Nonprofit risk comes in several tasty varieties

May 4, 2015       The NonProfit Times      

Life offers many challenges and complexities. So, then, does the nonprofit sector in its effort to deal with what life presents. So, then, does the risk that nonprofits face in what they do.

Different challenges, different organizations, different risks.

Speaking during the 2014 Nonprofit Risk Summit, John Ergastolo of Arthur J. Gallagher & Co. said that it is important for nonprofit managers to be aware that operational risk exposures within the sector vary greatly. Here are some examples:

  • Higher risk nonprofits include healthcare providers and healthcare systems, higher education and large or high-profile organizations;
  • Relatively lower risk nonprofits include smaller local or regional social service organizations and youth athletic associations. But, small organization does not always equate to less risk.
  • Revenue/funding pressures create new challenges for nonprofits.
  • The complexity of nonprofit organizations has increased over the years. It could be that the line between nonprofit and for-profit is getting blurry.
  • New challenges could make nonprofit management even more difficult.
  • Leadership can be challenged when difficult decisions are made. Executive compensation will be highly scrutinized by multiple individuals and entities.
  • Any right-sizing actions can spawn multiple claims, both employment and non-employment related.
  • Financial challenges can result in delaying growth or operational expansion.