Do you have fears or qualms about anything happening in and around your center? Take a few minutes to make some notes — what do you worry about? If you aren’t a worrier, what things have you seen go wrong with other non-profits in your circle of peers in your state, or in other organizations in your city or county? I have a list of things that worry me. Let me share a summary of them, then talk about them today and in future posts.
- Financial risks. More often than we should, we learn about a center where money has been stolen from the organization. So what can you do to mitigate that risk?
- Risks of staff not doing their job. You have specific requirements from your funding sources. These should be written into job descriptions and individual performance should be evaluated.
- Weather or other disasters. Disaster policies, drills and state-wide collaboration are important.
- Security of both electronic and paper records. Confidentiality is key. Not everyone should have access to every file.
- Risk of a law suit from a staff member or consumer. Do you have policies and procedures? Do you follow them? Do you have insurance to cover when problems still exist?
Let’s look at the first of these. What kinds of things can you do to mitigate the risk of theft of funds from your organization?
Do you have job descriptions and policies and procedures that require good internal controls? How do you to make sure these controls are consistently applied? We saw something interesting related to the Pandemic. As staff moved to remote work, some of the internal controls were dropped. I am sure the intent was that these would be set aside temporarily — but in some situations the CIL failed to put them back into place or replace them with other safeguards. Be sure you look closely to ensure internal controls are in place.
Is your board involved in mitigating financial risks? Consider how they review financial statements — do you make key notes so they are aware of your greatest concerns? Is someone on your board expert in this area? How is the board involved in the separation of duties? If you have a small staff, a board member might assist with justifying bank statement against the financial statements for example.
We also suggest that you mitigate the risks by purchasing insurance and bonding key staff. Liability or other insurance may be helpful. Bonding should always include the bookkeeper or accountant. You may also want the Executive Director to be bonded.
Your main funder has provided training on Financial Risk Management. Check it out here https://www.ilru.org/training/financial-risk-mitigation-independent-living-15-hours. If you prefer a written manual, check this out: https://www.ilru.org/financial-management-for-centers-for-independent-living-0