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Governance is an important aspect of nonprofit risk management. So what risks can be presented within the governance function? This week’s post in this series asks the popular AI program ChatGPT to answer that question. 

The Nonprofit Risk Management Prompt

We seeded ChatGPT with the following prompt about nonprofit risk management:

Acting as a journalist, describe common risks that nonprofits face relating to governance.

ChatGPT’s Answer

As a language model AI, I don’t have personal experiences, but here’s a list of common governance risks that nonprofits face based on my training data:

  1. Conflicts of interest: Conflicts of interest among board members, staff, or volunteers can result in poor decision-making and harm to the organization’s reputation.
  2. Lack of board oversight: A lack of board oversight can result in ineffective management, poor decision-making, and harm to the organization’s reputation.
  3. Inadequate policies and procedures: Nonprofits may not have adequate policies and procedures in place, which can result in poor decision-making, ineffective operations, and legal consequences.
  4. Lack of diversity and inclusiveness: A lack of diversity and inclusiveness on the board can result in a lack of perspectives and poor decision-making.
  5. Unclear roles and responsibilities: Nonprofits may not have clear roles and responsibilities for board members, staff, and volunteers, which can result in confusion and inefficiencies in the organization’s operations.
  6. Inadequate training and support for board members: Nonprofits may not provide adequate training and support to their board members, which can result in poor decision-making and harm to the organization’s reputation.
  7. Failure to comply with legal and regulatory requirements: Nonprofits must comply with a variety of legal and regulatory requirements, including those related to tax laws, disclosure, and governance. Failure to comply with these requirements can result in legal consequences and harm to the organization’s reputation.
  8. Inadequate financial controls: Nonprofits must have adequate financial controls in place to ensure the responsible use of resources and to prevent fraud or mismanagement. Inadequate financial controls can result in legal consequences and harm to the organization’s reputation.

    Notes and Questions Based on This Answer

    How many of these governance issues affect your nonprofit? When we work with organizations to begin implementing nonprofit risk management, governance issues relating to board and staff function and roles ordinarily show up on the resulting risk registers. 

    What other governance risks should be on your radar? In my book, Managing Your Nonprofit for Resilience, I provide 31 additional issues you can ask about your governance function as part of your nonprofit risk management work.

    If you are thinking about how to incorporate AI into your risk management planning to help address some of these risks, reach out to me here at Risk Alternatives for suggestions, including resources for getting better results when using AI. Alternatively, you can create a ChatGPT account for yourself to begin exploring how AI could impact your organization.

    (As previously noted, all of the art for this series on common nonprofit risks was generated by Midjourney, another AI program. I asked that program to generate images about governance risks in the style of Vincent Van Gogh.)