Top 10 Risks Facing Nonprofit Boards
Members of nonprofit organizations regardless of state, face risk factors and the Center for Nonprofit Excellence wants you to be aware of them.
1. Exposure from social media use, misuse and naivete’ – over the past 10 years social media use has exploded around the country. There are more platforms available now than ever. Risk from this comes not just how your organization officially communicating on these channels it’s how your individual board and staff members are using those channels and what liability may they be exposing the organization to, through their personal use.
Gregory Nielsen, CEO, Center for Nonprofit Excellence (cnpe.org), holds a Bachelor of Arts Degree in Government and International Relations from the University of Notre Dame and a Juris Doctorate from Notre Dame Law School. He previously served as an officer and attorney in the United States Army Judge Advocate General’s Corps.
In this CLE class video clip, Mr. Nielsen discusses the Top 10 Risks Facing Nonprofit Boards.
You can watch the complete Nonprofit Law CLE class here:
Nonprofit Law CLE
2. Unhappy staff and volunteers – expose the organization and board members to a significant risk.
3. IRS Form 99- and federal tax-exempt status – in order to protect tax-exempt status, board members should have a basic understanding of the restrictions imposed by the tax laws and implement policies and procedures responsive to these requirements and Form 990 reporting mandates.
4. Copyrights and trademarks – Nonprofit organizations will often use logos, slogans, and sayings in order to promote a charitable event, it is important for your organization to have a policy procedure in place for reviewing how you’re using logos and trademarks to make sure you’re not infringing on the rights of others.
5. Lobbying and political activity compliance – 501(c)(3) states that no political campaign activities; lobbying within limits. Political campaign activities such as endorsing specific candidates in specific parties is prohibited. 501(c)(3) states that you may engage in limited political campaign activities and may lobby as its primary activity.
6. Sexual harassment – this could be at the board level, at the staff level, and again underscores the need for specific policies, review, oversight, and monitoring the organization.
7. Mistakes in contracting – Purchasing and procurement mistakes, or mistakes where the organization is acting outside of its own policy, could expose the board or entity to risk.
8. Lack of synchronicity in board policy and practice – Occasionally, board members should examine its practices in light of the nonprofit’s overarching mission. “What would our stakeholders say if a light was shined on our governance operations?”
9. Failure to understand and manage conflicts of interest – (Duty of Loyalty) Nonprofits that fail to manage conflicts of interest run the risk of losing public confidence, or worse, becoming the object of media scandal.
10. Reliance on the goodwill, good nature and insurance coverage of others –