Helping those in need, bettering the community and leaving a legacy are just a few of the rewards associated with successfully operating a nonprofit organization. These types of organizations are formed to provide programs and services to under-served members of a community. In order to keep your nonprofit in full swing, it is important to recognize and understand the top risks your organization faces each and every day. Being aware of these risks and asking questions like “what could go wrong?” can help your nonprofit to mitigate the risks inherent in the day to day operations of your organization.
Top 5 Risks Faced By Nonprofits
This post was written by Nicole Jolley at GuideOne Connections blog.
Sexual Misconduct Liability – Most nonprofits rely heavily on their ability to solicit and retain volunteer workers to assist with the often times massive amounts of work that must be accomplished. In an effort to get the work done, properly screening references and backgrounds of volunteers falls to the wayside. These oversights could create a sizeable gap in proper sexual misconduct risk management practices. This negligence could lead to an impropriety that damages the lives of the impacted individuals, families and community in which the event occurred.
Violent Incidents & Crisis Management – Nonprofit organizations serve some of the most challenging clientele who are in need of housing, food, clothing or other services provided by these organizations. Because of the sensitive nature of the clients combined with the external risks, a nonprofit organization is at a greater risk to undergo a violent incident (life threatening injury, death or hostage situations). The direct and indirect costs of these risks include individual and group counseling, medical payments, additional security, public relations costs to restore reputation, and short and long-term impacts to revenue and donations. A violent incident or crisis event is a highly visible and emotionally difficult time for any organization.
Directors and Officers – Directors and Officers are hard-pressed to make sound decisions that impact the current day to day operations of the organization as well as its future vision and strategy. Recruiting, selecting and training directors and officers on proper governance practices and timely and informed decision making are crucial to the success of the organization. Without proper guidance, the organization may suffer under a disjointed board of directors, not to mention the risk of joint and several liability.
Theft – Often discovered days, months or years after the event actually occurred, crime committed by employees or volunteers is especially common in nonprofits. With much of the revenue coming in the form of direct donations, extensive vetting of employees and volunteers and proper internal controls are essential to lessening the risk.
Special Events Risk – Special events can represent a common occurrence for organizations that put on multiple events per year or a unique exposure for those that hold an annual fundraiser or two. In either case, special events represent an opportunity for a loss to occur through bodily injury or property damage. Proper planning can prevent a financial loss to the organization through low turnout or lack of donations generated. In addition, well documented safety procedures outlined and provided to the employees, volunteers and vendors will ensure a safe and successful outcome.
Thank you to GuideOne Connections Blog for partnering with us and allowing us to share this post on our blog. You can find the original post and many more awesome resources on their blog.