Managing Your Nonprofit for Resilience: Use Lean Risk Management to Improve Performance and Increase Employee Engagement

By Ted Bilich

A hands-on risk management playbook for nonprofit leaders, funders, and advisors

In Managing Your Nonprofit for Resilience: Use Lean Risk Management to Improve Performance and Increase Engagement, experienced nonprofit risk management expert Ted Bilich delivers a comprehensive and engaging exploration of how to keep your nonprofit vibrant, proactive, and out of trouble. In the book, you'll learn how the world’s best charitable organizations employ lean risk management to prioritize, mitigate, and eliminate the most significant risks facing nonprofits today.

The author teaches you how to develop a risk management cycle and work with risks at the board level, implementing lean risk management tactics incrementally. You'll also discover:

• Discussions of fundamental risk management elements
• Sample compliance checklists, example questions to ask during risk inventories, and common challenges faced by nonprofits in a wide variety of sectors
• Strategies for confronting nascent risk and issues with radical candor and taking reasonable steps to address them before they spiral out of control

An engaging and essential resource for the managers and directors of nonprofits of all sizes, Managing Your Nonprofit for Resilience belongs on the bookshelves of anyone tasked with shepherding a charitable organization through an increasingly challenging and volatile environment.

• Language: English
• Publisher: Wiley
• Release date: Dec 20, 2022
• ISBN: 9781394153831

Book preview

Praise for Managing Your Nonprofit for Resilience

Running a nonprofit can be exhilarating, messy, and sometimes overwhelming. This well‐researched book demystifies the practice of lean risk management. The clear approach allows you to gain an understanding of how simple risk management techniques will move you and your team from reactive to proactive, worried to confident, and make your strategic plan achievable. You and your team can use the provided templates and idea cues to identify the threats and opportunities your nonprofit faces in every functional area of your nonprofit. Ted Bilich makes a compelling case that managing risks acts as an accelerant to achieving your strategic plan.

—Linda Lenrow Lopez, Enterprise Risk Management Principal, Wikimedia Foundation

Ted hits the mark of 21st century duty of care thinking for nonprofit leaders! This dynamic, holistic approach for nonprofits embracing risk through a careful process, a path, a journey with calculating milestones is practical, engaging and sustainable.

—Peter A. Persuitti, Global Managing Director, Nonprofit, AIG Insurance

Ted Bilich has written the ultimate guide for nonprofits to build their resilience and bounce back from difficult situations and embrace new opportunities, something the nonprofit sector desperately needs at this moment. A must‐read for every nonprofit leader.

—Beth Kanter, Author, Facilitator, and Trainer

Ted's book is a must‐read for any nonprofit executive or board member, whether veteran or newbie. In uncommonly plain English, Ted dismantles key risk management concepts and makes them accessible and practicable. This primer provides inspiration to those caught in analysis paralysis or who've considered enterprise‐wide risk management too daunting a prospect for resource‐challenged persons or organizations. Commercial insurers will love applicants that embrace Ted's methods.

—Scott R. Konrad, North American Nonprofit Practice Leader, HUB International Limited

Great pragmatic resource for nonprofit professionals, board members, donors, and volunteers. Applicable to organizations at any stage of their evolution, from newly formed to well established. We all deserve to be able to identify and know how to effectively address our heffenwoofers.

—Dr. Jan Young, Executive Director, Assisi Foundation of Memphis, Inc.

Tackling risk management is critical to the success of nonprofits. Ted's book provides a road map for this effort, and more importantly provides readers with confidence that they will succeed at anticipating, mitigating, and managing risk.

—Jenny Palazio, Senior Director of a Global Nonprofit

In today's changing world, running a nonprofit is harder than ever. For a strategy to be effective, it needs to be adaptive, which means leaders need to identify, assess, and respond to risks. Ted offers a useful, accessible framework for doing so allowing any size nonprofit to build resilience and thrive.

—Steve Zimmerman, Principal, Spectrum Nonprofit Services

The pressure for nonprofits to be resilient is perhaps greater now than ever. How fortunate for the nonprofit sector to have this book, a gift to nonprofit leaders and future leaders alike brimming with practical advice and helpful tools.

—Amy Coates Madsen, Vice President of Programs, Maryland Nonprofits, and Director of the Standards for Excellence Institute

TED BILICH

MANAGING YOUR NONPROFIT FOR RESILIENCE

USE LEAN RISK MANAGEMENT TO IMPROVE PERFORMANCE AND INCREASE EMPLOYEE ENGAGEMENT

Logo: Wiley

Copyright © 2023 by Ted Bilich. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging‐in‐Publication Data:

Names: Bilich, Ted, author.

Title: Managing your nonprofit for resilience : use lean risk management to improve performance and increase employee engagement / Ted Bilich.

Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2023] | Includes bibliographical references and index.

Identifiers: LCCN 2022032945 (print) | LCCN 2022032946 (ebook) | ISBN 9781394153824 (cloth) | ISBN 9781394153848 (adobe pdf) | ISBN 9781394153831 (epub)

Subjects: LCSH: Nonprofit organizations—Management. | Risk management.

Classification: LCC HD62.6 .B566 2023 (print) | LCC HD62.6 (ebook) | DDC 658/.048—dc23/eng/20220826

LC record available at https://lccn.loc.gov/2022032945

LC ebook record available at https://lccn.loc.gov/2022032946

Cover Design: Wiley

Cover Image: © Retouch man/Shutterstock

To Jennifer, my love and my best friend. With Coqui, we make a great pack.

Preface

WHAT IF NONPROFITS could avoid crises and devote more resources to the causes they want to advance?

What if instead of being merely reactive, nonprofits could be proactive—confronting issues with radical candor, then taking reasonable steps to address their most important challenges?

What if nonprofits could create virtuous cycles of action, leading team members to think like owners and strive for continuous improvement?

What if, instead of being fragile (susceptible to reversals) or merely robust (strong, but unyielding), nonprofits could actually become resilient: able to bounce back from challenges and spring forward to create and take advantage of opportunities?

I have spent decades exploring these questions. I have trained hundreds of nonprofits and gathered data every step of the way. This book is the result of those efforts.

Acknowledgments

THIS BOOK WOULD not have happened without the support and encouragement of Linda Lenrow Lopez. She has been a thought partner on these concepts and, just as important, one of my dearest friends. Risk Alternatives may have lost her to the Wikimedia Foundation, but the world is a better place for her being the risk management principal at that critical bastion defending the accumulation and sharing of information.

In addition to Linda, I want to thank everyone who reviewed and commented on earlier drafts of this work, especially Jennifer Adams, Amy Coates Madsen, Jan Young, Jenny Palazio, and John Ottenhoff. Scott Schaefer, Greg Wolfson, Michael Brown, and Miriam Cleeman were instrumental in helping me choose the right way to package these concepts in evocative ways. Thanks, as well, to Heather Angel and Laura Hurt, who do so much to keep Risk Alternatives running at peak performance. At Wiley, thanks to Brian Neill, Debbie Schindlar, and Susan Geraghty, who have made production of this book a fun experience.

I also want to thank the hundreds of nonprofits who contributed data to our survey database, participated in our workshops and webinars, and permitted us to serve them as advisors. I want to thank all the members of Nonprofits Build Strength Together (BeST). I stand in awe of the work you do every day. I want to thank the scores of funders who have supported our work in communities around the United States. Finally, special thanks to Fred Brown, Hannah Karolak, and Emma Yourd from The Forbes Funds; Kevin Dean, Andrea Hill, and Annie Schmitz from Momentum Nonprofit Partners; Amy Coates Madsen and Kate Hull from Maryland Nonprofits; and Keith Timko and Xander Subashi from The Support Center for Nonprofit Management. You have been thought partners in helping to develop resources that make nonprofits better. Together we can make the nonprofit sector so much stronger.

Introduction

THIS BOOK AIMS to help nonprofits not only survive but also thrive. The aim is not just to avoid fragility, where uncertainty can shake a nonprofit to its core. It is not even mere robustness, where the nonprofit can survive shocks because it is cautious, solid, and stable.

This book instead aims to build nonprofit resilience—an ability to bounce back from setbacks and spring forward toward opportunities. To that end, this book provides nonprofits with a blueprint for creating an early warning system to help a team see downside and upside risks and take reasonable steps to address them.

1

You and Your Nonprofit Deserve Risk Management

Nonprofits play a vital role in communities around the world.

In the developing world, nonprofits often serve as the only barrier between life and death. Even in highly developed economies, however, nonprofits provide enormous impact. In the United States, for instance, nonprofits provide nearly 6 percent of the gross domestic product. They provide just under one out of every ten US jobs, and they comprise half the nation's hospitals, almost half the institutions of higher education, close to 80 percent of vocational rehabilitation facilities, and approximately 80 percent of daycares. Furthermore, they account for almost all operas and orchestras, one out of every five nursing homes, and about one third of private clinics and home health care facilities.¹

Impressive as those figures are, they understate the importance of nonprofits in our communities. Nonprofits often provide essential goods and services for those who are most vulnerable. They address the needs of those who, because of age, health, socioeconomic status, or power dynamics, cannot operate effectively on their own in our economy. If the US economy is an engine, nonprofits are its vital lubricant. Nonprofits reduce friction, helping the otherwise sharp edges of society function more safely, productively, and humanely.

Nonprofits strive for sustainability, growth, and responsiveness to meet their important roles in society. But the harsh truth is that running a nonprofit is hard and getting harder. When addressing most risks, many nonprofit leaders have a limited and linear thought process:

Risk is bad.

I should avoid risk when I can.

I should insure against the risks I can't avoid.

I should worry about all the rest.

This book aims to help. The framework for improvement set out in this book is based on effective risk management—a structured process for identifying and dealing with risks before threats become crises and opportunities pass the organization by. By implementing this methodology, nonprofits can increase clarity and peace of mind and find untapped sources of value.

You should read this book if you are a nonprofit leader or team member, a student, a nonprofit funder, or a nonprofit advisor

This book is written principally for nonprofit leaders. When you see this book refer to you, this book is speaking directly to you. You are being held to increasingly unpredictable standards of care, and you need to understand how to use risk management principles to protect and advance your operations and meet your mission.

This book is also aimed at students learning about nonprofit practice. Nonprofit risk management has long been overlooked in undergraduate and advanced degree programs. This book helps fill that void.

The book is also for funders. When funders place their resources in the hands of a nonprofit, they need to be confident that their investment is sound. A nonprofit without effective risk management is flying blind. Funders have no assurance that nonprofits without effective risk management understand their true capabilities or will perform effectively with donated resources. This is not to say funders know better than nonprofits about what nonprofits should be doing. Instead, funders should understand the language and value proposition of risk management so that they can explore and support this capacity with the grantees they fund.

Finally, this book is written for nonprofit advisors. Attorneys, accountants, and bankers need to be aware of whether their clients are protecting themselves from emerging threats and preparing themselves to seize on potential opportunities. Consultants providing organizational development, leadership training, strategic planning services, or other advice need to consider how those efforts interact with the risk management function. Advisors and consultants can achieve substantial synergies by becoming more aware of what risk management is, why it is important, how it improves operations, and how it is implemented effectively.

Read the Book Straight Through

This book is designed to be read from start to finish—at least the first time. The Contents recommends a step‐by‐step approach, and that approach is most effective for nonprofits who are interested in resilience and sustainability. (In fact, the chapter titles and subheadings of this book are designed to tell a story about your success.)

The book begins by explaining why risk management is important (this chapter) and identifying core vocabulary (Chapter 2). It then describes how you can perform a risk inventory to identify threats and opportunities throughout your nonprofit (Chapter 3). The book then explains how to prioritize your risks (Chapter 4) and develop your first risk register—the prioritized punch list of the most important issues facing your organization (Chapter 5). Chapter 6 then notes the basic ways you can respond to a