Every budget is a set of promises.
Most boards treat a budget as a forecast, a test of how good or bad management is at predicting the future. But when a board approves next year’s budget, it is also approving a list of commitments the organization says it will keep: pay these people, fix that roof, raise this much from these donors by these dates. The bottom line comes out to zero, everyone exhales, and the minutes record a balanced budget. That zero says very little about whether the promises above it can be kept, and in budgets that later fail, the promises that break tend to be the same three: positions frozen on paper while the work is still expected, maintenance pushed into a later year, and a contributed-revenue line set by the size of the gap rather than by the donors in the pipeline. This fall, the Phoenix Symphony gave the field a public lesson in the third.
What Happened in Phoenix
On October 20, the Phoenix Symphony’s board announced that it would suspend the 2026–27 season after its November 1 concert and begin laying off its full-time musicians (66 of them, by the musicians’ count) the next day. The orchestra cited ongoing operating deficits and said ticket sales and giving had both grown but that anticipated contributions fell short of what it needed, and in a message to subscribers, CEO Peter Kjome wrote that the Symphony projected it would be unable to meet essential obligations beginning in November. At the end of October the story got more complicated, when local outlets reported that attorneys for the trust of Glenn and May Tansley had asked a Maricopa County judge to vacate an October 14 order awarding the Symphony a $6.5 million bequest. The Symphony says it disagrees with the trustee’s account and will respond in court, that it asked for the gift to go to its separate support foundation under its gift acceptance policy, and that neither organization has received any of the money. The court had not ruled as of this writing. Then, on November 6, the board reversed course. It said a small group of donors had pledged enough to resume performances on November 12 and carry the season through December 31, that continuing into 2027 will take more fundraising, and that a new 11-member commission, including two musicians chosen by their union, will rework the orchestra’s finances and operating model. The Symphony hasn’t said how much was raised, and it did not respond to my request for comment on the figures in this post.
Nashville got its own rescue on October 4, when Oracle gave $10 million and brought back the season the orchestra had suspended for lack of cash. Gifts like these buy time, and without a plan for what changes, they kick the can down the road to next year’s budget. For an orchestra, that plan has to include a complete restructuring of the collective bargaining agreement, which is the largest fixed cost center, because you cannot turn around a business model that is fundamentally broken. In Phoenix, the musicians’ contract expired November 1, so the commission’s work and the next negotiation will be happening at the same time.
I wrote about the balance sheet on LinkedIn (the line of credit, the board loans, a support foundation that sent the orchestra $10,600 last year), so I won’t repeat that here. What I want to do instead is read ten years of the Symphony’s Form 990s the way a board should read a budget, as a record of which promises held.
Ten Years of Filings
The Symphony’s fiscal year ends June 30, and the surplus and deficit figures below are total revenue minus total expenses as filed, which means they include restricted gifts. They aren’t the operating results a board would see, and they don’t show the budgets the board approved, so I can’t tell you which of these years were presented as balanced.
Start with the good news, because there is real good news. From FY2023 to FY2025, total revenue rose 49%, from $8.29 million to $12.35 million, while expenses rose 27%, from $11.28 million to $14.36 million. Contributions climbed from $4.21 million to $7.32 million and program revenue from $4.03 million to $5.09 million. Very few orchestras grow revenue by half in two years, and the deficit did narrow, from $2.99 million to $2.01 million.
But the deficit never closed. The three years from FY2023 through FY2025 lost a combined $7.98 million, and net assets fell from $7.89 million in June 2022 to $264,590 in June 2025, a 97% drop. Net assets without donor restrictions were negative $3.5 million. Total liabilities rose $2.03 million in FY2025 alone, to $4.72 million.
The longer view is harder still. Net assets were negative at the end of every fiscal year from FY2016 through FY2021, bottoming out at negative $2.94 million in June 2020. FY2022 then brought $16.6 million in contributions and a $9.8 million surplus, which pulled net assets above zero for the first time in the decade these filings cover. Three years later that cushion was almost entirely gone. KJZZ reported losses “nearly every year for the past decade,” but the filings show deficits in five of the last ten years, and the ten-year total from FY2016 through FY2025 is a surplus of about $990,000, all of it from FY2022. Take that one year out and the decade lost $8.8 million.
So this is an orchestra that spent most of a decade with no cushion, had one very large year (including $7.5 million in government grants, almost certainly federal pandemic relief, on top of $9.1 million in private gifts), and then ran three budgets that each needed $2 million to $3 million more than came in. That pattern is easier to see in a budget than in a tax return, so let me build one.
Three Promises in a Composite Budget
The organization below is invented. It’s a composite I’ll call Orchestra X, roughly Phoenix’s size but not Phoenix, and every number is made up to show the mechanics.
Orchestra X needs $14.0 million to run next season. Earned revenue (tickets, fees, rentals) is budgeted at $5.5 million, which leaves $8.5 million to come from contributions, grants and the endowment draw. Last year that line brought in $7.2 million. The budget balances, and the board approves it unanimously.
Now look at three things inside it. First, three open staff positions (a major gifts officer, a finance associate and an education coordinator) are held vacant all year, which books $270,000 of savings. The work those people would have done is still expected, so it lands on the remaining staff or doesn’t happen, and one of the three is the person who was supposed to help raise the gift line. Second, the $400,000 replacement of the hall’s HVAC system gets pushed to next year. That money is still owed, and it shows up in a future budget that also has to balance, usually at a higher price and sometimes after an emergency repair. Third, the development office’s own pipeline (renewals at last year’s retention rate plus weighted new asks) supports, at 90% confidence, about $7.6 million in contributions, a 6% increase. The budget says $8.5 million, an 18% increase, because $8.5 million is the number that makes the bottom line zero. That $900,000 difference is a plug.
Add them up and $1.57 million of Orchestra X’s balanced budget, about 11% of expenses, rests on promises the organization either has no plan to keep or no evidence it can. If contributions land where the pipeline says they will, the year ends $900,000 short, with $400,000 of deferred cost already waiting in next year’s budget and three jobs’ worth of work undone.
The Questions That Expose a Plug
None of this is hidden. It’s in the budget packet, if the board asks for it. Which positions are frozen, and who is doing that work? What did we defer, and what will it cost when it comes back? How much of the contributed-revenue line does the pipeline support today, and how much is there because we needed it to be? And if the answer to that last question is a large number, what do we cut in March when the money hasn’t come in?
The third question matters most, because the gift line is the one that can fail all at once. At Orchestra X, contributions are 61% of revenue. At Phoenix in FY2025 the figure was 59%. When most of the budget depends on giving and there is no reserve behind it, a miss on the gift line goes straight to cash.
Reading Phoenix Against the Three
The filings can’t show me Phoenix’s budgets, but they do show where the pressure sat. Contributions were 59% of revenue in FY2025, and net assets of $264,590 covered less than a week of the orchestra’s $14.36 million in annual expenses. The Symphony’s own explanation this fall is that its current budget assumed about $7 million in contributions, a figure it says was consistent with recent fundraising, and that the money didn’t arrive at anticipated levels. That makes the point more sharply than a plug would, because even a gift line built on history breaks when there is nothing behind it. Growing revenue 49% in two years took real work from the staff and board. Growth on top of no reserve still leaves a board with no room for a single promise to break.
The Tansley bequest makes the same point from another direction. By the Symphony’s account, its intention was to preserve the principal in a memorial fund and spend only the interest and dividends. At a typical 4% to 5% draw, $6.5 million produces $260,000 to $325,000 a year, roughly a tenth of the FY2024 deficit, between an eighth and a sixth of the FY2025 deficit, and about a third of the $926,000 the Symphony says it lost in FY2026 (its own figure, not yet audited or filed). That is a proper way to honor a donor’s wishes, and it is also a reminder that an endowment gift, however generous, can’t close an operating gap of that size.
What a Board Can Ask For
The fix fits on one page. Ask management to send the budget with a promise schedule attached: every frozen position with its savings and who is covering the work, every deferral with its estimated future cost and the year it lands, and the contributed-revenue line split into the part the pipeline supports (90% confidence) and the part that closes the gap. Then the board votes on the gap number by name.
Two standards follow from that page. If the gap is larger than the organization’s unrestricted operating reserve, the budget isn’t balanced, and the minutes should say so. And as Mike Batts argued in “The False Comfort of a Balanced Budget,” the budget should plan for a surplus that moves the organization toward a stated reserve target, so that balance means money set aside rather than an organization holding still.
A board that asks for the promise schedule will still approve a budget with a plug in it some years. It will know how big the plug is, and it will have decided that in October instead of discovering it in March.