Purpose

The Alliance for Nonprofit Management has published extensive information on risk management for nonprofits.

Description

The Alliance for Nonprofit Management is the professional association of individuals and organizations devoted to improving the management and governance capacity of nonprofits - to assist nonprofits in fulfilling their mission.  The Alliance is a learning community that promotes quality in nonprofit capacity building – see Membership Application and Online Resources.

The Alliance has a variety of programs and also maintains a Resource Library, including FAQs on Governance, Financial Management, Strategic Planning, and the information outlined below on Risk Management.

Risk Management for Nonprofits

Extensive information on risk management for nonprofits has been published by the Alliance – download full publication (78 pages).

Part 1 (10 pages)

• What is risk management?
  • Risk management in the nonprofit sector
• What is Risk?
  • Developing a risk management program
  • The Role of Insurance
• What are the most common risks facing nonprofit organizations?
  • Defining Risk
  • The Most Common Risks
  • Damage to Property
  • Employment Practices
  • Fraud
  • Legal Requirements
• What is a risk management committee?
  • Forming A Risk Management Committee
  • The Core Responsibilities of a Risk Management Committee

Part 2 (8 pages)

• What is the board of directors' role in managing risk?
• What are the most dangerous myths about nonprofit liability (or risk management)?
  • Myth #1 - Practicing risk management is about buying insurance.
  • Myth #2 - Lawsuits against nonprofits are common.
  • Myth #3 - Volunteers are more likely to suffer injuries than clients or employees.
  • Myth #4 - A "hands-off" approach to managing volunteers provides the best protection against liability.
  • Myth #5 - General liability policies cover all of a nonprofit's liability exposures.
  • Myth #6 - The Volunteer Protection Act immunizes our volunteers from claims.
• What risks are associated with nonprofit fundraising?

Part 3 (9 pages)

• What can go wrong?
  • Funding With Strings: Let the Recipient Beware
  • Managing Fundraising Risks: Tips for Consideration
• What constitutes a basic insurance package for a nonprofit organization?
  • Insurable Risks
  • Creating an Insurance Program
  • Automobile Insurance
  • Insurance Assurance

Part 4 (10 pages)

• How do I review my organization's insurance contracts?
• What is the role of an insurance advisor?
• What are the essential components of a nonprofit D&O policy?

Part 5 (9 pages)

• When and How should we report claims to our insurance company?
• What contractual measures are available to control risk?
  • Waivers
  • Hold Harmless Agreements
  • Additional Insured Endorsements
  • Disclaimers
  • Indemnification

Part 6 (14 pages)

• What affect will the Volunteer Protection Act of 1997 have on the potential liability of our nonprofit and our volunteers?
• What are the most common financial management risks facing nonprofits?
• What practices minimize the risk of employment-related claims?

Part 7 (11 pages)

• What can we do to reduce potential liability for wrongful termination?
• What are the essential steps in screening paid and volunteer staff?
• How should we conduct reference checks to minimize our liability?
  • Liability for giving references
  • A policy on checking references
  • A commitment to provide references
  • Use of reference forms
  • What to check

Part 8 (7 pages)

• What is our exposure for defamation claims?
• What is our risk for an invasion of privacy claim?

Outcomes

Effective risk management is an integral component of the Standards of Excellence: Achieving Excellence in Community Action developed by the Community Action Partnership as cited under the following standards:

• 6.1 Financial Systems:  The board formally adopts and systematically reviews/updates a Financial Management Policy/Manual.  It is systematically deployed and integrated across all programs and services, and includes provisions for an annual financial risk assessment, analysis, and report to the board on overall agency integrity…
• 7.5 Financial Accountability and Health:  The agency’s financial health is sound, resources are growing, and audit reports are exemplary. The agency exceeds all regulatory requirements, is in good standing with current funding sources and required accreditation entities, and demonstrates high integrity in its annual risk assessment report.

CLICK HERE for the Virtual CAP description on Pathways to Excellence/Award for Excellence in Community Action.

CSBG IM113 - Risk Assessment and Risk Mitigation Process for Fiscal Year (FY) 2009 CSBG American Recovery and Reinvestment Act (ARRA) Funds - includes information on GAO standards for internal controls based on The Internal Control Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Under the COSO framework, internal control consists of five interrelated components:

1. Control Environment, including the integrity, ethical values, management philosophy, and operating style of organizational management;
2. Risk Assessment, including identification of analysis of relevant risks to achievement of organizational objectives;
3. Control Activities, including the policies and procedures that help ensure management directives are carried out;
4. Information and Effective Communication, such as reports, containing operational, financial and compliance-related information, and communication of objectives and responsibilities within an organization and with key external parties; and
5. Monitoring of internal controls and system performance both through ongoing internal monitoring and separate evaluations.