Lisa Jordan’s article in the March issue of Alliance addresses a critical topic for any grantmaking organization or individual donor. I agree that information about failures is not shared with the same enthusiasm as are the successful stories of some grants. Au contraire, it is too often kept as a secret of the organization.
I remember an interesting article by Farrell and Hoon in Directorship in which they argue that a ‘risk culture’ shared by board members, executives and staff should exist in any organization. They also stress the challenges of developing such a culture. One issue is the degree to which individuals understand that risk and compliance rules apply to everyone. In a KPMG International survey of corporate board members and internal auditors, more than half (58 per cent) said that their company’s employees had little or no understanding of how risk exposures should be assessed for likelihood and impact. One-third of respondents also said that key leaders in their organization had no formal risk management training or guidance, with only 16 per cent receiving at least annual training. We do not have a similar study for foundation board members and executives, but the situation could well be worse.
Everyone involved with a non-profit organization needs to understand how to make educated risk-related decisions to ensure consistent risk behaviour throughout the organization. But without training, there is no basis for critical thinking and judgement in this area. Once people are trained, a management team should be created that emphasizes the importance of a risk culture to create the right risk management tone for any particular grantmaker. For that, leadership in the organization represents the real driver of change.
It is good to see Lisa Jordan, leader of an important foundation, driving us to discuss the topic. Congratulations!
1 J M Farrell and A Hoon, ‘What’s Your Company’s Risk Culture?’ Directorship, 12 May 2009.
President, Institute for the Development of Social Investment, Brazil