Posted on Wednesday, October 18, 2017 Share
When talking about risk within a nonprofit, it’s common to think of fraud risk - the areas within the organization that are susceptible to fraud occurring. Or you might think of IT risk - the risk of someone hacking into the organization’s computer system. Or even legal and compliance risk - the risk of not following applicable laws or requirements.
What about reputation risk? Given that a nonprofit’s greatest asset is its reputation, time should be granted to focus on protecting it.
Reputational risk is the loss due to damages to an organization’s reputation. It includes not only what is true but what is perceived about your organization. In addition to lost revenue, a bad reputation can lead to the following.
- Loss of volunteers
- Loss of clients or program constituents
- Difficulty in hiring qualified employees
- Difficulty in attracting board members
- Difficulty in obtaining grants
- Difficulty in obtaining loans
- Increased scrutiny by regulators
- Overall decrease in community support
In order to manage reputational risk, you must first understand how your organization is perceived. The following are ways you can monitor your organization’s reputation.
- Ask for feedback from employees, volunteers, board members, donors, clients, etc. Find out what your constituents think about your organization. Make sure you use the feedback to make changes.
- Google your organization to see what shows up. This is what the public sees in regards to your organization. You can sign up for Google alerts that alert you every time your organization is mentioned on the internet.
- Review your organization’s website. Is it current? Is it easy to navigate? Is your most current IRS Form 990 available on your website? This may be the first impression your organization has on people. Is this how you want to be portrayed?
- Monitor third party websites such as GuideStar, the National Center for Charitable Statistics and the Better Business Bureau. How is your organization portrayed?
- Develop a social media strategy that outlines what your organization allows to be posted on the internet and who is responsible for posting. Also include who is responsible for responding to comments on your organization.
In addition to monitoring your organization’s reputation, you should also be sure that you respond to any feedback or concerns. How you respond to these has an impact on your reputation.
Don’t wait until things go wrong to measure or assess your organization’s reputation.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.