Podcast Summary: Nonprofit Mastermind Podcast

Episode Title: Is Your Balanced Budget A Red Herring?
Host: Brooke Richie-Babbage
Date: October 21, 2025

Overview

In this episode, Brooke Richie-Babbage challenges the conventional wisdom around balanced budgets in the nonprofit sector. She argues that while balanced budgets are often viewed as proof of responsible and stable leadership, they can actually mask serious issues and create fragility within organizations. Through personal anecdotes, strategic insights, and practical advice, Brooke encourages nonprofit leaders to shift their thinking: budgets should reflect the true cost of their organization's impact—not just an exercise in bookkeeping or a backward-looking prediction based on last year’s numbers.

Key Discussion Points and Insights

The Balanced Budget Myth (00:00–04:30)

• Balanced budgets are not an indicator of organizational health:

  “A balanced budget can be one of the biggest red herrings in nonprofit leadership.” (A, 00:00)

• Numbers can be manipulated:
  Brooke explains how it’s easy to "make the numbers work" with tweaks, but this doesn’t reveal the real situation.

• Case Study:
  A leader Brooke coached ended 2024 with a perfectly balanced budget, yet, by March, the organization was “breaking”—staff overwhelmed, donor reports delayed, and burnout rampant (01:05).

Risks of Backward-Looking Budgets (04:30–06:00)

• Patterns of Budget Development:
  Most organizations build budgets by adjusting the previous year's figures, which feels safe but actually restricts growth and innovation.

• False sense of security:

  "It locks you into survival mode and it creates an implicit ceiling." (A, 01:43)

• Budgeting anxiety:
  Leaders become anxious, treating budgeting decisions as "gambling," and experience decision fatigue from trying to predict what numbers will keep things afloat.

Hidden Costs of a “Balanced” Budget (06:00–10:00)

Brooke highlights three major hidden costs:

1. Invisible Labor
   Activities crucial to organizational success—relationship building, thought leadership, community engagement—are rarely budgeted for.

   "Invisible labor is huge." (A, 05:23)

2. Leadership Load
   When budgets are too lean, the executive director absorbs the excess workload, leading to bottlenecks and burnout.

   “The executive director becomes the bottleneck and the ceiling for growth.” (A, 05:56)

3. Cost of Growth Bigger budgets and ambitions bring more reporting, oversight, and pressure.

   "Growth...equals more pressure, more responsibility, more accountability." (A, 06:18)

Emotional Fallout and Organizational Fragility (10:00–12:00)

• Shame and burnout:
  Leaders internalize organization struggles as personal failure due to the illusion created by balanced budgets.

• “Budget shame spiral”:
  Balanced budgets can hide organizational cracks until they suddenly become unsustainable:

  "A budget that hides costs is actually perpetuating slow leaks." (A, 09:08)

The Solution: Designing a True Cost Growth Budget (12:00–13:30)

• Budgets as strategy and storytelling:
  Shift budgeting from bookkeeping to organizational design.

  “Budgets...should reflect the organization you’re building and the impact you want to have and the cost of that impact, not where you’ve been.” (A, 11:02)

• Future-ready budgeting:
  Build infrastructure, systems, workflows, and leadership development into budgets, not just programs.

  • Invest in tech, automation, staff support, and leadership growth.

  “Investing in your staff so that they are growing along with the organization. What is the cost of that? That is not a nice to have. That’s part of the infrastructure.” (A, 12:09)

• Powerful analogy:

  “You wouldn’t try to pour a gallon of water into a single cup. Your organization needs to be designed for the weight of the work it’s trying to hold.” (A, 12:37)

• Budgets as strategic tools:

  "What needs to be brought into balance in a budget is the work that is being proposed, not just the numbers on the page." (A, 13:10)

Common Objections and Counterpoints (13:30–14:50)

Brooke addresses three typical concerns:

1. "We can’t afford to budget for what we don’t have."

   • If you don’t name what you need, you’ll never resource it.
   • Budgets communicate to funders the true costs of your impact.

   “If you don’t budget it, you can’t raise it.” (A, 13:34)

2. "Our funders won’t support overhead."

   • The landscape is changing—more funders recognize infrastructure as critical.
   • Not naming operations makes organizations fragile.

   "Naming the operations, the infrastructure, the overhead actually creates the possibility of support." (A, 14:03)

3. "We’ll budget for systems once we grow."

   • Postponing systems investments builds fragility and accelerates breakdown.

   "You are building a fragile container from the beginning. You’re baking fragility into your organization." (A, 14:20)

Brooke calls these objections “red herrings”—they distract leaders from the deeper truth that budgets dictate what is possible for the organization.

The Takeaway: Budget as a Storytelling and Strategic Tool (14:50–15:28)

• Budgets as anchors:

  "A balanced budget is just math. Math isn’t strategy." (A, 14:47)

• The real question for leaders:

  “Are you treating your budget like a fancy bookkeeping document or as an expression of the future you want to lead?” (A, 15:03)

• Budgeting for ambition:
  Go to funders with clarity: “This is what we’re doing, and this is the money we need to do it”—not just “this is what we can afford.”

• Budgets as storytelling:

  "Your budget is not just a financial document. It’s a really powerful storytelling tool. It’s your way of saying to the world, this is the future we’re building and this is the support we’ll need." (A, 15:25)

Notable Quotes & Memorable Moments

• On balanced budgets:

  “A balanced budget can be one of the biggest red herrings in nonprofit leadership.” (A, 00:00)

• On invisible labor:

  “Invisible labor is huge.” (A, 05:23)

• On the cost of growth:

  "Growth...equals more pressure, more responsibility, more accountability." (A, 06:18)

• On budget design:

  "Budgets...should reflect the organization you’re building and the impact you want to have and the cost of that impact, not where you’ve been." (A, 11:02)

• On why to name true costs:

  "If you don’t budget it, you can’t raise it." (A, 13:34)

• The budget as narrative:

  "Your budget is not just a financial document. It’s a really powerful storytelling tool." (A, 15:25)

Important Timestamps

• 00:00 — Myth of the balanced budget
• 01:04 — Real-world example: balanced budget hides organizational breakdown
• 04:30 — Dangers of backward-looking budgeting
• 06:00 — Hidden costs: invisible labor, leadership load, growth costs
• 09:08 — “Budget shame spiral” and organizational leaks
• 12:00 — Future-ready, true cost budgeting explained
• 13:30 — Addressing leaders’ common objections
• 14:50 — Budgets as strategic, storytelling anchors
• 15:25 — Parting wisdom on budgets and organizational storytelling

Conclusion

Brooke Richie-Babbage reframes the nonprofit budgeting conversation: rather than a backward-facing exercise, budgets should function as visionary blueprints and advocacy tools for the work and stability nonprofits hope to achieve. Leaders are encouraged to budget for infrastructure, systems, and growth—not just for what they did last year. In short, a balanced budget is never the objective; the real goal is a budget that funds the actual work, growth, and future sustainability of the organization.

For further resources and information about Brooke’s programs, visit brookeritchiebabbage.com/podcast.