Six Risks Your Nonprofit Should Be Taking

Common sense tells us to avoid risk.

But sometimes, the best path to your organization’s goals is risky. Ask yourself, is your nonprofit taking enough risks? And, are they the right risks?

Knowing about risks is the first step to realizing if you are taking the right ones. Every business—for-profit or not-for-profit—faces some kind of risks. Financial, reputational, ideological…there are as many kinds of risks as there are organizations. Some of the risks may even be personal—consider the Livestrong Foundation’s recent management of the scandals surrounding its founder.

But, just because a risk carries the danger of failure or embarrassment, doesn’t mean that your organization shouldn’t take it. Teams that take no risks also reap fewer rewards. Organizations that shun risk-taking may find that their programs stagnate and that they are passed over on funding in favor of programs that are more innovative, original and fresh.

Here are six risks you should be taking:

1. Take advice from unlikely sources

Taking the advice of someone who isn’t involved directly with your organization is a risk. But, too often, nonprofits and other organizations that are set up to help a community forget to go back to that community for advice. Take the risk of considering all advice, even if it’s from a community member or someone in a for-profit industry.

2. Trust your team

The nonprofit sector has always relied on teamwork, even before “there’s no I in team” became a catchphrase. To get the most benefit out of having a great team, trust the people you are leading. Feel like there’s not enough trust in your organization, or that your team isn’t working cohesively? Consider doing a staff retreat, to get everybody back on the same page.

3. Enlarge Your Network

For nonprofit professionals, there’s so much benefit in having a large network of contacts. Your network can offer tips on training opportunities, hints for what funders like (and don’t like!) and a huge amount of support in other areas as well. But it is draining to keep “putting yourself out there” and meeting new people. If you’ve been in the business for awhile, it may be that you’re relying on the same group of people that you’ve been working with for years. Risk putting your best foot forward and striving to meet people outside your circles, so that you can enlarge your network—and the potential of what you can do for your organization.

4. Forge partnerships

Risk is inherent in any partnership but the good will usually far outweigh the bad if you can hammer out some good collaborations. Just be sure to do some research beforehand to make sure that the amount of risk is acceptable.

5. Risk losing time by applying for funding

Though you should never apply for a grant that your program or organization is not suited for (you wouldn’t want to give the funder a bad impression of your team), there are grants that you should risk going after even if the level of competition is high and the awardees are few. Each time your team prepares a grant application (or gets the information ready so that a grant writing team like ours will do it) you learn a lot, and you become better prepared for the next application.

6. Risk revising your strategic plan

If your organization doesn’t have a strategic plan—you need one. But, once you get one, it shouldn’t be set in stone. Leaders who state “it’s not in the plan” as the reason why they won’t take a risk are missing the point of making a plan in the first place. The point is not to give you step-by-step instructions; the point is to help you reach your goal. Along the way, if you find an opportunity that may help you reach your goal more quickly, elegantly or efficiently, then that might be a risk worth changing your plans for.

Now that we’ve put those risks forward, it begs the question of, how do you know what risks you are facing? Every request for funding that you respond to will ask you to list the challenges and obstacles that may be standing in the way of your program’s progress. These challenges each represent a risk.

Are you happy with the risks your organization takes?

Keep track of your risks

With your team and board, keep track of the risks that you tackle, and the ones that you decide not to face. There is a lot that you and your strategy-makers can learn from past risk confrontations.

And, what happens when everything goes pear-shaped? Get your team to repeat:

It is OK to fail.

It’s OK to fail

Because when a nonprofit program “fails,” that doesn’t mean that it hasn’t helped its community. Each program that you devise, even if it doesn’t find adequate funding, or isn’t implemented in the best way (easy to say in hindsight of course), has helped in some way. If nothing else, perhaps you identified a need that you’ll be able to address with future programs. Perhaps you inspired others in your community to march forward with your mission in a slightly different direction. Or, perhaps you just realized that the time isn’t quite right for your plans.

But, every nonpofit and forprofit has to take a risk—and experience some failure—in order to later succeed. We’ve written about it before, but holding a “failure party” or other team-building activity in which you freely talk about the good and bad aspects of your year’s activities is a great way to clear the air and get your team mentally and emotionally ready for the next steps.

But, watch out for these pitfalls

Of course, there are some things you should be very careful about taking a risk with, because the consequences are simply too great:

• Not following the instructions on a funding proposal
• Using funds in a way that isn’t allowed by your funding guidelines
• Missing a deadline for a funding proposal
• Missing a deadline for a grant management report
• Insulting or offending a funder
• Insulting or offending the community you serve

What do you think? Are you taking appropriate risks with your organization?

Read more about risk and nonprofits:

The Sloan Review from M.I.T.’s article, “How Nonprofit Organizations Use Repuational Risk Management.”

“Richard Branson on Taking Risks,” an Entrepreneur.com article about the celebrated British entrepreneur and philanthropist.