First Ever Framework For Philanthropic Sector To Address Risk
New York, NY – January 18, 2017. Ashoka President Diana Wells participated in high-level 25-member task force called “The Commons” that recently launched “Risk Management for Philanthropy: A Toolkit” to guide foundations in implementing best practices to maximize impact. It is the first practical, comprehensive framework designed to guide foundations in implementing best practices in risk management for their grantmaking portfolios in order to maximize impact.
The Commons was co-convened by Judith Rodin, president of the Rockefeller Foundation, and by the founder of Open Road Alliance with support from Arabella Advisors. Cheryl Dorsey, president of Echoing Green, also participated.
While risk is intrinsic to the work of nonprofits and a necessary element of impact, it often goes unacknowledged and unmeasured. To address this, the Commons developed the Toolkit which includes 10 adoptable and adaptable tools that address risk culture and risk management practices in philanthropy. It details strategies for setting aside emergency funding, establishing contingency protocols, and building more effective funder-grantee communication.
“Prior to the Commons, we collected data that shows donors do not commonly include risk management in their budgets or grant practices, which is a systemic problem within the sector,” said Laurie Michaels, founder of Open Road Alliance. “Our ability to achieve greater impact depends upon our willingness and our capacity to protect our grants and social investments from unexpected disruption in the same way we would any traditional financial investment - this means addressing risk.”
The Commons is a diverse group of philanthropic leaders representing foundations, nonprofits, impact service providers, nonprofit attorneys, wealth advisors, and philanthropic associations. The group met multiple times over a seven-month period in 2016 to better understand risk in philanthropy and develop a baseline of best practices for managing risk, explicitly designed to ensure and maximize impact.
The Toolkit is broadly applicable across the philanthropic sector and is useful for all types of funders with varying levels of risk management practice. It is a first step in the development of a comprehensive risk management framework and is expected to evolve, improve and iterate over time as more experience and data become available. Using these tools, funders will be better positioned to discuss, assess and manage risk in their philanthropic practice.
“Risk can be a complicated concept because it means different things to different people - even within the same organization. Bringing such a diverse group together allowed the Commons to define risk for groups across the sector and ultimately understand how to properly address it at every level,” said Judith Rodin, president of The Rockefeller Foundation. "Because every organization has different goals, and therefore a different risk appetite and capacity, providing a range of risk assessment strategies and tools has been critical to this work."