Goal Setting: The Foundation of Impact Budgeting

Goal setting represents the most crucial stage of impact budgeting. This process establishes clear, measurable objectives that will drive organizational work in the coming year, moving beyond aspiration to create actionable targets.

Starting with Reality

Effective goal setting begins with honest assessment of current position. What outputs and outcomes is your organization currently achieving? What resources make those achievements possible? This reality check is essential—if you've consistently fallen short of certain goals for several years, it may be time to adjust expectations rather than perpetuating unattainable objectives.

Categorizing Goals

Goals should be separated into two distinct categories:

1. Current programs: What will you continue from this year to next?

2. New initiatives: What will you add or change to expand or deepen your impact?

For each category, articulate specific outputs (quantifiable services) and outcomes (resulting changes) that define success. This separation allows board members, staff, and funders to clearly understand what constitutes baseline services versus growth or innovation.

Creating Transparency

A summary grid including line items for each output and outcome creates transparency around costs and priorities. By clearly articulating the cost of a unit of service—such as the expense of delivering a food box or providing a day of afterschool care—you create fundraising opportunities that allow donors to understand exactly what their contributions make possible.

Beyond the Budget

Goal setting in impact budgeting extends beyond the budget itself. This process creates alignment between mission and financial planning, helps employees understand their role in achieving organizational objectives, and generates compelling narratives for fundraising. When executed well, goal setting transforms budgeting from a financial exercise into a mission-driven roadmap for organizational success.

Organizations should ensure goals meet basic criteria: they should be specific, measurable, achievable given current capacity, relevant to the mission, and time-bound within the fiscal year.