Redefining the board's role in fiscal planning

Abstract

Board approval of an operating budget, a traditional exercise of board authority, can trivialize board leadership and stultify managerial prerogatives. Considered within a new governance paradigm, conventional budget approval is not only unnecessary, but dysfunctional. This article argues that boards should proactively establish policy for financial planning and then require administrative budgeting throughout the year to meet the policy criteria. The result is that boards stay focused on the bigger issues, particularly program priorities and goals, leaving managers the authority to create and adjust budgets within policy boundaries.