Where’s the Risk in Your Nonprofit Infrastructure?
This is part two of a two-part series on resilience in nonprofit enterprises with a focus on risk.
By Anna Prow| Trellis Partners
In Part One, Risk and Resilience in Nonprofit Enterprises, we explore how factoring for risk is the first step in achieving organizational resilience. Being frank about risk — both internally with your team and externally with funders — is essential to preventing and responding to risk so nonprofit impact is not interrupted, mitigated, or derailed when risk is realized.
We also (re)defined nonprofit infrastructure to include more than just admin and business systems. Infrastructure includes the frameworks and assets required for activity, so of course nonprofit infrastructures must include resources dedicated to program planning and design.
Culture is a force that affects organizational activity, so it, too, counts as a component of infrastructure — warts and all. Management and leadership are essential for effective nonprofit activity, so should be considered as components of infrastructure, too. And of course without business systems, activity toward a mission cannot be sustained.
In Part Two, we help look inside each of these components of your organization’s infrastructure to find areas of exposure that can endanger mission impact.
What is “Risk Realized”?
But first, what does risk realized look like in a mission-driven nonprofit? When something bad happens, a nonprofit’s intended impact can be compromised. Beneficiaries go without services. Rivers go untended. Schools close. Policies go unchallenged. People get hurt. Each nonprofit leader can picture the countless ways their organization’s impact could be damaged.
At the extreme, risks throughout their infrastructures can pose existential exposure for nonprofit organizations. A nonprofit can be shuttered for any number of reasons and stop doing its work.
There also can be terrible risk to stakeholders within the components of nonprofit organizational infrastructure. In a recent article, Vox describes how a nonprofit’s lack of diligence for the safety of stakeholders led to the awful result that the “girls (the) charity was supposed to be protecting were being raped by the man who helped found it.” That nonprofit’s intended impact was reversed, undone — doing more harm than good; visiting unacceptable horrors on those who were supposed to be beneficiaries.
So it’s incumbent on nonprofit leaders to look inside our mission-driven organizations and imagine where risk lies. From there we can name it, factor for it, resource it, track it, learn from it, prevent it, and so much more.
Where’s the risk in program design?
When we look inside a nonprofit’s infrastructure for risk to impact, usually the fewest risks come from the program design component. The nonprofit sector is known for designing and implementing extraordinarily impactful programs toward justice.
But the quality, scope, scale, and reach of our impact can be mitigated by poor planning and ineffective strategies or tactics. We may not be delivering best on our mission if we don’t have assessment and adjustment practices to keep our strategy focused on results. We may lose opportunities for impact if we don’t have effective decision-making processes. We may be forced to lessen our commitment to an area of impact because we don’t manage resources effectively.
Every nonprofit leader can ask herself how impact is mitigated by the ways we design our programs.
Where’s the risk in business systems?
There’s a ton of risk to impact in nonprofit business systems — too much for one article, in fact. But expertise and support are widely available in the marketplace to mitigate nonprofit business risks in human resources, finance, insurance, counsel, banking, technology, taxes and compliance, facility and equipment, fundraising, communications, PR, and so much more.
Another type of risk in nonprofits is how the systems work throughout the organization. Systems that don’t work well together can threaten impact. As but one example, if program design systems aren’t aligned with finance, or finance isn’t collaborating with development, or development’s not working with programs, then the short-circuited feedback loop causes confusion in mission delivery. To add insult to injury, this can waste resources that could have been spent on other impact opportunities. Here is where nonprofits often do well to focus attention on stabilizing, strengthening, and scaling business systems.
Evaluating how well business systems work to support programs is a key to mitigating an organization’s risk and developing its resilience.
Where’s the risk in culture?
It may seem harder to imagine how a nonprofit’s impact could be affected by the culture of the organization.
Our organizational cultures can be passionate, inspiring, energizing, encouraging engines of progress and justice. And our organizational cultures also can risk safety, waste time, invite distraction, lead to bad decisions, and cause us to rush through important events or leave out important advice. When these risks are realized, our impact suffers.
Organizational culture can be described as, “The values and behaviors that contribute to the unique social and psychological environment of an organization.” Further, “[o]rganizational culture…is expressed in its self-image, inner workings, and future expectations. It is based on…written and unwritten rules that have been developed over time and are considered valid.”
The connection between risk and organizational culture has long been understood. As but one enormous example, the Columbia Accident Investigation Board blamed that NASA’s culture allowed safety to slip and led to the 2003 Columbia shuttle disaster. The way they describe it sounds hauntingly quotidienne: “…managers fell into the habit of accepting as normal some flaws in the…system and tended to ignore or not recognize that these problems could foreshadow catastrophe.”
Leaders throughout an organization can ask themselves about the ways the organization’s inner workings affect its activities toward impact: Do organizational attitudes put safety and security of stakeholders at risk? Are lapses in accountability slowing down delivery? Are there unwritten rules that prevent intended results? Are there customs that alienate voices who might strengthen the project? Are there formal and informal practices that discourage innovation? Are there internal communication practices that impede constructive dialog and decision-making? Does the organization’s self-image cause it to miss opportunities for partnerships and collaborations?
Organizational leadership can’t and shouldn’t try to “change culture” overnight. But leaders throughout an organization can go into each decision about the future with increased awareness of the ways an organization’s shared values manifest themselves in its practices.
Where’s the risk in management + leadership?
It goes without saying that a nonprofit’s mission impact can be negatively affected by the quality of its management and leadership.
Scope creep, which is notorious for lessening impact, can result from unclear direction coming from management and leadership. When leaders and managers don’t have the future in mind, they may not sufficiently resource strategies for impact. When leaders and managers don’t enable consistent and effective feedback loops, the confusion distracts from the mission. When leaders and managers don’t demonstrate and act on valuing diversity, equity, inclusion, and justice; then diverse views aren’t duly factored in mission delivery.
It’s easy to see how developing managers and leaders throughout an organization can strengthen impact.
So what to do?
The short answer is there is no how-to. But seeing risk enables nonprofit leadership to manage it. And we know managing risk is a significant part of resilience.
As they see the risk in all components of their infrastructure, nonprofit leadership will find that next steps naturally happen:
- Having conversations about risk with appropriate stakeholders and decision-makers
- Making space for risk review in decision-making
- Planning and budgeting for prevention, remediation, and improvement
These strategic steps lay the groundwork for a compelling case for funding, as well.
I interpret loosely the meaning of the word, “measure” in the variously attributed expression, “You can’t manage what you can’t measure.” To me it means, “see,” or “observe.”
When it comes to risk to impact in nonprofit organizations, when we can see it, we can better manage it. And when we can better manage it, we can better deliver on the mission we’re charged to do.
After 15 years as a change leader in the social sector, Anna Prow founded Trellis Partners because she passionately believes that nonprofit organizations are among society’s best hopes for bringing about a more just world. She knows that to do so, mission-driven, nonprofit enterprises must operate as effectively and efficiently as they can — and they must possess the resilience to surmount and learn from inevitable challenges.
In notable executive positions with Center for American Progress, National Democratic Institute, Health Care Without Harm/Practice Greenhealth, Friends of the Earth US, the Enough Project at New Venture Fund, and Campaign Legal Center — as well as a volunteer leader for the Human Rights Campaign — Anna has partnered with pre-eminent civil society leaders and their teams to take their organizations to next level excellence.
Undergirding her social sector experience is a career chapter as a public high school English teacher and corporate trainer for Anheuser-Busch. Anna served as a teacher trainer Peace Corps Volunteer and then as an academic director for School for International Training’s study abroad program, both in Madagascar. Anna has an MS in Urban Policy from the New School. She’s based in Washington, DC.
