10 Questions Every Board Member Should Ask Before Approving the Budget

Each year, your nonprofit board is asked to review and approve the budget. For some board members, this feels routine—just another item to vote on. But approving the annual budget is one of the most important fiduciary responsibilities a board has.

Here’s the challenge: too often, budgets are approved with little discussion, a few polite nods, and a quick unanimous “aye.”

That’s not oversight—that’s a missed opportunity.

A budget is more than numbers on a spreadsheet. It’s a reflection of your nonprofit’s priorities, risks, strategy, and sustainability. So before you cast your vote, ask these ten key questions:

1. Does this budget align with our mission and strategic plan?

The budget should put your mission into action. If you’re funding programs that aren’t part of your strategic priorities—or underfunding key initiatives—something’s off.

2. What assumptions are built into this budget?

Ask about assumptions for revenue (grants, donations, earned income) and expenses (staffing, inflation, rent increases). If assumptions are too optimistic or vague, the board should challenge them.

3. Is this a balanced budget—and should it be?

Not every nonprofit needs to break even every year. A deficit might be planned (to use reserves for growth), or a surplus might be necessary (to rebuild cash). But either way, the board should understand the “why.”

4. How realistic are our revenue projections?

Is that six-figure grant secured or still in the wishful thinking stage? Overestimating revenue is a common mistake. Board members should probe: What’s committed? What’s pending? What’s uncertain?

5. What are the largest risks in this budget?

Could the loss of a major funder sink operations? Are we assuming we’ll fill every seat in a fee-based program? Ask: What’s our Plan B if something doesn’t go as planned?

6. Are we properly funding our people and infrastructure?

Too many nonprofits underbudget for administrative costs, technology, or fair wages. Ask: Are we setting ourselves up to deliver programs effectively, or burning out our staff?

7. What changes from last year should we understand?

Significant changes in revenue, expenses, or staffing deserve attention. A 20% increase in program costs or a dip in expected donations should trigger a conversation—not just a glance.

8. Are we building or using reserves appropriately?

If you’re drawing from reserves, is there a plan to replenish them? If you’re adding to reserves, what’s the long-term purpose? A healthy financial cushion is strategic—not accidental.

9. How will we monitor financial performance throughout the year?

A great budget means nothing without follow-through. Ask: What reports will the board receive? How often? Who’s responsible for explaining variances?

10. What’s not in this budget—but should be?

Sometimes, the most important question is what’s missing. Are there unfunded needs, unbudgeted risks, or postponed decisions? Don’t be afraid to name the gaps.

Approving the budget isn’t about rubber-stamping—it’s about stewardship. You don’t have to be a financial expert to ask smart questions. You just need to be curious, mission-minded, and willing to dig a little deeper.

Because when boards take budgeting seriously, nonprofits are stronger, staff are supported, and missions are advanced more sustainably.