August 26, 2009

Conquer Your Fear with Familiarity

By Melanie Lockwood Herman

I’ve often remarked that, in the absence of fear, few nonprofit leaders would look to the Nonprofit Risk Management Center for advice and assistance. Fear motivates leaders to attend risk management workshops, purchase online tools, and read the books and guides we publish. Yes, fear can be a good thing, but for many reasons beyond sustaining the role of the Center.

Fear and worry go hand in hand. Our fears cause us to worry. Unproductive worry—called “toxic worry” by some experts, is not beneficial. Toxic worry is of little use to a nonprofit leader because it causes the person experiencing this form of worry to freeze—taking no action to relieve the symptoms causing worry. In contrast, “adaptive worry” inspires action. A nonprofit leader who harnesses adaptive worry considers how to escape from worry and lead her organization out of the woods.

Concern and fear about the economic downturn have led to surprising results. At a conference I attended last week I heard stories about nonprofit leaders who are pushing the innovation envelope—inspired by the need to do things differently with fewer resources. Others have found new ways to leverage resources to meet pressing client needs. I also heard about groups who had been determined to “go it alone” finally decide that partnering with others made the most sense for the people and communities they serve.

It is human nature to fear the unknown. Given that, how can we conquer our fears on behalf of the nonprofits we serve? Throughout the summer I’ve been writing about the topics of fear, uncertainty, and “unknown unknowns” in the Center’s latest risk management book, Ready or Not…A Guide to Risk Management for Nonprofit Executives. One of the theories I offer in the book is that making something familiar is the first step to overcoming fear and worry. In his book, The Leadership Engine, author Noel Tichy writes: “The best way to get humans to venture into unknown terrain is to make that terrain familiar and desirable by taking them there first in their imagination.”

In many respects the discipline of risk management is ideal for those with a healthy imagination and an opportunity for others to fine tune their imaginative abilities. After all, risk management activities involve peering into the future and making decisions today that will protect the mission and programs of a nonprofit, no matter how that future takes shape. A good imagination is an indispensable tool for the seasoned risk manager. It’s also one of the reasons why enlisting the help of a diverse group of people is essential to any risk management program. The more diverse your brainstorming group, the more imaginative you will be in identifying your critical risks and innovative responses.

One area where nonprofit leaders seem to express quite a bit of apprehension is exposure to litigation. With the rare exception of seasoned courtroom veterans, the prospect of being sued is likely to strike fear in the heart of the typical nonprofit executive. In many respects a lawsuit is like an accident—it isn’t easy to predict. But it is possible to “go there in your imagination” and consider the types of activities your nonprofit undertakes that could lead to legal challenges. For many nonprofits these include:

• Delivering services to vulnerable clients;
• Terminating employees;
• Using the intellectual property of others;
• Assuming contractual obligations;
• Collecting personal information from staff, volunteers, clients and donors;
• Soliciting and using restricted donations; and
• Hosting special events.

Imagining the types of claims you might face as a result of these activities is a vital precursor to identifying and implementing practical risk management interventions. Your concern about claims arising from client misconduct might lead to the development of a Code of Conduct. Your concern about the misuse of intellectual property might lead to guidelines for the use of third-party materials in the nonprofit’s newsletter and web site. Your concern about the risks associated with an upcoming special event could inspire you to establish a safety team charged with spotting and address dangers before and during the event.

In addition to letting your imagination consider the types of suits you might face, becoming familiar with legal terminology and the litigation process are other remedies that will quiet your fears of being sued.

In our new book, EXPOSED: A Legal Field Guide for Nonprofit Executives, my co-author Mark E. Chopko and I explore everything from basic legal terminology to guarding against claims alleging mistreatment of vulnerable clients and surviving litigation.

Executives serving management roles in nonprofits can, without investing in a formal legal education, learn liability basics and use a wide range of legal resources to inform decision-making for their organizations. The book was inspired by the belief that leaders of nonprofit organizations should take the time needed to understand the liability environment in which their organizations operate and to learn some legal basics that will enable them to:

• understand what steps are important to steer clear of legal trouble, minimize the risk of lawsuits and claims, and refrain from jeopardizing the nonprofit’s position in a legal battle;
• proceed more confidently about their business, without unwarranted fear of legal liability and frivolous lawsuits;
• manage the nonprofit’s affairs in a way that complies with legal rules and requirements; and
• fortify the organization to withstand a legal challenge.

Our hope is that EXPOSED will help our readers get on the right track and develop confidence about and familiarity with a wide range of legal exposures.

To order a copy of the book or learn more about its contents visit: http://nonprofitrisk.org/store/exposed.shtml. NOTE: the release date for the book is September 20, 2009.

The program for the 2009 Risk Management and Finance Summit for Nonprofits, September 21-22 in Austin, TX will showcase several sessions intended to raise awareness about legal exposures. These featured sessions include:

• The 10 Biggest Legal Traps Nonprofit CEOs should Avoid - A successful nonprofit CEO doesn't need a law degree, but he or she does need to spot legal red flags and be able to effectively deal with them. During this conference workshop one of the nation's leading legal advisors to nonprofit organizations walk participants through the 10 most significant legal issues faced by the typical nonprofit CEO. Gain practical tips for how to deal with and resolve complex dilemmas that expose your nonprofit to liability. You'll have ample opportunity to ask questions and get understandable, practical answers to your most pressing legal questions.
• Best Practices in Nonprofit Governance and the Legal Duties of Nonprofit Boards - Governance is one of the hottest issues facing the nonprofit sector. Across the country nonprofit leaders are searching for the perfect recipe for 'best practices' in board governance. This workshop will offer a menu of good governance practices, with case studies to whet your appetite. The development of appropriate, customized policies will be discussed. Since the key to good governance is ensuring that those around your board table are both aware of their legal obligations and embrace their fiduciary roles and responsibilities, this workshop will share practical strategies for enhancing the board’s appreciation of governance risks and helping the board provide the leadership required to protect the nonprofit’s mission, programs and assets.
• Implications of Directors’ and Officers’ Fiduciary Failures in Nonprofit Organizations - A growing number of nonprofit boards have moved well beyond the question of whether D&O insurance is a necessary coverage for the organizations they served. While the question “D&O—Yes or No?” has been answered with a resounding “Yes” new questions about the protection afforded by this critical coverage have emerged. These questions are particularly important in the current era of unprecedented scrutiny of nonprofit operations and governance practices. What are the most common and potentially catastrophic fiduciary failures committed by nonprofit boards? What lessons can be gleaned from the claims files of prominent insurers of nonprofit D&O coverage? Attend this workshop to learn the answers to these (and other) thought-provoking questions.
• Volunteer Liability: What You Don’t Know about “Free” Workers Could Cost You - Experienced volunteer coordinators and nonprofit CEOs know full well that volunteer service is anything but “free of charge.” Astute leaders must proceed with care when recruiting, training and deploying volunteers. Experts are predicting that volunteer numbers will climb as poor economic conditions continue. This workshop will explore some obvious, and some less-than-obvious risks presented by volunteers and offer practical strategies for getting the most out of volunteer service.

In addition to the sessions described above, two workshops on the legal exposures facing churches and religious nonprofits have been planned:

• COMMON GROUND: Hot Topics in Employment Law for Churches and Religious Nonprofits - Retaliation, age discrimination, and managing leaves of absence are just a few of the topics with which leaders of churches and religious nonprofits must be familiar. This workshop will explore the world of employment risk through the lens of a church or faith-based nonprofit organization, offering practical as well as values-based advice.
• COMMON GROUND: Legal Developments and Rulings Impacting Churches and Religious Nonprofits - This workshop will explore recent legal developments and judicial decisions that require special notice by religious nonprofits and churches. Attend this workshop to find out what changes have taken place and what additional changes and rulings leaders should anticipate

The full conference program, including details on our dynamic plenary speakers, can be found at the following link. The registration fee for the Summit is only $495. The registration fee includes resource materials for all conference workshops, breakfast and lunch on both days of programming, and generous doses of inspiration and practical information. To register for the Summit, click here.

Questions?! Call the Nonprofit Risk Management Center at (202) 785-3891 or write to: info@nonprofitrisk.org.

Summer Issue of Risk Management Essentials Now Available

The summer issue of the Center’s newsletter, Risk Management Essentials, is now available. To download a PDF of the newsletter, click here. To view the articles featured in the new issue online, click here. To request copies of the printed version for distribution within your organization, contact Sue Weir Jones at (202) 785-3891 or Sue@nonprofitrisk.org.

© 2009 Nonprofit Risk Management Center