Giving Compass' Take:

• Kyla Gallagher highlights the importance of prioritizing risk management in the social sector in order to withstand unexpected shocks.

• How has the coronavirus illuminated the need for a solid contingency plan in nonprofits? How are you prioritizing risk management in your giving strategy for today and tomorrow?

• Read more about the necessity of prioritizing risk management in your organization.

The world is an unpredictable place. As businesses, communities, and individuals, we each have our own way of thinking about and preparing for the unexpected, even if we don’t realize it. In the social sector, however, discussions about risk are left out or included as a side note to normal management conversations. Keeping risks in the shadows prevents us from planning for, understanding, and learning from the risks our organizations encounter every day.

As an example, we can look at the status of risk management in philanthropy, provided by our partners at Open Road Alliance.

  • 76% of funders said they don’t ask applicants to assess, either in written or verbal form, what circumstances could lead to a need for additional funding.
  • 83% of funders don’t have a specific allocation in their budget for contingencies.
  • 65% of funders said they don’t have a policy to govern grants off-cycle or provide additional funds to existing grants following disruptive events.

Overall, most funders are not prepared to be able to respond to unexpected events. Funders are a crucial part of the social sector and set many of the expectations for their grantees and partners. This is just one side of a complex sector, but demonstrates the need to prioritize risk management more often and more consistently.

If we identify those risks early and plan for them, we can determine how risky a project really is, prepare for issues before they arise, and have contingency plans in place in case a risk event does happen.

Many risks can be prevented, avoided, or mitigated with the right tools and approach.

Read the full article about prioritizing risk management by Kyla Gallagher at PEAK Grantmaking.