Governance Risks for Community and Grassroots Organisations

Community and grassroots organisations have unique governance risks. But good governance creates a positive, accountable culture.

Authored by: iClick2Learn Team

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Governance Risks: Community and Grassroots Organisations

Australian community organisations benefit greatly from a sense of shared values. When a grassroots organisation like a film group or community theater establishes what governance encompasses, they can avoid much confusion and conflict.

Good governance and effective risk management can help your community organisation stay on track and enjoy effective operation. It will also help ensure legal compliance. By managing governance risks, your organisation can avoid potentially devastating consequences and create a positive, accountable culture.

Good governance is:

Transparent – Grassroots organisations should establish “whistleblower” policies, report to stakeholders annually (at least), and attempt to open board or committee deliberations to the stakeholders and community.

Accountable – Community organisations are responsible for their entire operation and its impacts. An organisation’s accountability extends to members as well as those it serves.

Mindful of Risk Management – Good governance means having robust risk management processes in place. Risk management policy should be regularly reviewed, tested, and refreshed.

Community Organisations: Top Governance Risks

Conflicts of Interest

Negative publicity is one of the most significant threats to any community organisation. Member, volunteer, and donor trust are essential.

Establishing a conflict of interest policy is vital to the health and efficacy of any grassroots organisation. The policy should be reviewed by staff and board at least annually. Examples of conflict of interest scenarios might be:

Can a board member be paid for services rendered to the organisation they serve?
Can an executive hire a relative to work directly under them?
Would it be okay to rent event space at a discount rate from a member?

Risk Management and Personal Liability

Risk management is critical in every community organisation. An effective risk management process helps keep organisations on track to achieve their goals. Avoiding and minimizing risk also helps your organisation maintain a good reputation in the eyes of the community.

Ethics and Accountability

Public confidence is important for any grassroots organisation. When your organisation promotes a culture of ethics and accountability, you help ensure a positive relationship with your members and the broader community.

Your organisation might create a code of ethics that clearly outlines your mission, vision, and values. This core code will help guide your community organisation and its members every step of the way.

Investment Oversight

A finance or investment committee can create an investment policy statement for your organisation. This statement should outline spending needs, performance expectations, objectives, roles, and responsibilities.

Having this detailed statement can help your organisation improve the governance of investment assets and avoid fraud and scandals.

Benefits of Risk Management

There are many clear benefits of risk management:

Improve your organisation’s decision-making
Optimise performance
Prepare for challenging events
Reduce the likelihood of unexpected events
Improves planning processes

Your grassroots organisation might face various risks. Generally, risks are categorised as:

Compliance Risks – If your organisation fails to meet its corporate and legal obligations, this is a compliance risk. Specific examples include work health and safety activities, licensing, accounting, and reporting.

Organisational Risks – If your organisation fails to meet its objectives, this is an organisational risk. Negative results of these risks might include a high staff turnover or a damaged reputation.

Opportunity Risks – When your organisation explores new opportunities to achieve its goals or improve in some way, you may encounter opportunity risks. This type of risk should be examined with consideration for any potential gains.

Governance Risks: A Checklist

Creating a risk register helps your organisation define how risk management aligns with your governance. Your values and culture, policies, procedures, reporting processes, and communication methods are all guided by governance.

A risk governance checklist helps your community organisation answer questions about conflict of interest policies, compliance policies, and risk management policies. Completing the checklist can help you achieve effective governance and abide by best practices.