Guidance for nonprofits managing risk in hard times

Downsizing is an option of last resort during tough financial times, since staff members who believe in the organization and its work are our most valuable asset. Sometimes there is no other choice but to downsize, however. This type of restructuring can help turn around an organization, but it also has its dangers.

For example, cutting staff will increase the burden on those who remain. How will a nonprofit retain staff in the face of the strain on morale and productivity? Is there a legally defensible plan in place to determine who will be laid off and who will stay? Is advance notice of layoffs required by the state? Have COBRA notices been prepared for departing employees?

In addition, managers must decide which core programs and activities to maintain and which can be given up. Are there other organizations to partner with to fill gaps when programs must be dropped or cut back? How will the organization handle the work that used to be done by those who are leaving?

The Nonprofit Risk Management Center offers advice about these questions and pitfalls and what to consider when addressing serious employment issues. Click here to see their article, "Risk Management: Managing Risk in Challenging Times, on the Texas Association of Nonprofit Organizations' web site.