Non-profit organizations aren’t immune to risks. This is why risk compliance is so crucial for all non-profits. Sadly, ethical issues plague these organizations just as much as with for-profit businesses.
Non-profits are often in a difficult position, though. Finances are often tight and when working with grants and fundraisers, money is often spent before it comes in. This opens up a world of risks that can easily destroy the most well-intentioned organization.
Understanding The Risks
Donors expect non-profit organizations to manage their contributions well. All this pressure makes it even more difficult to run an entire organization on a shoestring budget. Overworked employees and volunteers may turn to unethical means to get what they think they deserve or to make the organization seem to be more successful than it actually is.
Naturally, this leads to legal and financial risks that can damage the reputation of the non-profit, donors and any organizations tied to the non-profit. Risk & Insurance lists seven of the most critical risks that non-profits face, including:
· Reputation damage
· Fraud, especially with fundraising
· D&O liability, along with their own personal liabilities
· Regulatory compliance, especially when funds are mismanaged
· Liability for volunteers
· Legal and liability issues at special events
Uncovering The Biggest Risks
Risk compliance is more of an issue for non-profits as many owners, directors and board members may not fully understand how a non-profit works and how to manage the budget effectively. This becomes even more of an issue as many non-profit organizations rely heavily on government grants. Another issue is never knowing what types of liability issues may arise, such as a volunteer getting injured due to safety problems. This is why non-profit organizations need a risk compliance service to help. These services are designed specifically to help non-profits uncover the biggest risks by analyzing vulnerabilities and trends.
Helping Others Do The Right Thing
Another part of reducing risks for non-profits is guiding employees and volunteers to do the right thing. Ethical Advocate’s service utilizes a team of psychologists and communications specialists to develop a more positive and encouraging culture. This reduces unethical behavior so non-profits can stay true to their missions.
Even when someone does do something wrong, those seeking to do the right thing are much more likely to report the person versus letting the problem continue.
Risk Compliance For A Non-Profit’s Future
Many unethical employees at non-profits assume they can get away with fraud and theft more easily since non-profits are tax-exempt. However, the IRS still monitors the financials. Eventually, any problems will become public knowledge. All it takes is a single incident for donors to lose trust. Identifying issues early and even preventing common vulnerabilities is vital to maintaining your reputation.
Non-profit organizations can lose government grants, funding from major businesses and donations from individuals. Without these you can’t continue operating. So, staying on top of risk compliance is a key step to running a more ethical organization and helping more people.