For nonprofits, reputation — theirs and their private-sector partners’ — is everything. Managing it has become a key strategic goal.
When an organization’s mission and message are about “doing good” — helping those in need or tackling an important social or environmental problem — it may be hard to imagine any reputational risk associated with their enterprise. Isn’t reputational risk management something that only private-sector, for-profit corporations need to be concerned with?
Although it might come as a surprise, the reality is that nonprofits — whether they’re development organizations, charitable bodies, or advocacy groups — have started to build fully-fledged reputational risk management systems similar to those employed in the private sector. Why? Because they meet challenges to their missions very similar to those faced by private-sector companies. First and foremost, they want to avoid a relationship with a controversial donor that might jeopardize their reputation.
Reputation as an Asset
A friend who advises the nonprofit sector recently explained it like this: “Companies have products and services. Even if a company is criticized, selling products and services will continue to generate revenues. Nonprofits, on the other hand, depend on donations that are primarily given on the basis of the organization being an honorable and effective one. Put simply, their reputation is really all they have.”
Here’s an example of the harm that comes from an attack on a nonprofit’s reputation. In 2011, the World Wildlife Fund (WWF) was criticized for its partnerships with industry in a German documentary with the audacious title, Der Pakt mit dem Panda — Was uns der WWF verschweigt. This roughly translates as “The Pact with the Panda: What WWF isn’t telling us,” but it was recast in English as The Silence of the Pandas, a reference to the thriller The Silence of the Lambs, insinuating that WWF was involved in an awful crime. The title alone was damaging in either language because it cast WWF as manipulative and dishonest; the film’s content itself, which according to WWF contained a number of significant factual errors, was even more so.
In its press release addressing the issue,WWF was able to prove that most of the claims made in the documentary were unfounded. However — and this is again similar to the situation of private-sector companies — dealing with the controversies absorbed valuable time and money. WWF Germany also lost members and donations. The drama of a message often overshadows a rational, point-by-point refutation; WWF may have had the last word, but it didn’t necessarily reach the ears of donors (or potential donors).
Furthermore, the Internet is an unforgiving archive of allegations, regardless of whether they are true or false. The undesirable effects not only last over time, but also spread across borders. Incidents that occur in a specific region can affect other countries’ offices and the organization’s headquarters as well. WWF Switzerland, for example, felt the ripple effects of the controversies in Germany.
Managing Risk in Corporate Partnerships
Completely avoiding partnerships with private-sector companies would be an effective way of mitigating the corresponding reputational risks. Some nonprofit organizations do exactly that. Think of Greenpeace, an organization active on the very front line of corporate criticism. The last thing it wants is to be accused of taking money from controversial companies or supporting “greenwashing” by partnering with them.
But this strategy comes at a price. First, private-sector companies are an important source of revenue. Donations from private individuals have not grown for many years, but there is still an untapped potential among corporates. “Although only 5% of donations come from companies, the volume of corporate income among Swiss nonprofits grew by 7% last year. However, the more funding nonprofits receive from companies, the more tough questions they will have to answer. The best way for them to avoid controversies is to agree with the partner on a truly transformational agenda. The positive impact of the partnership should be the primary reason to engage with the private sector,” says Michael Arnold, head of corporate partnerships at WWF Switzerland.
Second, as highlighted by Arnold, private-sector companies can play an important role in projects themselves. They have much-needed knowledge and resources. Many subject matter experts at nonprofit organizations believe that it will not be possible to solve today’s challenges without the involvement of the private sector. From the opposite perspective, private-sector companies are more often seeking partnerships with nonprofit organizations as part of their corporate responsibility and sustainability strategies.
With this in mind, donor organizations have also started to think about how they can manage the corresponding reputational issues. Jean-Christophe Favre, in charge of private-sector partnerships at the Swiss Agency for Development and Cooperation (SDC), says that the SDC needed a system “that allowed them to have a good enough understanding of the potential partner so that they could feel comfortable about the partnership.
Not having a reputational-risk framework and clear criteria also made it very difficult to discuss partnerships in a productive manner and to ensure institutional coherence. Every office would make decisions differently. And, in the worst case, SDC would not be able to explain how the partnership was assessed and why SDC came to the conclusion that this partnership was beneficial to SDC’s mission.”
Christian Görg, responsible for the reputational risk process used to assess private-sector partnerships at Germany’s largest development organization GIZ, has had similar experiences: “At GIZ, we wanted to avoid inconsistent decisions in different areas of the organization. The most important benefit of our reputational risk process is that we think about ways to mitigate risk from day one. The process sharpens our senses and makes sure that we don’t enter into partnerships hastily.”
Looking at potential partners, nonprofit organizations need to be able to answer the same questions as private-sector companies in the same situation: with which companies do you want to work? Or, in other words: with which companies is it better not to have a business relationship — and if you embark on a partnership anyway, what should be your terms?
While businesspeople tend to see reputational risk management as an obstacle to business, it is an enabler of business in the world of nonprofits. Understanding the issues a potential partner is exposed to and identifying risk-mitigating measures are essential to doing business. This enables nonprofit organizations to frame the discussion, to evaluate risks and options, and to overcome internal concerns.
Author: Olivier Jaeggi
Computer hacking can occur at any time and entail a wide range of problems and embarrassments. And that’s not including hackers who invade a system for the express purpose of damaging or destroying it.
So, everyone is taking steps to keep those faceless hackers from getting in, and as long as we put up walls we’ll all be safe right?
Not so fast.
At the Nonprofit Risk Management Center 2016 Risk Summit, Jim Jackson, director of campus operations at Momentous Institute, and Paul Henry, network administrator/engineer of Momentous Institute, said that the biggest threat to cyber security lies in user behavior within the system.
In other words, when people in the organization use their computers/devices for purposes other than work, they are not just taking time off from work.
They presented the following statistics:
- 29 percent of all data breaches are socially engineered attacks, taking advantage of human behavior to advance a data-breach scheme.
- 67 percent of all web traffic (40 million viewers) to the world’s most trafficked free porn site was generated from the office.
- Facebook is the Number One website visited during work hours.
- 62 percent of people say it is acceptable to transfer work documents to personal computers, smartphones and online file sharing applications.
- 95 percent of all security incidents involve human error.
Source: The Non Profit Times
A first question of course is who should be laid off. While this is largely a management decision based on which positions are the most important to future financial stability, an important HR component is making sure that the layoffs don’t put the organization at risk. Check the personnel handbook for policies that address layoff and/or severance pay, and check to see whether employees marked for layoff are on any kind of protected leave (such as family or medical leave, workers’ compensation leave, or pregnancy disability leave). If possible, speak with an HR or labor law attorney about employees on protected leave.
In most community nonprofits there aren’t, for example, 15 people holding the same position of Social Worker I, with an intention to lay off 3 of these employees. In such an instance, though, it will be important to clarify whether the layoffs are being made based on seniority, on merit, or on a combination of factors. Most organizations would prefer to lay off the least meritorious individuals with the least seniority. The nonprofit should check past evaluations and documentation of performance in order to avoid discrimination claims. For most community nonprofits, however, it will be clear that a position is being eliminated, rather than an individual being selected for poor performance. In all cases, document the whys of each decision you make, perhaps with business necessity as the main theme and with merit and seniority as considerations.
A few specific tips:
- Determine whether your organization is subject to either federal or state Worker Adjustment and Retraining Notification (WARN) regulations. Generally applicable if you have 100 or more employees, and for layoffs of 50 or more employees or 1/3 of your workforce, WARN requires 60-day layoff notices and other steps.
- It’s generally better to do a deeper layoff once than to lay off a few people at a time in dribs and drabs: the staff who remain need to feel confident that they will stay on their jobs.
- Most professionals recommend that individuals finish the day or the week after hearing about being laid off, but not longer than that. It’s usually difficult for the laid off employee to feel positive about work, and others may feel awkward around them. (See Layoff Stories from Blue Avocado Readers for examples.) But it will be key to discuss how the employee’s clients or projects will be managed after his or her departure.
- Letting people know on a Friday will give them the weekend to absorb the news.
- Have a FAQ (frequently asked questions) sheet for people who will be giving layoff news, such as what references can be given, how long the employee will have access to his organizational email account, how will her clients be notified of a change in organizational contact, and so forth.
- Give layoff information face-to-face. Don’t tell the employee how hard this is on you. Give the employee a chance to ask questions. Let them know how long their insurance benefits will continue, that they will be receiving the required COBRA (option to continue their health insurance), and unemployment insurance information. Tell them what other support the organization can provide them (such as employment references, severence pay and so on). Employees should also receive most of this information in a formal letter. (We’ve posted a sample layoff letter as a guide.)
- After layoffs have been announced, managers may be tempted to retreat to their offices and look buried in work, but encourage them to circulate with the staff, ask and answer questions, and demonstrate confidence.
Temporary layoffs, furloughs, and temporary shutdowns
Nonprofits tend to consider only permanent layoffs. Sometimes short-term layoffs can be effective ways to save jobs while protecting the organization’s financial status. For example, there may be an unexpected two-month gap between the completion of one government contract and its renewal. In the past, your organization may have been able to keep paying the individuals on that contract during the gap, but this time you may need to lay them off, letting them know that if the renewal comes through they may be called back within several weeks. However, check your state laws to see if you are required to pay out all accrued vacation if you close down for a week or more. We know of at least one nonprofit charged with violating such a requirement that had to pay substantial fines and penalties before it reopened its doors two weeks later.
A furlough is specified unpaid leave, such as workweeks reduced by one day, or months reduced by two full days each. Typically employees request the days they would like to use for their furloughs. In effect, furloughs change full-time positions into slightly part-time positions for non-exempt staff. Some furlough tips:
- Exempt employees cannot be paid for less than a full week if they have worked any day that week (remember that obscure definition of the workweek in your personnel handbook?), so furloughs don’t reduce payroll costs for exempt staff. What you can do, however, if you are furloughing exempt staff for one day per week, is to reduce their full-time salaries by 20%.
- Be clear whether employees will continue accruing vacation and receiving benefits at their full-time levels (typically yes), and whether an employee taking a furlough on a holiday will still be paid for the holiday (typically no).
- Keep in mind that some international staff on H1-B visas may need to work a certain number of hours a week to be eligible to work in the United States.
- Remind employees whose wages are being garnished or who have deductions for child support that these amounts may be affected.
Some nonprofits pick a slow week (perhaps Fourth of July week, school spring vacation, etc.) to close down. Closing for a full week allows the organization to save on both exempt and non-exempt payroll (remind exempt employees that they cannot do any work that week — even checking their work email — lest they trigger a legal requirement to pay them for the full week). Some employees may find this a relatively easy cut to accept, but for others, even a one-week closure may result in a loss of pay that is untenable. Give employees the option of using their accrued vacation pay during the shutdown or taking the week off as unpaid leave, otherwise you may be required to pay out all accrued but unused vacation.
Finally, remember that many, many nonprofits (and for-profits) are feeling the pinch. Reach out to contacts in other nonprofits to see how they’re handling things, and to identify local resources for people losing their jobs. And post a Comment below to let Blue Avocado readers know your ideas and tips.
Source: Blue Avocado
Author: Pamela Fyfe