Risk Management Tips for Churches & Nonprofits

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Churches and other nonprofit organizations face a number of requirements in their daily operations and many of them are legal: employment, governance, tax issues, real estate, cybersecurity, safety, intellectual property, and more.  They are also accountable to a number of different stakeholders, including members, donors, employees, national affiliates, etc. 

Today, risk management is more essential than ever before; however, it often goes overlooked due to an organization’s limited resources and concentration on organizational programs and activities. However, it is critical for churches and nonprofits to pay attention to important obligations like annual governmental filings, compliance with state and federal employment laws, program oversight and safety, updating by-laws and other governance documents to adhere to the organization’s mission, tax exemption and real estate ownership issues, and the proper use of protected intellectual property.

Depending on an organization’s mission and structure, there are some steps that churches and other nonprofits should take to mitigate any legal risk associated with these issues:

Anticipate risk.  In order to anticipate risk, you need to perform a complete organizational analysis that takes into account not only the organization’s current situation but also any future scenarios that may pose a risk.  While few nonprofits could have foreseen the huge and immediate impact from COVID-19, the resulting pandemic has given us all lessons to learn on the importance of planning for the unknown.

Prioritize risks.  Evaluating the most exposed areas of your organization will help you determine how to prioritize the risks.  For example, if you have children’s programs, you will need to have clearly defined abuse prevention policies in place as well as background screening and training for employees or volunteers managing this program.  The increasing incidence of violence at church services would also dictate that you have appropriate security policies and personnel in place to monitor for any potential problems.

Assign responsibility for risk management.  An effective risk management strategy depends on a dedicated team of risk managers to carry out preventive measures.  For most nonprofits, this means making risk management a part of every manager’s responsibilities so the importance of mitigating risk permeates the organization. 

Communicate risk management measures.  Managers, employees, contractors, and volunteers need to be aware of the risk management measures in place to protect the organization.  An employee handbook is essential to communicating the organization’s policies and procedures, including those dealing with the use of social media, anti-discrimination and harassment laws, cybersecurity, code of conduct, etc.

Keep monitoring for risk.  Regularly monitoring your exposure for risk can help ensure your organization will be ready to act in the event of a security breach, a bad act by an employee, or any other scenario that poses a risk to the organization. 

Obtaining knowledgeable legal assistance from an attorney experienced with serving churches and other nonprofits can help you proactively identify and correct any current vulnerabilities as well as plan for how to mitigate risk in all areas of the organization.

The Church Law Center of California advises churches and other nonprofits on how to protect themselves from risk while furthering their mission. Call us today at (949) 689-0437 or reach out to us through our contact page.

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