![]() |
Michele moderating a panel at the NFP Summit 5-18 |
I like to say that for effective programming, management has
to “get everyone on board.” That is, in
a successful organization all members (employees & volunteers) know their
roles and understand how they contribute.
This particularly applies to effective risk management, as risks are
everywhere… as are opportunities to help the organization successfully meet its
mission. On May 7, 2018, the
Manhattanville School of Business asked a panel of experts at the NFP Leadership Summit to share their
thoughts on “Risk Management Hot Topics for Nonprofit Board Members and
Executives” with a room full of not-for-profit executives.
The panelists highlighted a number of current issues and
on-going topics that should be discussed with nonprofit board members at least
annually. Nancy May, President and CEO
of Board Bench Companies, LLC, emphasized the importance of being clear about
the roles and purview of the board vs. those of the executive director and
senior management, particularly for organizations that rely on volunteers’
expertise. Michael Santocki, Managing
Director of Crystal & Company, spoke to the need to stay up to date on laws
that effect all employers, whether for-profit or not-for-profit. Current examples include “ban the box” in
hiring, compensation rules, and potential ramifications of legalized
marijuana. Liz Gousse, Senior Manager at
PKF O’Connor Davies, LLP, addressed succession planning and reputational
risk. I talked about how organizational
culture helps manage or increase risks and the importance of updating board
members on routine procedures as well as on significant emerging issues.
Panelists contributed the following Successful Strategies
and Recommended Practices. Join our
conversation by emailing me your organization’s risk priorities, lessons, and
questions (michele.braun@mville.edu)
and I will discuss them and experts’ responses in a future article.
******
Michele
Braun, Director
Institute for Managing Risk, Manhattanville School of Business
michele.braun@mville.edu
Explicit
discussion of risks and risk management will help your organization assess
risks that will help it achieve its mission as well as those to avoid.
Accordingly, three questions for members of
nonprofit boards to ask:
What risks does
our group face that could derail our mission?
What risks could
our group take that would help us accomplish our mission?
What processes do
we currently have in place for assessing and managing risks?
Elizabeth G. Gousse, Consulting Services Senior Manager
PKF O'Connor Davies, LLP
PKF O'Connor Davies, LLP
egousse@pkfod.com
Conflicts of Interest. While
the majority of Boards have conflict of interest policies, most do not require
annual disclosure of these conflicts (88% according to National Council of
Nonprofits). Discuss with the entire Board the types of situations where
a conflict can arise and what would happen if one of the board members
disclosed that s/he had a conflict of interest.
Whistleblower Protection. A
written policy is critical to managing risk.
And, IRS Form 990 (Part VI, Section B, line 13) requires NFPs to confirm
the existence of such a policy.
Self-assessment process. Annually,
the Board should compare its own practices to industry best practices, assess
areas where there are “holes” in Board members’ expertise, and use this
information when recruiting new members.
Diversity. The Board should focus on inclusion and
sensitivity to the people that the not-for-profit serves. [In a diversity
survey conducted by BoardSource 25% of respondents Boards were all white.]
Nancy A. May, President and CEO
Board Bench
Companies, LLC
nmay@boardbench.com
NFP boards should
periodically discuss strategic and enterprise-wide risks, as well as day-to-day
operational risks. Examples for a board
to explore include
·
The ramifications
of poor program delivery/outcomes that impact the “customer” or constituents
served,
·
Risks of not
having enough or the right talent on the board to support the mission,
·
How a board’s
collective and individual liability is covered, if at all,
·
Financial risks
arising from donors’ restrictions on how monies can be used,
·
Reputational
risks such as
o
What happens if a
board member is held liable for actions outside the boardroom?
o
What happens if
the organization is impacted by political implications?
o
Unexpected
negative publicity following policy or operational actions or decisions, or
inaction.
Michael Santocki,
Esq., Managing Director
Management and Professional Risk Group, Crystal & Company
Michael.Santocki@crystalco.com
Nonprofits face
increasingly unpredictable and costly exposure to the growing impact of
employment claims, cyber exposures and government scrutiny into NFPs
(particularly in NYS).
These exposures
(greed, lust etc.) can be hard to analyze, anticipate, and mitigate. Other exposures are actively evolving – e.g.,
Ban the Box, Pay Equity laws, rise in marijuana smokers in the workplace (and
legal in some states).
Although risk
elimination is impossible, these exposures can be transferred through an
insurance product. Cyber, D&O, Crime, and Employment Practices
insurance are all readily available.
Senior NFP staff
members should look closely at their insurance policies and at the broker used
to procure those policies to ensure that the organization is getting the
coverage it needs and wants.
Comments
Post a Comment