding an orphanage in Africa, the numbers on the page of your budget don’t tell the entire story. Using real, tangible stories can help show the impact of your organization.

Budgeting and planning

student, typing, keyboard

Ultimately, whenever you tell your story, you should always back it up with facts. Facts help to buttress your stories, showing that the work that you’re doing is not only important but also viable.

Honestly, when I’m donating to an organization, I want to make sure that they understand the cost of running the organization. Financial accountability proves that you’re a viable organization, and that the money donated to you will go to the right places.

You can have the best story, you can come up with the best idea, but if you don’t have a plan to deal with the costs of the day-to-day operations of your businessincluding salaries, indirect costs, and direct coststhen your organization may head towards failure.

Tips for Creating an Effective Narrative Budget Example

A. Gather financial information for budget justification

Have all of your ducks in a row so you can tell your financial story. Remember, budget narratives are an important document, one that can be used in donor care packages or even applying for grants, so you want to make sure that you have all the right information included in your narrative budget.

Assess both the direct and indirect costs associated with running your organization. Direct costs are expenses geared around one specific product or service, while indirect costs are everything associated with keeping the lights on in your organization. You need to find every single direct and indirect cost to create a budget narrative.

B. Identify key messages

What was that one big thing that you pulled off this year? What was that one thing that you didn’t think you could complete last year, but got it done? Include that story in your narrative budget, and stick with that key theme.

Let’s say you open a youth drop-in centre in your area. Your major key theme for the narrative budget should revolve around getting the drop-in centre up and running. Think through the stories that you can tell from the key events of the past year.

C. Use visuals and infographics

graphic, information, template

It’s always a good idea to include visuals and infographics because they draw the eye and allow people to take in more information. Instead of just a long wall of text, break up your narrative budget with pictures of the work that you’ve done. You can also include quotes by subject matter experts in your field or historical figures which point to the merit of the work you’re doing.

D. Tell a compelling story

You can do a thorough job of explaining each of the expenses from the previous year, but few people will read a document which is dry and boring. One interesting story can reach a wide variety of people, and can help you to actually grow your business. I want you to think about the most important thing that you did this previous year. Ask yourself why was that important? And how did I make a difference?

If you feel passionately about that story, and you tell it in such a way that it is interesting, other people will be attracted to the story too.


Narrative budgets are important because they help to show the mission, vision, and values of your business. Instead of just having facts and figures on a piece of paper, you actually end up having a platform to share about your successes and your goals for the future. By showing each budget line item and explaining why you spent the money where you did, you can actually provide a budget justification for the work that you’re doing.

Telling your story isn’t the easiest thing to do. And having somebody to come alongside you to highlight some of the work you’re doing can actually help you get better in your storytelling abilities. One thing that I enjoy doing is enhancing the online presence of nonprofits by helping them to tell their story. Take a look at my Services page, and you can learn more about the ways I can help your business.

Leave a Reply

%d bloggers like this: