I’ll be on Tony Martignetti’s Nonprofit Radio podcast speaking with Tony in Part II of our two-part discussion on nonprofit risk management. You can find our post on Part I, focusing on indemnification, here.
While we focused mostly on legal risks, there are other risks that can be equally or even more important. Consider financial risks, health risks, environmental risks, equity risks, reputational risks, and organizational culture risks.
Employment-related Risks
Sexual harassment – Learn to identify and assess risk factors in the workplace environment, including sexist attitudes among co-workers, an unprofessional work environment, skewed sex ratios among employees and specifically managers, knowledge of grievance procedures for sexual harassment incidents.
Discrimination – Learn to identify and assess risk factors in the workplace environment, including racist and discriminatory attitudes among co-workers, an unprofessional work environment, skewed diversity ratios among employees and specifically managers, knowledge of grievance procedures for discrimination incidents.
Facilities-related Risks
Listen to the show as we talk about a variety of facilities-related risks, both physical and legal. See, e.g., A Blueprint for Facility Risk Management (Nonprofit Risk Management Center). Consider also the implications of the movement towards remote working. How does that change the risks, including regarding physical security and safety?
Events-related Risks
Listen to the show as we talk about a variety of events-related risks, particularly in these times where COVID-19 and several natural disasters have changed or should change how events are planned and operated. Force majeure is a Latin term that more nonprofits are becoming familiar with in negotiating events-related contracts. See, e.g., COVID-19: Legal Strategies for Nonprofit Meetings (Nonprofit Risk Management Center).
Vehicle-related Risks
Listen to the show as we briefly discuss vehicle-related risks, noting that there are special considerations to weigh with volunteers and not only with respect to those driving their own vehicles. See, e.g., Risk on the Road: Managing Volunteer Driver Exposures (Nonprofit Risk Management Center); What is Volunteer Risk Management and Why Is It Important? (VolunteerHub).
Mitigating and Reducing Risks
Ensure legal compliance; create policies and procedures; train the board members, employees, and volunteers; enforce policies. INVEST in creating and maintaining a healthy and thriving environment and protecting employees, volunteers, board members, donors/funders, and the organization and its reputation. Consider carefully when you should seek out help and in what form such help is required or advisable. Insurance, legal audits, financial audits, activity audits may all be part of a good risk management plan and strategy. Also consider using skilled volunteers to make up ad hoc committees. It may be easier to find some allies who are unable to commit to the much higher responsibilities of a board member but who might commit to being a part of an advisory committee that is tasked with a project taking a relatively short amount of time.
Resources
Nonprofit Risk Management Center
Risk Management | National Council of Nonprofits
What We Didn’t Cover (Yet): Fraud
In the brief amount of time, we covered a few specific areas of risks but one additional area deserving of special mention and a separate discussion is fraud. Last week was International Charity Fraud Awareness Week. Here are a few resources focused on the topic:
IRS joins international organizations in fighting charity fraud during special awareness week (IRS)
According to the Fraud Advisory Panel, a UK-based organization leading the effort, cybercrime is on the rise, exacerbated by the pandemic, including attacks on charities, their supporters and beneficiaries. It estimates that the average charitable organization will lose 5% of its revenue to fraud each year.
Preventing Charity Fraud (Charity Commission for England and Wales)
Our helpsheets offer information, advice and practical actions on grant fraud, cyber security, moving money, financial security and more.
Fraud Advisory for Charities: International Charity Fraud Awareness Week (BBB Wise Giving Alliance)