Non-profits fail. Between 30-50% of them, it is said. Unfortunately, these stories are not often told. We hear the success stories and so we think a great deal about how to succeed. But how often do we think about how not to fail?
If that sounds very negative, let me explain my story. Before starting a non-profit, I was training to be an actuary. And actuaries are trained to think about all the bad things that can happen, and how to get into a position where those things can be faced with confidence.
In fact, that’s what made me change careers. While working on an actuarial research project about the impact of the HIV epidemic on children, I realised how many challenges children in South Africa face. I wanted to get alongside as many of those children as I could, and help them overcome the challenges. And so I got together with like-minded people to start a unique donor-funded school designed to serve the needs of children in adversity.
This change raised an obvious question: what use is actuarial training in non-profit work?
1. Integrated thinking
While the stereotypical actuary is always knee-deep in the details of a spreadsheet, real actuaries start with a broad lens and consider all the factors that might come into play in a given situation, before diving into the detail.
This mind-set is just as valid for non-profit leaders. We naturally (and understandably) focus all our attention on our organisation’s mission, because that’s what success means for a non-profit – helping your beneficiaries. But while there is only one way to succeed, there are many ways to fail, from insolvency, to ineffectiveness, to poor governance, to scandal.
Non-profit leaders and board members need to develop an integrated vision of what a healthy organisation looks like. Try this challenge – ask the key leaders in your organisation to sketch a diagram on a blank page of how they understand the organisation. Then see what made it into the diagram, and what did not:
- Is it clear what the mission is and who the stakeholders are?
- Do your governance, financial management, legal structures and institutional development all serve that mission?
- Do you have the right team on board, and a way of developing future leaders?
- Do your level of technology, your organisational culture and your physical spaces all fit with the bigger picture?
2. Worst case scenarios
Non-profits inspire hope, and rightly so – they are an embodiment of people’s desire and commitment to do good in the world. But they do so by naming reality as it is, and asking what can be done to make it better. We can apply the same principle to managing risk. Once you have developed a big picture view of your organisation, take each component and ask, what could go wrong here?
What are the worst things that could happen, financially, legally or ethically? What would a failure look like in staffing, governance or safety? What could happen to our buildings or equipment or partnerships? These are not questions you want everyone to ask all the time, but someone has to ask them some of the time.
3. Getting into position
The point of assessing risk is to mitigate it. The future is uncertain and we cannot insulate ourselves against it. But we can strive to build a resilient organisation that can withstand the challenges we are likely to face.
Once you have developed an integrated big picture view of the whole organisation, and you have assessed where things could go wrong, you can identify how to build resilience. What kind of financial management will make it less likely that the bad thing will happen, or enable us to better handle it if it does? Ask the same question for every aspect of your organisation, and you will know in detail what you need to become.
Some changes might be easy, but many will require incremental change over a period of time. The key is for the leadership to have a vision and a plan for becoming a resilient organisation that can continue to achieve its mission, even when bad things happen.
Renier Coetzee is the founding principal of Trinity Children’s Centre and has been leading and growing the non-profit school since it was established in 2012. He holds a B.BusSc. in Actuarial Science from the University of Cape Town and an M.Ed. in Integrated Curriculum and Instruction from Covenant College in the USA. Renier was also awarded the title of Lead SA Hero of the Year in 2017.