3 Ways to Mitigate Risk at your Small Nonprofit

Most nonprofits were started as small, community-based efforts. A shelter might have started as a soup kitchen, a service for domestic violence might have started as a volunteer-driven crisis hotline. It’s amazing how people can work together to meet community needs whether it be through grassroots organizing, religious institutions, or other groups. But starting small can leave agencies with limited views on growth, especially when it comes to risk.

It is inspiring how small organizations can do so much with so little. Yet this can persist as a scarcity mindset (more on that soon) and blind leaders to the possibilities of risk as the organization grows.

The most common area that small nonprofits struggle with mitigating risk is human resources, specifically hiring, training, and firing. Many scrappy nonprofits think that as long as an employee fills out an I-9 and a W-4, they’re good to go.

Wrong.

Most nonprofits do not have dedicated HR professionals, usually an executive is wearing many hats. In this case, it’s even easier for things to fall through the cracks, so taking a proactive approach to mitigating risk can be extremely beneficial. HR laws can be complicated, and vary from state to state. But there are a few common sense strategies to mitigate risk at your small nonprofit organization. A common theme you’ll see throughout the following three strategies is to have things in writing, which can seem overly formal to small organizations, but is an absolutely reasonable step for an organization of any size.

1: Anti-Discrimination

Aside from the morals and ethics of discrimination, there are many legal ramifications of employer discrimination. There are also more specific anti-discrimination requirements for entities that receive certain types of federal and state funding. You’ve seen those canned statements on applications, right? “We do not discriminate on the basis of…”. Having a boilerplate anti-discrimination statement and policy for your agency is an important step that can happen no matter the size of the organization. Research what your funders require for anti-discrimination policies as well as local, state, and federal requirements. Sometimes this means having seemingly redundant anti-discrimination statements on multiple forms and paperwork, but it’s better to repeat yourself than to leave your organization open to risk.

Figuring out what the bona fide job requirements are for all positions is an important step in determining how you can screen candidates while staying in compliance with federal guidelines.

2: Employee Expectations

This is one that is easy to gloss over. As long as an employee has their job description, do they really need anything more? Yes. It’s very important to lay out employee expectations clearly during the hiring and training process. Are employees expected to fill out a weekly time card by a certain time each pay period? That should be in writing. Is your organization in an at-will employment state? Then there should be something in writing about this at the time of hire so the employee understands if they can be terminated without cause, for example.

It’s also good to explain what an employee can be terminated for, even if you work in an at-will state (and they can be terminated without cause). This helps give the employee a sense of security so they know what behavior is acceptable and what is not acceptable (i.e. harassment). It is not enough to assume that “poor behavior” will not be tolerated because different cultures and upbringings have different standards and values (also assumptions can be unfair to people with certain types of disabilities). It’s best to explicitly name the behaviors that are considered inappropriate and list what the consequence of each could be.

For example, if your workplace has a strict dress code, it would be important to explicitly state that wearing jeans could get an employee a warning and possibly sent home to change. Or perhaps your workplace wants a strict zero-tolerance policy on sexual harassment. In this case it would be important to explicitly state what constitutes as sexual harassment, who judges whether or not unlisted behavior constitutes as sexual harassment, and what “zero-tolerance” entails (commonly written as something like “disciplinary action that could result in termination”).

Having these expectations and consequences in writing at the time of hire can save so much stress later on. I know it can seem impossible to list every kind of unacceptable behavior, but there are some common ones that you can start with and branch out from there as your organization has need.

3: Vetting Candidates

Most organizations ask candidates to provide references and then call those references. Do you have something in writing that the potential employee signs so they know what you will research about them? Perhaps you plan on calling their references, checking their social media, and doing a Google search of their name. While none of those things are necessarily bad, it’s a gray area of privacy. What if you found something about a candidate on social media that was extremely inappropriate and made you not want to hire them? Would the candidate have a chance to verify the information you found was correct? Whether the answer is yes or no, it’s important to explain the vetting process, you guessed it - in writing - to the candidate.

Background checks: This is a sticky one. One the one hand, background checks can be invasive with low return because of their frequent inaccuracies. Background checks have also been shown to screen out minority applicants in some circumstances, because they tend to be arrested and convicted at disproportionately higher rates. On the other hand, showing that you have done your due diligence in researching a potential candidate’s level of fitness for the position can be extremely important if things go south.

When it comes down to it, leadership needs to weigh the pros and cons and consider how relevant aspects of a candidate’s background are to the job. If the job was working with seniors with disabilities, it may not be appropriate to hire someone who had been convicted of elder abuse. However, assuming that the mere presence of any arrest or conviction disqualifies an applicant for any position is probably taking it too far, according to the EEOC. Laws about what can be considered about a person’s background in the hiring process can vary from state to state as well, so it’s important to do your research.

There are many more types of risk than the ones mentioned here, but hopefully these can give you a start as you grow your organization.

Note: Some risks can be very costly. The safest way to minimize risk to your organization is to hire an attorney (or other employment law professionals) to review your policies and procedures. I understand that this is not always in reach for small nonprofits. This article is intended to introduce some basic concepts, self-research opportunities, and common sense approaches to mitigating risk. It is not intended to be legal advice and I am not an attorney.