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Becoming a Nonprofit Risk Leader: Four Ways to Build Your Organization’s Proactive Muscle

By Wendy Seligson

The Nonprofit Quarterly’s summer 2017 issue, Nonprofit Graduation: Evolving from Risk Management to Risk Leadership offers a fresh look at risk and uncertainty, making the case that nonprofits need to be proactive in order to thrive. With thoughtful/provocative graphics of risk monsters in all shapes and sizes, the issue encourages nonprofit leaders to explore where risk monsters lurk and choose which actions to take, as well as what to avoid. The discussion examines risk, opportunity and uncertainty from many angles, including collective action, social entrepreneurship, values, operations and governance.

Building proactive muscle to address risk is transformative, increasing a nonprofit’s ability to:
• Take positive risks that elevate the organization
• Prevent, mitigate and/or eliminate unwanted risks that would otherwise slow the nonprofit down, and
• Grapple with uncertainty that could upend the nonprofit.

This article explores four ways that you – as a nonprofit leader – can engage your board and staff to build your organization’s proactive muscle, using approaches I have developed over the years as a nonprofit executive and consultant.

FIRST: Build your nonprofit’s capacity to recognize risk, opportunity and uncertainty.
As a nonprofit leader, you know what keeps you up at night. This is an excellent starting point to engage your organization in dialogue about what constitutes risk, opportunity and uncertainty. Ask others what keeps them up. Discuss concrete examples from your nonprofit’s experience and those of peer organizations.

What are some of the common challenges you might face when you open up this discussion? Sometimes, board and staff are unable to pinpoint risk and opportunities, simply because they lack knowledge, for example: regulatory requirements or the nonprofit’s business model itself. Other times, risks go unnoticed or undiscussed because they have become fixtures of the landscape, such as inadequate financial reserves or flaws in operational systems. On occasion, board and staff are aware of risks, opportunities or uncertainty, but lack a shared language to describe them.

When you make the discussion of risk, opportunity and uncertainty part of your organization’s regular work, you can address these challenges directly and build collective awareness and literacy. This increases your nonprofit’s capacity to identify risks, opportunities and uncertainties and to do so at the earliest possible point, often at the front lines of your organization.

SECOND: Make sure the benefits of being proactive are well understood and appreciated by board and staff.
One of the best ways to motivate staff and board members is to make sure that the short- and long-term benefits of being proactive are clear, using examples from your organization.

o Show how devoting time and effort to planning innovative new ideas or approaches, such as new partnerships, services or methods of program delivery, allowed your organization to realize new goals.

o Demonstrate the benefits that come from addressing negative risks:

  • One of the top-rated benefits of addressing negative risks is building the overall capacity of your organization. Demonstrate this. For example, you may have implemented new software to replace a faltering system and can show how it led to increased productivity and the ability to better meet client and/or staff needs.
  • Highlight the value of prevention and mitigation. Point to meaningful examples that made a difference. You might be able to show where being proactive enhanced bonds with your clients or stakeholders, such as increased safety measures to benefit program participants or stronger financial protocols to safeguard your organization’s assets. Point to examples of what happened to other organizations when these measures were missing.

o When it comes to grappling with uncertainty, two articles in NPQ’s recent issue on risk illustrate the benefits (and challenges) extremely well and provide a good jumping off point for discussion in your organization. Using Hurricane Katrina as an example, one article demonstrates that networks and systems of collaboration established before the hurricane created a bulwark against the devastating effects of the unanticipated crisis. Another article makes the compelling case that an entrepreneurial approach to uncertainty led to innovation and growth.

As with the identification of risks, opportunities and uncertainty, raising awareness, education and hands on demonstration of the benefits of being proactive – using examples from your nonprofit’s experience and those of other organizations – builds your nonprofit’s capacity to take a proactive approach going forward.

THIRD: Examine your culture: how does it encourage the discussion of risk, opportunity and uncertainty?
One of the biggest obstacles to proactivity is a culture that tends to reject new ideas and quickly place blame for things that go wrong. If this is an issue for your organization, the culture change can be a long and sometimes difficult journey; however, the rewards are great.

Consider a plan of action to engage others, such as retreats and regular staff discussion. Visibly demonstrate a positive, forward looking approach to new ideas and to the evaluation of situations where things may have gone wrong. Engage your senior staff leadership and board members to do the same. Those who succeed in making this type of change generally shine a spotlight on the harmful effect of the culture, express a vision for a new way of doing things and are committed to sustained, strategic efforts at change.

FOURTH: Make the process clear: lay out the action steps to address risk, opportunity and uncertainty.
Along with openness and willingness to tackle risk, opportunity and uncertainty, make sure your processes – or rules of the road – are clear. This might include:

o Incorporating discussion of risks, opportunities and uncertainty into all parts of the nonprofit’s operations, including staff meetings, board meetings, project planning and debriefs

o Establishing regular environmental scans to identify changes in the landscape, both externally and internally, that might require action. These type of landscape changes might include newly developing networks, changes in consumer demand, shifts in government or philanthropic funding patterns and newly identified needs for safety measures.

o Creating clear channels and methods for communication up and down the organization, to be used when risks, opportunities and uncertainty are identified

o Utilizing scenario planning to gain insights into potential issues and develop possible strategies and plans, and

o Laying out clear pathways for evaluating, prioritizing and acting on risks, opportunities and uncertainty once identified.

Moving forward
Risk, opportunity and uncertainty are intertwined. Every time you build your nonprofit’s proactive muscle in one of these areas, you increase your nonprofit’s ability to deftly navigate all three. As a result, your organization grows stronger, healthier and more able to tackle the risks, opportunities and uncertainty it inevitably will encounter.

Wendy Seligson is founder and principal consultant at Wendy Seligson Consulting, a nonprofit management consulting firm specializing in strategic approaches to risk. With close to twenty years as a senior executive in New York City nonprofits, Wendy has managed complex nonprofit operations where she addressed strategic and operational risk. Wendy was Associate Executive Director of the 14th Street Y and Vice President of Administration at the Fortune Society. Prior to entering the nonprofit sector, Wendy was a practicing attorney.