Does Your Nonprofit Need a Business Continuity Plan?
Hurricanes, wildfires, riots, pandemics. While this list might sound the stuff of a Hollywood-type apocalypse, it increasingly encompasses the norm of disruptive challenges faced by nonprofits in today’s world. The unexpected has increasingly become¦.well, expected. And failure to adequately plan for anticipated risks can subject directors to scrutiny for breaching their fiduciary duties. Having a business continuity plan is increasingly important; not only for ensuring the continued operation of essential services but also to shield directors from liability for failing to plan for such disruptions. Here’s what you need to know:
What is a Nonprofit Business Continuity Plan and Why Do I Need One?
Nonprofit business continuity planning boils down to the proverbial bus factor; i.e. what would happen if your executive director, board president, [or insert any other indispensable position] gets hit by a bus tomorrow? Wikipedia well-defines it as a measurement of risk resulting from information and capabilities not being shared among team members.
It’s easy to roll the eyes at the bus cliche, but the scary reality is that for many small nonprofits only a few key individuals retain the institutional knowledge and operational knowhow to maintain operations; this knowledge is often not documented or communicated to others who might have the capacity to step in in the event of a misfortune.
But rain or shine, pandemic, fire, or flood, the mission goes on. There are causes to be won and clients to be served. And if you sit on a board of a nonprofit, it is arguably your fiduciary duty to ensure that the doors stay open and the organization maintains long term viability, regardless of what circumstances present. A business continuity plan, or BCP, prepares your organization for all of this; to respond to unforeseen circumstances so your nonprofit can continue to operate at minimum viability and ultimately chart a course for recovery and sustainability over the long term.
What Are the Key Parts of a Nonprofit Business Continuity Plan?
What key elements should be included in a nonprofit business continuity plan? No two plans will the look same. The details of your nonprofit business continuity plan will be influenced by your function, size, locality, and other factors. Still, some elements are common to most nonprofit business continuity plans, including:
- Identification of potential risks.
- Determination of critical business functions.
- Activation plan and universal response (i.e. what will trigger a nonprofit business continuity plan response, who will activate it, and what steps need to be taken at the start).
- Clearly defined key roles and responsibilities.
- Plans for communicating with staff, clients, vendors, and the community.
- Alternate operating strategies.
- Essential equipment and services backup (i.e. data, essential business documents, and critical assets).
- A business recovery plan for recovering and reinstating regular business operations.
- Regular testing and evaluation of your nonprofit business continuity plan.
How Do I Create a Nonprofit Business Continuity Plan?
There are four key steps to creating and maintaining an effective nonprofit business continuity plan; analysis, evaluation, planning, and testing.
- Conduct a business impact analysis. Which risks are most likely to impact your organization? Are you in an area prone to hurricanes and tornadoes? Or maybe you depend heavily on technology and a breach in security could compromise your systems. Also, what are your nonprofit’s essential functions and how would an unplanned disruption affect your organization’s ability to carry out these essential functions? For example, if providing services to vulnerable populations is part of your mission how will you continue to provide those services? Likewise, shuttering a museum is a far different call from shuttering a zoo.
- Mitigate risks and establish business continuity strategies. What steps can be taken before disaster strikes to mitigate potential risks? Can sensitive data be backed up and critical documents replicated? Can the installation of an emergency power source or securing alternative suppliers guarantee that you are able to provide essential services during an emergency? In the event of a triggering event, which services, programs, and activities can temporarily be discontinued or delayed? What will your process be for implementing a temporary scaling back?
- Implement and train. Key employees, board members, and stakeholders should know about your nonprofit business continuity plan and their role in activating and carrying it out. Board and staff should run through the plan periodically to ensure a seamless response in the event of a triggering event.
- Evaluate and periodically revise. Inputs to your nonprofit business continuity plan may change over time. Likewise, training on your BCP may expose shortcomings in your plan. Key personnel and stakeholders should engage in a process of reviewing and revising your BCP on a periodic basis; at least annually if not on a quarterly basis.
There is no time like the present to create your nonprofit business continuity plan and ensure the long-term sustainability of your nonprofit organization.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.