Beat Risk Aversion in the Nonprofit Sector
“There is only one thing that makes a dream impossible to achieve: the fear of failure.”
Paulo Coelho, The Alchemist
In professional and personal arenas alike, failure isn’t your worst enemy. Your fear of it is. The way your organization approaches new opportunities and evaluates risks greatly impacts your success. When failure is viewed as an inevitable part of growth it frees your organization from the risk aversion and debilitating fear that prevents so many from “going for it.”
While easier said than done, you can change your nonprofit’s relationship with risk and failure. Addressing your fears and understanding how they sabotage your impact is the first step to developing an organizational culture that fosters innovation. You can then develop a conversation around the fear of failure that empowers your staff to take calculated risks often to grow and succeed.
Risk Aversion and The Nonprofit Sector
It’s natural to fear uncertainty and attempt to mitigate risk. Unfortunately, this fear can misconstrue an organization’s risk versus reward evaluations and prevent them from taking calculated risks more often (thereby reducing the potential for rewards). When recognized and communicated to your staff, these fears can supply your organization with a healthy sense of motivation and prompt you to take thoughtful risks.
Your organization likely faces several types of fear on any given day. Consider these possibilities to better understand what plagues your organization’s culture.
Fear for your cause.
Nonprofits work every day to solve some of the world’s most serious problems. The pressure is enormous and it can feel like a lot is at stake when the work you do goes beyond the staff of your organization. There are real fears of not saving a life, of not finding a cure, and of what it means when your organization doesn’t reach its goal. This fear is likely why you started in the first place. You were motivated by the fear of what the world would look like if you didn’t work to solve this problem.
Fear of disappointing supporters.
Risk aversion for nonprofits also stems from the fear of disappointing supporters of your cause. Fear can surround the communication of your campaign results. What if your impact isn’t as large as you’d hoped? The fear multiplies when you’re unsure of how to communicate your results. What if providing a measurable result is proving more difficult than you anticipated? How do you show progress when you’re working on something as large as finding a cure?
Fear of making a lackluster investment.
There’s always an element of fear when your organization makes a new investment. Whether it’s a new staff member, or a new process or tool, it can be a stressful decision to make. There is a fear that despite the research you completed, the investment will not see a return. Just like starting a new campaign or trying out a new concept for an event, the process isn’t foolproof, and it never will be.
Lost Opportunity in Concealment
Layered on top of all your other concerns is the fear your failures will define your organization and impact its reputation. While your first reaction might be to try to present the information in a more positive light, be wary of sugar-coating information and misleading your staff or supporters.
According to journalist Sarika Bansal, “Some nonprofits are tempted to hide their failures, partially for fear of donor reaction. But most acknowledge that transparency about what works and what doesn’t is crucial to their eventual success.” While your intention may be to protect your organization from any criticism, a lack of transparency does far more damage than it prevents.
A lack of transparency is a lost opportunity to build trust and a culture of openness with your staff and supporters. By communicating your results, no matter how negative, and providing your breakdown for what you believe led to the failure, you can appeal to your donors for additional support. “We’re not quite there yet. Can you help us? Can you rally three friends to help us? We’re sure we can meet our goals through the following measurable actions.”
A staff that’s uncomfortable reporting failures, may omit important details in an attempt to improve their image or the image of your organization. The problem is that this is information that could provide valuable insights for moving forward. If your culture doesn’t support admitting failure, you may miss out on key insights.
Your organization’s culture can be your greatest asset or your largest obstacle. Overcome the idea that failure is synonymous with embarrassment and use your failures to stimulate your staff and audience by saying, “Here’s what we tried. Here’s why that wasn’t enough. Here’s how you can help.”
Create a Culture of Failure
Once you have acknowledged any intense risk aversion and fears of failure and how they are holding you back, you can move forward and implement a strategy to build meaningful dialogue around them.
The “culture of failure” is a popular topic in the startup world and is how many seek to change the dialogue on failure. While innovation might not be the first word you think of when you consider your organization, it should be just as much a focus for nonprofits as anyone in Silicon Valley.
How then can you foster a sense of safety across your organization when discussing new innovations and some of their inherent failures? By celebrating them. Engineers Without Borders (EWB), Canada does just this. Every year they publish their Annual Failure Report in order to “share the lessons more broadly and create a culture that encourages creativity and calculated risk taking.”
A culture of failure acceptance is a culture where your organization operates at its fullest potential. By promoting transparency in your discussion of failure, you can dissect each failure in order to learn from it as EWB, Canada does every year. By opening the dialogue and calling themselves out, they hold themselves accountable and ensure best practices are garnered from previous experiences.
A New Standard of Performance
Making a shift in the culture of your organization isn’t something you can do overnight. It’s up to the leaders in your organization to advocate for a change and set up practices that encourage intelligent risk and support failure. This emphasis on research and development will help you discover new solutions and keep pace with the the ever-changing world around you.