It’s no secret that nonprofit organizations operate in a complex service, funding, and regulatory environment that is characterized by risk. These risks can include multi-year contracts with flat funding, complex program eligibility, increasing PS and OTPS obligations, capped overhead rates, growing community demand, and rigorous performance requirements to name just a few. As recent nonprofit closures and collapses illustrate, failure by executives and boards to identify, assess, manage and mitigate risk undermines the sustainability of the organizations they lead and poses a serious threat to the millions of people who count on them.
CRE’s Risk Management practice enables and supports nonprofits to regularly and proactively engage with risk by developing a digital tool, the CRE Fitness Test (CREFT) to assist nonprofit organizations in identifying risks and assessing vulnerability to risks, and establishing a CRE Risk Management Practice to create customized risk mitigation and organizational fitness plans.
Using elements drawn from technology, user-centered design, state-of-the-art organizational assessment, and cross-sector research, CREFT is the first online platform to take a comprehensive view of nonprofit risk. CREFT’s comprehensive assessment of an organization’s risk (also called “enterprise risk”) is unique in the nonprofit sector.
The tool considers risk indicators and organizational activities across six operational and performance categories and delivers an overview of a nonprofit organization’s risk preparedness. CREFT includes risk scenarios, modeled on bank stress tests, to gauge organizational response to catastrophic risk.
CREFT has four distinct values.
- It creates a framework for focusing and educating organizations on vulnerability and risk.
- CREFT allows nonprofit leaders and boards to identify risk vulnerabilities specific to their own organization as a first step toward managing or mitigating them.
- The data collected through CREFT can be used to build a body of evidence that tells a story about risk in the nonprofit sector.
- CREFT is built on an analytic platform that could be able to support predictive capacity around the likelihood and/or impact of risk once a robust database has been established.