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Current nonprofit sector research and recommendations for effective day-to-day practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.
Illustration by Jocelyn Ruiz
What is risk culture?
“...staff at every level appropriately manage risk as an intrinsic part of their day-to-day work. Such a culture supports an open discussion about uncertainties and opportunities, encourages staff to express concerns, and maintains processes to elevate concerns to appropriate levels.”
The nonprofit sector is in a delicate and unique position compared to the for-profit sector. Amazon took over 14 years to turn a profit with many of those first years spent entirely in the red. Can you imagine if nonprofit organizations were able to operate this way? Can you imagine pitching to donors that “Yes, we will create social change, but it’ll take a few years to get there. When can you write a check?” Needless to say, the nonprofit sector doesn’t operate that way. In fact, the nonprofit sector has been guilty of leaving the topic of risk out of necessary and influential conversations. There’s a hush-hush culture regarding risk and failure. Sure, it may never be able to operate in a manner that allows for 14 years without some kind of profit. However, changing the attitudes within the sector from being risk averse to the embrace of a risk culture could mean the difference between how much impact organizations make.
Open Road Alliance believes that in order to get the greatest social impact out of philanthropic dollars, funders and grantees must have open conversations about the risks involved in each project. Funders recognized that an estimated 20 percent of funded projects would experience an event that would negatively impact the outcome. Despite this, only 17 percent reported having some type of contingency fund for these situations. We simply are not discussing risk and potential failures that come along with projects as well as innovation. That needs to change.
So, what can you do today to create a culture within your organization that embraces risk and failure? One organization implemented a “Worst Grant Contest” in which staff told stories of, and voted on, the worst grants and projects of the year. The intent of the event was for staff to become more comfortable and open with the discussion of failure. But your transition into an organization that embraces risk does not need to be so overt. Start with the following three stages in making the transition:
Only when we as a sector become comfortable discussing and accepting the failures that come with risk can we push our impact to reach full potential. Cultural shift within the sector starts with you and your organization.
Remember the words of Peter Drucker: “If you want something new, you have to stop doing something old.”
Jordyn Shafer-Frie is a graduate of the Master of Nonprofit Leadership and Management program at Arizona State University. Shafer-Frie is a native of Alaska. She found her passion for education and the nonprofit sector after making the move to Arizona. She received her Master of Nonprofit Leadership and Management Degree in December 2018 from ASU’s Watts College of Public Service and Community Solutions. She is currently employed at ASU as a specialist in the Academic Transfer Credit Solutions office. She is interested in education attainability, inclusion and advocacy.