PMA Consulting, LLC

Potential Risks for Organizations – Part I of II

Risk will always be part of running a business, whether it be for-profit or nonprofit. Identifying the potential hazards and addressing them as a board is the best first step to minimizing pitfalls. Below are four risks to consider. A second post later in the week will address more potential problems.

1. Conflicts of Interest

When someone within the organization has financial, personal or other interests that interfere with that of the nonprofit, a conflict may arise. Potential risks include diminished public confidence, media backlash and even investigations. Awareness has given rise to a number of watchdog organizations, Form 990 by the IRS, and attention from Congress.

The Fix: A conflict of interest policy that includes procedures for handling conflicts and encourages full disclosure. While not all conflicts are bad, a policy keeps everyone on the up-and-up.

2. An Unhappy Staff

Employees and volunteers can sometimes be exposed to workplace abuses such as bullying and verbal assaults. An abusive work environment is setting your organization up for legal trouble. While many states have introduced new laws making it unlawful to subject employees to such an environment, your board should address the issue immediately.

The Fix: A complaint procedure should be implemented. Employees should have a course of action to follow if they feel there is a problem. The CEO should set the tone for appropriate behavior and encourage staff to speak up when a problem arises.

3. Copyrights & Trademarks

The risk is a two-way street. Staff can be quick to “borrow” content from other sources across the internet with a simple copy and paste action on the computer. An effort to create unique content can go by the wayside when project deadlines loom. Conversely, an organization’s intellectual property is at risk for similar reasons.

The Fix: Another policy. Put in place some rules to make sure no one is knowingly stealing. Consider having meetings in place to discuss ideas which staff can draw creatively from, rather than being inclined to take from someone else. Identify the key intellectual property for the organization and consider what, if any, should be trademarked or copyrighted.

4. Adherence to Board Policy & Practice

Know all those statements about fairness and doing good in the world? An organization should be following the same messages it puts out when it comes to its own practices.

The Fix: Evaluate procedures and re-align practices to be in line with its mission. Consider what would look bad if the tables were turned and fix it.