How Nonprofits Can Use Risk Management Techniques

Risk is the four-letter word we like to avoid in the nonprofit world. We are doers, givers, and believe there are good things we can do to make a positive difference in our communities. We are multi-taskers and have too many balls in the air to think about risk on a daily basis. Alas, risk is a priority and a task we must face head-on.

What Does Risk Management Mean?

First, let's define Risk Management. According to the Alliance for Nonprofit, risk management is, "a discipline for dealing with the possibility that some future event will cause harm. It provides strategies, techniques, and an approach to recognizing and confronting any threat faced by an organization in fulfilling its mission."

For nonprofit organizations, risk management ranges from proper insurance coverage, financial health, employee clearances, volunteer screening, information protection, and even obtaining the correct licenses for fundraising events. Logically we know that risk is impossible to avoid so take a look at the following risk management techniques for non-profits.

Identify, Evaluate, and Prioritize Your Risks:  Take a look at your nonprofit organization from head to toe and think about the many different risks you could encounter and how to prioritize them. Consult an attorney who could be very helpful in this process. Some risks are financial, operational, regulatory, and external. Create a strategic plan of action for each situation so you are prepared if and when it happens to your organization.

Know Nonprofit Regulations:  Get to know and keep up to date with regulations established by the IRS to assure you maintain your tax-exempt status. There are certain things every nonprofit has to do to keep and maintain their 501c3 status including documenting that funds are being allocated properly.

Protect Your Digital Information: All of our information is online in today's digital world. Unfortunately, there are hackers who are ready to take advantage of organizations that aren't fully protected. Nonprofits conduct several business activities that can lead to a data breach yet many nonprofit leaders aren't informed or prepared with the tools they need. If you process donations or event registrations via your website, store any personal information about your donors and volunteers online, or collect email addresses, you are at risk.

Learn More Online:  Risk management can sound like an overwhelming and expensive topic. But in the long run, being informed, prepared, and protected will be well worth the time and financial investment. Learn more by reading online articles to help guide you along your risk management journey.

Cybersecurity for Nonprofits:  National Council for Nonprofits

Stanford Social Innovation Review:  Call For Nonprofit Risk Management

Nonprofit Risk Management Center:  Embracing ERM in Your Nonprofit  What is Risk Management? Where Can I Learn More About It?

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