Risk and Resilience in Nonprofit Enterprises, Part 1
This is part one of a two-part series on resilience in nonprofit enterprises with a focus on risk.
One of the major forces bringing about resilience around the world is the social sector. Whether fighting voter disenfranchisement, rebuilding coral reefs, implementing stay-in-school programs, feeding the hungry — and so much more — nonprofit organizations are dedicated to fostering resilience toward global social, economic, and environmental justice.
Not only do nonprofits work to enable resilience in society, but also now we’re seeing a mandate for nonprofit organizations to be resilient, themselves. Social sector — nonprofit — enterprises require resilience to both recover and learn from realized risks. Nonprofit organizations must be resilient in order to make the changes in the world they are obligated to deliver.
Developing organizational resilience begins with acknowledgment of risk. But first, let’s be sure we understand what organizational resilience is.
What is resilience?
From metallurgy to psychology to economics to the discipline of management, the word “resilience” has a shared essential meaning: The ability of an entity to resume its norm after stress. Some definitions take it farther, adding that not only does resilience assume recovery, but also growth and strength from the challenge. Indeed, in her book, The Resilience Dividend, former Rockefeller Foundation head, Judith Rodin, describes the “resilience dividend” as “…more than effectively returning to normal functioning after a disruption…It is about achieving significant transformation that yields benefits even when disruptions are not occurring.”
Development organization OECD defines resilience as, “The ability of households, communities and nations to absorb and recover from shocks, whilst positively adapting and transforming their structures and means for living in the face of long-term stresses, change and uncertainty.” Nonprofit enterprises are communities, themselves, and require resilience for ongoing performance.
Designing resilience into nonprofit organizational infrastructure
Whether at the macro or organizational level, resilience is achieved through cross-cutting interventions and systems thinking. OECD writes, “Resilience is about addressing the root causes of crises while strengthening the capacities and resources of a system in order to cope with risks, stresses and shocks.”
Writing about development project resistance, Andrew Mitchell describes how, “…(R)esilience in one sector…can be undermined by a lack of similar investment in other sectors. In short, a layer of society cannot be ‘selectively’ resilient.” Much like resilience in the larger world must be integrated and holistic, so too must nonprofit enterprises achieve resilience throughout the whole.
Nonprofit leadership must consider resilience in these four components of their infrastructure:
- Program Design — Strategy, goals, timeline, and tactics to deliver on the mission
- Business Systems — Administrative and core functions that support and enable program design and delivery
- Culture — Shared history, beliefs, values, and practices
- Management + Leadership — The ways individuals show up to make their contribution to keep the organization functioning toward its mission
Throughout an organizations’ infrastructure, team habits, default practices, and cultural norms combine and cascade to affect the resilience of the organization. Likewise, achieving organizational resilience requires integrated, enterprise-level interventions for a time period long enough to change community habits.
The dedication to drive change can come from within an organization, but in the lean and pressing nonprofit environment, too often leadership and talented staff are already over-committed. Social sector organizational leadership often does not have the time or capacity to “own the problems” and create custom solutions to organizational challenges — or to manage the changes necessary to surmount them sustainably. Even growth-minded leadership does not always possess the unique skills and strengths to drive sustainable organizational change toward resilience.
Creating conditions for resilience throughout an entire nonprofit enterprise is an intensive, systems-level, executive job. Poorly executed resilience initiatives can do more harm than good — causing staff to become inured to and cynical about organizational change — having a chilling effect on innovation, learning, and adaptive capacity.
So what to do?! It seems so daunting. Where to begin to become a resilient organization? Though no single how-to can achieve nonprofit resilience, this two-part series can help you see where to start.
Factoring for risk
We can’t consider resilience without first discussing risk. Assuming we define risk as factors that decrease the likelihood of a positive outcome, then by definition, realized risk threatens social sector impact. And with missions as important as advancing global justice and well-being, nonprofits can’t afford to undermine impact.
In most nonprofits, sometimes budgeting for risk may seem an impossible luxury. Utilizing staff capacity to factor for worries that may never happen does not compute. Admitting to funders that failure may happen may be intolerably vulnerable for many nonprofits.
Open Road Alliance has done great work to illuminate risk to impact in social sector organizations. Open Road has developed effective tools and resources, like the Risk Management Toolkit. A key takeaway is the importance of communication about risk with funders, but Open Road offers tools to help with risk evaluation, contingency planning, and more.
Communicating candidly with funders about risk, of course, assures uninterrupted impact in case of risks realized, but perhaps even more so, helps funders understand the true costs of making social change. Nonprofits benefit in a number of ways from bringing true cost considerations into their planning and operations, as well.
This frankness about risk is the first step in achieving organizational resilience. From more accurate funding practices to better budgeting, to increased preparedness, acknowledging risk goes far toward resilience. Internal risk calculations can improve role clarity and decision-making. Internal risk planning can help nonprofit teams better understand their infrastructure so they may better manage it.
No matter how far an organization’s journey to resilience, it begins with incorporating risk into program plans and organizational systems.
In The Resilience Dividend, Judith Rodin writes how “…the vulnerabilities (and…assets) you have before a disruption will largely determine what happens during a disruption.” When it comes to nonprofit organizations and the impact they must deliver, identifying risk vulnerability and how to manage it is a significant part of developing the resilience to overcome and grow stronger from inevitable disruptions.
Part 2 will talk you through where you should look for risk in your organization.
About The Author
After 15 years as a change leader in the social sector, Anna Prow founded Trellis Partners because she passionately believes that nonprofit organizations are among society’s best hopes for bringing about a more just world. She knows that to do so, mission-driven, nonprofit enterprises must operate as effectively and efficiently as they can — and they must possess the resilience to surmount and learn from inevitable challenges.
In notable executive positions with Center for American Progress, National Democratic Institute, Health Care Without Harm/Practice Greenhealth, Friends of the Earth US, the Enough Project at New Venture Fund, and Campaign Legal Center — as well as a volunteer leader for the Human Rights Campaign — Anna has partnered with pre-eminent civil society leaders and their teams to take their organizations to next level excellence.
Undergirding her social sector experience is a career chapter as a public high school English teacher and corporate trainer for Anheuser-Busch. Anna served as a teacher trainer Peace Corps Volunteer and then as an academic director for School for International Training’s study abroad program, both in Madagascar. Anna has an MS in Urban Policy from the New School. She’s based in Washington, DC.