Nonprofit Risk Management’s Watershed Moment

The past 12 months has been a watershed for nonprofit risk management. After years of relative neglect, commentators have flooded nonprofits with articles and reports emphasizing the critical importance of holistic risk management as an essential practice for nonprofit resilience and sustainability.

Below, we provide links to many of these important articles by thought leaders in the field of nonprofit capacity building, with quotes highlighting critical themes for you to discuss with your board, senior leadership, and staff. If risk management has not been on your agenda, now is the time.

What They’re Saying

“Nonprofit leaders want support so that they can operationalize risk management. They don’t need to be convinced about its value. There was a uniform call for best practices, tools, networks, facilitation[,] and consultants.”

Ahead of the Curve (2016). This report summarizes insights from a symposium on nonprofit risk management in New York City in September 2016. It demonstrates how many nonprofits are learning that risk management is not a burden or a luxury, but instead a powerful tool for governance and sustainability.

 

“In a sector in which risk is inherent and uncertainty is a constant—particularly as we see more changes coming out of Washington—identifying and engaging with risk have never been more important for nonprofits. Not doing so undermines our sustainability, along with the well-being of the people we serve.”

Katie Leonberger and Jeff Ballow, Risk and Reward: Positioning Your Nonprofit for Sustained Impact (Nonprofit Quarterly Aug. 8, 2017). Leonberger and Ballow report on an important initiative using Community Resource Exchange’s risk assessment tool, called CREFT.

 

“The call for nonprofit risk management is clear. But although nonprofits are increasingly aware of the need to adopt risk management, there’s still little guidance about when and how they should adopt such a program, or what it should look like in its early stages.”

Edward Bilich, A Call for Nonprofit Risk Management (Stanford Social Innovation Review, July 13, 2016). This one’s from me. I note how nonprofit best practices increasingly include risk management, and I provide an overview of when and how organizations can begin adopting holistic risk management (which many call “enterprise risk management”).

 

“With some notable exceptions, I think the entire construct of risk has been missing from most nonprofit organization governance and management deliberation.”

From Risk Management to Risk Leadership: A Governance Conversation with David O. Renz (Nonprofit Quarterly, July 18, 2017). This interview emphasizes the need for nonprofits to adopt effective enterprise risk management frameworks.

 

“For the large majority of this group [of 415 nonprofits surveyed], innovation is more than a catchall slogan — it’s an urgent imperative to which 80 percent of them aspire. The problem is, just 40 percent of these would-be innovators say their organizations are set up to do so…. [M]ost  … struggle to anticipate emerging opportunities for distinctive offerings or approaches that might extend their reach or magnify their impact.”

Nidhi Sahni, et al., Is Your Nonprofit Built for Sustained Innovation? (Stanford Social Innovation Review, Aug. 1 2017). Sanhi’s article emphasizes how to develop positive risks (opportunities).

 

“[I]f we spend a good deal of time and energy just trying to avoid risk rather than learning what protects us from it — and projects us forward, even — then we are missing all the fun and potential on the horizon.”

The Editors, Sorting Nonprofit Risk and Uncertainty (Nonprofit Quarterly, July 25, 2017). This editorial discusses nonprofits’ need to evaluate and engage in risky activities.

 

“[R]equests from the board of directors for increased risk oversight are high for not-for-profit organizations….”

Mark Beasley et al., 2017 State of Risk Oversight. This report compares risk management efforts among different sectors and notes increased interest among nonprofits, although they lag other sectors.

 

“Today’s nonprofit board members are keen to talk about the implications of risk to a charitable mission.”

Melanie Herman, Risk Management Guide 2017: How’s Your Appetite? (Nonprofit Times, Aug. 1, 2017). This article explores board oversight of risk management.

 

“In short, when it comes to acknowledging, embracing, and managing risk, the charitable sector may lack the kind of trust for each other that it advocates for in society as a whole.”

Jane Wales, Risk, Trust, and Impact: Connecting the Dots (Stanford Social Innovation Review, Summer 2017). Wales advocates greater transparency between funders and nonprofits about risk.

 

“To use risk as an instrument for progress, it needs to be seen as a means for continuous learning — the most promising path to developing effective solutions.”

Mauricio Miller, Change is Worth the Risk (Stanford Social Innovation Review, Summer 2017). The article focuses on how to use risk management to help target populations.

 

“It has become common to hear axioms about organizations taking big risks when working toward big change, but it’s rare to hear what doing so actually looks like on the ground…. So when I hear funders talk about organizations taking bigger risks, my question is this: Is the organization built to withstand a crisis, and is the funder ready to support the organization in the event of one?”

Eric Stowe, Case Study: Managing Risk to Scale Impact (Stanford Social Innovation Review, Summer 2017). This essay provides three case studies of facing and addressing risks in the ongoing operations of a nonprofit.

 

“Over the past year, we have witnessed a wave of largely unexpected sociopolitical events with important implications for the social-impact sector….”

Sampriti Ganguli, Using Scenario Planning to Surface Invisible Risks (Stanford Social Innovation Review, Summer 2017). This article suggests ways to use potential “story lines” about the future in order to deal more effectively with the present.

 

“Try to be less afraid of telling the truth, asking for help, admitting mistakes. Work to replace doubt with trust and be less afraid of stepping into the unknown. Try accepting — if not embracing — the uncertainty inherent in our work.”

Maya Winkelstein, A Note on the Risks of Risk (Stanford Social Innovation Review, Summer 2017). This essay notes how risk management can impact the sector positively and negatively.

 

“Until risk management becomes common philanthropic practice, we will miss the boat on maximizing impact. Here’s how to start developing the policies and practices you need.”

Laurie Michaels and Judith Rodin, Embracing Philanthropy’s Risky Business (Stanford Social Innovation Review, Summer 2017). This article talks about an initiative, called The Commons, developed to help funders coordinate risk management discussions.

 

“Looking at leadership transitions from an enterprise risk management perspective may offer board members a less threatening and perhaps even more familiar and potentially engaging way to think about succession planning.”

Jennifer Chandler, From Enterprise Risk Management to Shared Leadership: A Different Look at Succession Planning (Nonprofit Quarterly, May 10, 2017). This article describes how succession planning can catalyze and inform effective risk management.

 

“It is well past time for a full discussion of how to take on the responsibility of providing risk leadership when huge change is afoot.”

Beyond Risk Management: How About a Little Risk Leadership? (Nonprofit Quarterly, July 17, 2017).  The NPQ board issues a challenge to nonprofits to respond to political and social upheaval by adopting better practices to deal with risk.

 

If you are a nonprofit staff member or board member, you should be thinking about your current risk management practices. If you are a nonprofit funder, you should be thinking about your grantees’ practices. With the right preparation, you can make it a rising tide, instead of a deluge.

0 Comments

Leave a reply

Your email address will not be published. Required fields are marked *

*