Are you looking for early warning signs that your nonprofit needs risk management? The six signs outlined in this post are proxies for underlying risk. Where these problems occur, threats are sure to follow.
- No regularly scheduled budget oversight or monitoring. This means no controls on spending or recognition of deficits and a serious lapse in board governance.
- Limited data sharing on agency activities, operations, or performance, and no routinely scheduled incident, program, and back-office performance review. This means the organization is not learning from experience or correcting mistakes.
- Limited communication, irregular feedback, or no corrective action monitoring. This means there is little shared understanding of or accountability for achieving goals.
- Late filings or late submissions of required tax, financial, grant, or government reports. This puts the organization in jeopardy of penalties, revocation of charity status or non-renewal of government or foundation grants.
- High staff turnover or low productivity. This reflects a troubled work environment and the provision of low-quality services.
- Poor client relationship management and customer service. This looks like service recipients or patrons who do not get what they need, as evidenced by irregular attendance, leaving mid-way, or unwillingness to refer to friends and family.
These red flags focus attention on the need to dig deeper to identify the cause and drivers of risk and provide an opportunity to act quickly to resolve them.