The first step to developing a good risk management plan is to understand the kind of dangers you will be facing. At a recent Risk Management and Finance Summit for nonprofits, Melanie Lockwood Herman of the Nonprofit Risk Management Center discussed the top 10 risks that are faces by nonprofits. They are:
- Financial loss. To prevent this, it helps to have a well-trained, well-informed board.
- Exposures from social media use, misuse and naivete. Risk-management strategies include written guidelines for employees, volunteers and members and a point person to monitor social media.
- Incivility. Investigate complaints without delay and hold staff and volunteers accountable.
- IRS Form 990 and federal tax-exempt status. Losing that status is really easy.
- Copyrights and trademarks. Use the copyright symbol. Use work-for-hire agreements with contractors. Respect the work of others.
- Failure to limit a contracting authority and other common mistakes in contracting. Develop a simple policy, clarify who has authority to enter one and obtain legal review, before signing.
- Lack of synchronicity in board policy and practice. Look at policies. Do they need changing?
- Failure to understand and manage conflicts of interest. Make sure the policy is easily understood.
- Fraud. Understand the inherent risks and fraud schemes.
- Harm to reputation. Remember humility (admit mistakes) and speed (without delay).
1 comment:
If an individual is not sure about tax-exempt status then he or she should probably consult tax fraud lawyers in order to prevent risky decisions. I agree with you that it is important to be updated about fraud schemes so because that is the thing that what makes companies fail.
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