Risk Management at a Nonprofit?

Larry Tucker

You saw those photos of the Costa Concordia cruise ship on its side, submerged in shallow water on the Italian Coast. Did you subsequently learn that Costa Crociere which operates this ship is part of a major cruise line corporation? Most people now identify this disaster with parent company Carnival.  

The news media made reference to the fact that the CEO of Carnival would acquire these cruise companies, and then maintain some distance from these companies, allowing each to operate relatively autonomously…apparently too autonomously.  

So now, in addition to recovery costs and lost revenue, Carnival has to deal with a public relations nightmare. Fleetwide (not just Costa Crociere!) booking volumes are expected to drop in the 10% to 20% range by Carnival’s estimates.  

How does this apply to you?  

Perhaps the worst thing that can happen to a nonprofit is bad publicity. Any hint of scandal or incompetency will turn off donors. Some larger nonprofits have survived scandal, but most can’t. In today’s environment where a quick tweet or a negative blog can go viral, managing that risk is important for for-profits and nonprofits alike.  

Off the top of my head, the two areas that have the greatest exposure to negatively affect a nonprofit’s “brand” are:   

  • Poor treatment of clients. 
  • Misuse or poor accounting of donor funds.   

(You might suggest others.)  

I bring this to your attention because as a nonprofit leader, you make decisions every day on what issues to delegate and which to review/overview. Today’s reminder is: Don’t allow too much autonomy when it comes to activities that could harm your brand.

Author:  Larry Tucker,  Executive Coaches of Orange County,  www.ECofOC.org