Third sector resilience is at the heart of community resilience: Making use of risk management

by Dr Paula Karlsson-Brown, Lecturer in Management, Adam Smith Business School

As is the case for other sectors, the global pandemic will have significant impacts on the third sector, perhaps even more than the austerity measures of the last decade. Third sector organisations are already reporting reductions in a large proportion of their fundraising income – with fundraising events being the bread and butter of many third sector organisations. The demand for services is ever greater in a time of need, and at the same time funding is increasingly constrained. COVID-19 related emergency funding, e.g. the Response, Recovery & Resilience Fund (temporarily paused) and the Third Sector Resilience Fund (entering its second phase) will only go so far – there has been huge demand and it is unlikely they will be able to provide funding in the long-term.

The third sector is, in many ways, the last line of defence in protecting communities. They work in the margins, helping to mitigate social risk (MacRae, 2020) that individuals, families, and entire communities are facing. We thought the austerity measures in 2010 were bad – and we all felt it to some extent. But this, the coronavirus – I hate to use the word as it risks losing its impact – is unprecedented in its impact, spread, and its long-term consequences. These are all unknown. The effects are compounded for those most vulnerable. This perfect storm will exacerbate the existing core challenges facing organisations in the third sector, leaving them in a position where they can only really be reactive and less able to plan for the long term. These challenges are significant because third sector resilience is at the heart of community resilience.

To rapidly respond to the crisis in communities, third sector organisations partnered with other organisations as the COVID-19 crisis hit. While this change may have helped to mitigate social risk for the communities they serve, it also poses new risks to the organisations themselves, leaving them vulnerable if they engage in these partnerships without thorough consideration. This in turn may result in unintended consequences down the road for social risk and community resilience.

So how do we protect this last line of the defence?

For those organisations in the midst of the ‘firefighting’ stage of serving their communities in this crisis, there is simply no time to consider what comes next. However, those third sector organisations that not only respond to the current crisis but plan for the time after it, are more likely to survive. If organisations only focus on the immediate issue, they risk being unprepared for the aftermath. Unfortunately, this is often how it goes, as many in the third sector rely on short-term grants so they can rarely make long-term plans.

Operating under an assumption of ‘business as usual’ is a risky strategy, as Diaz (2020) points out: “it is a matter of recognizing that the feasibility of reducing uncertainty, the stability of certain assumptions that were considered given, and even the ability to think of solutions and approaches with lucidity are necessarily altered by the current situation”. In situations like this, usual decision-making mechanisms are not adequate and need to be strengthened. Especially aligned with the ideas of a ‘new normal’ (Gormally, Beggan & Coburn, 2020), we do not know what this new normal will entail, how long it will prevail, or if this will be the normal for good. As such there are many uncertainties to contend with, so to create a more resilient third sector (bearing in mind that the third sector has certainly showed its resilience over decades, and centuries for that matter), we can aim to create circumstances that allow us to be better prepared for any eventuality. A framework for managing risk (in other words, any eventuality) can certainly be one step in achieving this, and therefore improve resilience of the sector and by extension its service users.

Managing risk in the third sector

Implementing risk management is not something that should be done only when all other things in an organisation are sorted; for example, when all available services have been transferred to a digital mode. There is no reason (other than the obvious arguments for lack of time, funds, expertise, University of Suffolk & PolicyBee, 2018) why third sector organisations should not focus some of their attention on implementing risk management right now. If they only focus on surviving the immediate situation, they risk facing their demise in the immediate aftermath, as they have not focused any of their attentions on the medium to long-term. Managing risk is not about retrospectively managing risk related to ideas organisations have developed into services, for example. It is about using risk management to their benefit when planning the services – using it as a tool to help make better decisions for the organisation and its service users. I say it again, in a slightly different way – there is no better time than right now for third sector organisations to implement risk management.

The Charities Special Interest Group at the Institute of Risk Management has produced generic guidance on how formal approaches to managing risk can be implemented. They have more recently produced guidance that takes into consideration the fact that many smaller organisations especially do not have professionals with relevant risk expertise to help implement risk management. In that sense they have tried to provide more practical guidance. Yet, the guides may still seem too technical and complicated, and so the barrier to implement the recommendations is nonetheless too high. As I have argued with my colleagues (Karlsson et al., 2020), we need to consider how third sector organisations can be assisted in gaining access to the existing guidance and operationalising them if they lack the relevant skills. Research indicates that many third sector organisations have not had any risk management and governance training, and if we set aside the obvious reasons of lack of funds and time, another reason is the lack of knowledge as to where to go for training (University of Suffolk & PolicyBee, 2018). Unless you want to pay for it, I would argue that such training probably is not easy to come by – and with limited funds it is unlikely that third sector organisations would want to (or could) pay for risk management training.

Effectively, third sector organisations need even more practical guidance that is tailored to their organisation, both when it comes to implementing risk management and to improving existing processes so that significant improvements in risk management can be realised (Karlsson et al., 2020). Such practical guidance could be especially focused on risk in partnerships during COVID-19. We must support specifically smaller organisations in the third sector to ensure they have the capabilities to manage risk to ensure the resilience of the communities they serve. This is especially pertinent now when they are struggling with the added pressure of the pandemic. Therefore, I call for individuals who have skills or expertise to offer their assistance to third sector organisations. This could be in any field really (e.g. human resources, digital and computing tools, strategic planning, etc), although I have focused on risk management here. The advice you can provide board of trustees may be invaluable – and may be the difference between survival and demise.

If you want to serve your community but have limited links with the third sector, please get in touch (paula.karlsson@glasgow.ac.uk) as we are currently organising a network of academics and third sector organisations as part of a new Impact Acceleration Account (IAA) project, The Collaborative, for this very purpose.

References

Diaz, D.A. (2020) NGOs on Coronavirus Mode: The Risks of ‘Business as Usual’, E-International Relations (E-IR), 27 April, 2020. Available at: https://www.e-ir.info/2020/04/27/ngos-on-coronavirus-mode-the-risks-of-business-as-usual/
Gormally, S., Beggan, E., & Coburn, A. (2020) Community, COVID-19, challenge and change, Policy Scotland, 4 May 2020 [blog]. Available at: https://policyscotland.gla.ac.uk/community-covid-19-challenge-and-change/
Institute of Fundraising, NCVO & Charity Finance Group (2020) Impact on the charity sector during coronavirus – research report, June 2020. Available at: https://storage.googleapis.com/scvo-documents-evidence/0693z00000AvCxoAAF-IOF-coronavirus-impact-survey-report-june-2020.pdf
IRM, Charities Special Interest Group. Available at: https://www.theirm.org/join-our-community/special-interest-groups/charities/
IRM, Charities and voluntary organisations – Know your risks and how to manage them. Available at: https://www.theirm.org/what-we-say/thought-leadership/charities-and-voluntary-organisations/
Karlsson, P.S., Valkama, P. & Asenova, D. (2020) Risk management in Scottish charities: hidden practices and improvement needs in public service partnerships. Voluntary Sector Review
MacRae, C. (2020) Risk and Resilience, Centre for Economic Justice, 20 May 2020 [blog]. Available at https://www.caledonianblogs.net/wise/2020/05/20/risk-and-resilience/
University of Suffolk & PolicyBee (2018) Under the radar: risk management in small charities. Available at: https://www.policybee.co.uk/charity-insurance/charity-report

To cite this article: Karlsson-Brown, Paula, Third sector resilience is at the heart of community resilience: Making use of risk management, Policy Scotland, 9 July 2020, https://policyscotland.gla.ac.uk/third-sector-and-community-resilience-making-use-of-risk-management

Written content is published under a Creative Commons BY-NC-SA 4.0 licence.