Frequently Asked Questions
We are in a financial crisis and need to cut programs. What should we be thinking about in addition to the human resource issues?
This article from Bridgespan consulting group discusses the risks in cutting TOO MUCH, which may result in a nonprofit reducing its impact so significantly that stakeholders may conclude that the organization no longer worth supporting. Click here.
We are considering dissolving our nonprofit. What issues should we focus on to prepare our organization for winding down and closing its doors?
The Nonprofit Risk Management Center has developed a Risk Management Checklist for Winding Down. Click here to access the Checklist.
There are as many different types of potential crises as there are activities a nonprofit could engage in, but there is one common denominator – be calm! It’s easier to stay calm when you already have a plan in place and know there are resources to help you. Different crises will require different plans: fire, flood, power outage, natural disasters, sudden death of the CEO or theft of computers and embezzlement will require slightly different approaches. The common theme is that while you are in the midst of a crisis is NOT the time to ask your self ‘who should I be talking with about this and where is their phone number?’ or ‘do I have insurance to cover this and who do I call?’ If you would like more detailed information on forming a Crisis Management Team, reaching out to key public safety representatives, and being prepared with an up-to-date staff/volunteer contact list and inventory of assets critical to mission-delivery, you can review the Fact Sheet on Crisis Management Essentials, available from the web site of the Nonprofit Risk Management Center.
- The web site of the Nonprofit Risk Management Center has numerous other Fact Sheets on Crisis Management, addressing emergency evacuation, hoaxes, and threatening phone calls, among others.
We’re a small agency, and we can’t afford the cost of undertaking a full-blown response to the crisis risks we face. Is there anything we can do nonetheless?
Crisis management requires your investment of time and common sense, rather than a large budget. You do what you can, as you can, keeping the final goal of preserving your vital mission at the forefront. Consider your organization as a physician considers a patient. Check your nonprofit’s vital signs — the ones that enable your organization to fulfill its mission by meeting critical community and client needs — to establish a baseline for future diagnosis. When you detect an aberration, determine the source, identify treatment methods, apply the methods and evaluate the results. Schedule regular checkups to monitor the organization’s vital signs (e.g., funding stream, cash flow, employee and volunteer turnover rates, past incidents, and losses and lawsuits).This process will make a critical difference in your nonprofit’s future health.
If your organization is healthy, determine what you can do to keep it that way long term. However, if you find weaknesses, you’ll need to assess the symptoms, make a diagnosis and begin a treatment plan to cure what ails it so it can thrive or, at the very least, ease the symptoms to enable it to survive. Weaknesses might exist in financial management, human resources, fund raising, or volunteer management. The symptoms could manifest as uneven cash flow, a sharp increase in formal grievances, a complaint from a major donor, or a steep reduction in volunteer hours. The financial treatment plan could involve purposefully delaying the launch of a new program to coincide with your funding cycle or applying for a line of credit. The human resources treatment plan might be to revise the staff handbook and re-train supervisors on your agency’s policies and procedures. The volunteer management plan might involve identifying ways to involve volunteers more deeply in projects that are key to the realization of your mission, or providing a wider range of opportunities for your volunteer work force.
First, create a comprehensive directory of the organization’s staff, board and key volunteers. Include home addresses, phone/fax/wireless/beeper numbers, as well as emergency contact information. Distribute the list to employees and keep copies off site, as well as in your offices. Update and redistribute the list at least once a year, or more often if you have a high turnover rate.
Next, maintain a backup of your computer file server and key databases, and financial files. Update the backup every week (at least) and store a copy off site or in a fireproof safe.
Then, conduct an inventory of your nonprofit’s assets. Include equipment, furniture, databases, records and anything else you need to fulfill your mission. Your inventory should include brand names, model numbers, equipment/system location, purchase price and other key details. Store a copy of the inventory on site (preferably in a fireproof safe) and off site.
Finally, identify an attorney licensed in your state who you can call upon from time to time for advice and assistance. If you can’t afford a monthly retainer or hourly rate, consider soliciting bids from prominent law firms, emphasizing the charitable work of your agency. Don’t be surprised if you receive proposals offering pro bono or dramatically discounted legal services.
I understand that getting the right people involved is key in surviving a crisis. Who should be involved in preparing for a crisis?
For many nonprofits it makes sense to convene one group to develop a crisis management plan for the organization and a second group that will serve as the nonprofit’s “crisis response team.” The crisis-planning group should be diverse and include people in the organization who fully understand the nonprofit’s risks. For example, if your nonprofit owns a building including the person responsible for maintenance on your crisis planning team can help ensure that building-related hazards that could cause a crisis will be identified and addressed. Including the director of volunteers might enable the team to spot a volunteer-related hazard looming on the horizon.
A crisis response team is the group of people who coordinate your nonprofit’s reaction and response to a crisis. The composition of an organization’s crisis response team will vary based on a wide range of factors, including: the size of the organization, the nature of the services provided by the nonprofit, the likely sources of crisis in the organization, and the organization’s prior experience responding to a crisis. For example, in an organization with more than 50 staff, the crisis response team may include a handful of key department heads plus the CEO. In an organization with fewer than 10 paid staff, the crisis response team may include one or more board members, a couple of staff and outside professional advisors. With respect to the services you offer, the composition of a crisis response team at an environmental advocacy group will differ from the team that responds to a crisis at a daycare center. In the former, the team may include an experienced lobbyist and an environmental scientist. In the latter, the team may include the organization’s retained counsel, an expert on child abuse prevention or playground safety, and parents of enrolled children. The likely sources/causes of crisis in the organization should also be considered in forming a crisis response team. Is the organization more likely to face a crisis stemming from allegations of client mistreatment or a crisis caused by inadequate financial resources? The ranking of crisis risks will suggest areas of expertise and training that may be required during a crisis and individuals with special talents or expertise may be identified as necessary members of the crisis response team. If your nonprofit has successfully weathered a crisis in the past, you’ll want to include the people who were effective in addressing that situation on your crisis response team.
- For more information on this topic, you may be interested in ordering the book from the Nonprofit Risk Management Center: Vital Signs: Anticipating, Preventing and Surviving a Crisis in a Nonprofit.