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Risk management

Board members need to minimize various kinds of risks the organization may face. The board should review and plan for risk factors including legal, financial, regulatory, human resources, technology, and property. When needed, the board supports the executive director in taking action. The board should ensure Directors and Officers Insurance is in place and complete an annual review to make sure the coverage is appropriate and adequate.
The board needs to be aware of and understand the organization’s Document Destruction Policy and Whistleblower Policy. The organization must be compliant with the Sarbanes-Oxley Act and should follow the best practices for governance, policies, and disclosure outlined in the IRS Form 990. An additional policy to have in place and review annually is a Conflict of Interest Policy. Board members and key staff members should complete and sign a conflict of interest form annually.

To reduce operational disruption, the board should maintain several emergency and long-term plans. For all the plans mentioned, board members and staff need to receive instructions about the plan and their role in activating or complying with the plan.

  • Emergency and long-term succession plans for the executive director and other key organization staff and board members, which includes the board chair, are important to keep the organization’s momentum during leadership transitions.
  •  A general emergency plan for disruption in the delivery of programs or services (e.g., weather, pandemic, strike, etc.) should be guided by local and state laws and include procedures for mitigating loss of physical/financial assets and providing for health and safety of workers.
  • An emergency communication plan prepares a nonprofit in case of negative press related to the organization or the cause in which the organization is working.
Reflect

Reflection...

Think about your individual board member responsibilities and the collective responsibilities of the board as you reflect on the following questions.

WHY: 

  • Why does it matter that board members individually and collectively know and act on their board responsibilities?

WHO: 

  • Who reviews local, state, and federal requirements to ensure the organization is compliant? Here are a few items to check:
    • Federal: IRS Form 990 (filed annually)
    • State: Annual Report (filed annually for nonprofit corporations)
    • State: Annual Renewal (filed annually for charities – organizations raising funds from the public)
    • Local: Business license, business and occupation tax, etc. (taxes and licenses vary by jurisdiction)

HOW: 

  • Over time, how is the organization’s mission reviewed for continued relevance?

WHAT: 

  • What oversight do board members provide the organization?
    • What opportunities and challenges do board members need to anticipate and plan for?
    • What role do board members play as stewards of the nonprofit’s mission within the community?
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