No matter what your mission, your non-profit must protect financial and physical assets, human resources and relationships, and all the intangibles that keep your organization going, such as community goodwill and your reputation. In today’s environment, if you don’t have comprehensive risk control procedures and strong internal controls, you aren’t doing enough to prevent financial losses and other serious damage. Doeren Mayhew’s dedicated Governmental/Non-Profit Group weighs in on common non-profit risks and how to mitigate them.

What are the Biggest Risks?
Non-profits are susceptible to risk in every area — from staff hiring to recruiting volunteers; from proper spending of donations to investing reserve funds. Risk management is the best way to spot and head off many potential disasters before they happen.

The first step in risk management is to identify potential perils, starting with people — employees, volunteers, donors and clients. Another major area of risk is your organization’s assets – is cash with reputable banks, are investments diversified and is physical property protected? Let’s also not forget your goodwill with donors, volunteers, clients and the community, or the activities allowing you to generate revenue and raise funds. Finally, as the Internal Revenue Service increases its scrutiny of non-profits, remember your tax-exempt status is always at risk.

How is Your Organization Special?
Those are general risks, but your non-profit likely has specific ones. For example, your budget may rely heavily on the success of an annual fundraising event, or clients may use your services primarily because of your association with other local non-profits.

Identify the one or two strengths that define your reputation in the community. Then ask:

  • What would we do if forces beyond our control challenged them?
  • Could we develop new funding sources or continue at a new location?

What’s the Plan?
After you’ve identified the risks that create the greatest challenge to achieving your mission, develop a risk-management strategy that suits your organization. If yours is like most non-profits, managing and protecting financial resources is a major concern. So address any acts that could contribute to the loss of financial assets by establishing management and accounting controls.

Your internal controls should address proper oversight by senior management and board members, authorization and transaction documentation, the physical security of assets and early fraud detection.

Who’s Responsible?
After you’ve identified the risks creating the greatest challenge to achieving your mission, develop a risk-management strategy that suits your organization. If yours is like most non-profits, managing and protecting financial resources is a major concern. So address any acts that could contribute to the loss of financial assets by establishing management and accounting controls.

  • Consult with an IT security expert
  • Upgrade software and equipment
  • Limit staff members with network access
  • Begin storing data offsite

Remember risk management is an ongoing process, so the team must continually review procedures and address emerging risks.

Who Can Help?
Risk management is one of the major challenges of running a non-profit — but you don’t have to do it alone.

If you don’t have the internal resources, talk to your financial advisor or contact Doeren Mayhew’s dedicated Governmental/Non-Profit Group today.