Using Checklists to Avoid Nonprofit Management Missteps
Nonprofit organizations have many operational, administrative, and programmatic details to review and evaluate on a regular basis. Some of these details are minor (small but easy to miss) and some are major (large, complex, and extremely important). Missing any one of these details can be a potential tripping hazard and an opportunity to evaluate, make changes, and plan for improvements. Developing and implementing simple management tools like a reminder checklist will enhance review and evaluation processes with little effort.
There are three basic steps to stay ahead of these potential obstacles:
Recognize that there is always room to improve management decision-making processes.
Develop management tools to improve business life cycle review and management decision-making processes.
Add standardized annual and interim implementation practices and user procedures.
These three steps will close the risk gap and result in operational benefits to the organization.
Step 1 – Recognition
This step involves evaluating the past two fiscal year cycles and recognizing where management decision-making was impaired by missing or being late to address time-sensitive management and operational decisions. We all have had this happen. It is inevitable.
A few typical examples of important details include ensuring that a service agreement is renewed before expiration, sending out timely pledge fulfillment reminder notices, monitoring hotel contract attrition clauses, managing employee benefit enrollment for new employees, being aware of start / stop dates and other key deadlines under a grant, evaluating business insurance coverage, and terminating a contract within the required timeframe.
The one commonality among all these examples is the importance of awareness that a critical action step is upcoming (or worse, has already come and gone). Awareness and understanding are two very different decision-making factors. Most of the time we have a general understanding of the next management steps to action. What we often do not have are management tools to raise awareness and remind us of when to efficiently take these action steps.
In the postmortem analysis of a missed decision point, the cause is often a simple one: “it was accidental.” Usually, we knew the details, understood the consequences, and were in position to make a decision, but we made a mistake because we were very busy and distracted by other priorities. Not a good excuse, but often an accurate assessment of why an error occurred, or an action step was missed.
The challenge is learn from the experience and implement tools and practices that can help prevent mistakes from happening again.
Step 2 – Adding New Management Tools
There are many management tools and software applications that can help with this dilemma, such as project management platforms, finance calendars, document management systems, CRM software, and more. But we find starting with a simple checklist drafted in a word document or spreadsheet is usually the best initial effort with no cost.
We suggest downloading this nonprofit management annual reminder checklist and using it as a starting point for creating a checklist that is customized to meet the needs of your organization. This checklist is divided into seven typical categories as follows:
Funding and Revenue
Administration
Human Resources (HR)
Professional Services
Financial Reporting
Financial Policies and Procedures
Governance
The purpose of the checklist is to act as a reminder and raise awareness of potential time-sensitive action steps. We encourage you to edit and customize the checklist, add or combine categories, and adjust the checklist items within each category to meet your needs. Keep the checklist tight and to the point. Individual items can be added or removed at any time.
Yes, the checklist is there to act as a risk management tool to help avoid missing an action step. However, the checklist is arguably even more impactful as a quality control tool, helping to spur critical thinking and proactive planning well ahead of key dates and deadlines. By keeping these areas front of mind, you will have more time and space to implement change and innovation, reposition, and evaluate past performance and usefulness.
Step 3 – Implementation
When implementing a new management tool, the key is to focus on how the tool can be used by management and integrated into the organization’s processes and practices. Start by considering “who” who will use the tool and “when” it will be used.
With regard to the nonprofit management annual reminder checklist, implementation can be approached as follows:
Who can benefit from using the checklist is broad so the checklist should be designed to meet transparency and ease of use by all. However, the checklist will have a few primary users.
The finance department and senior management involved with finance (CFO, director of finance, controller) will be critical users. Next look to distribute the checklist to the other C-suite (senior management positions). Get them involved with editing the checklist and soliciting their comments and observations. This will help them to connect to the checklist and use it in the future.
When to use the checklist will be set on how you integrate the checklist into your operational management processes and internal accounting control system (IACS). This tends to fall into two categories monthly users like the finance department (who will rely on the checklist as part of the monthly close process) and other non-financial users (who will reference the checklist less often but at least on an annual basis to improve performance and lower risk).
Planning Tip – Establish a formal schedule with time set aside at least once a year to assess risk and evaluate, renew, and (when appropriate) consider changes to documents, activities, policies, and practices. It is a good practice to schedule this annual review for just after mid-year, which will allow ample time to assess current trends impacting performance and risk while also having time to make changes and improve operations before fiscal year-end. The nonprofit management annual reminder checklist will be a big help with supporting this effort.
The origin of the nonprofit management annual reminder checklist comes from real life experiences and missteps that could have been avoided. The old adage “you learn from your mistakes” applies here. When a mistake occurs, like missing a key contract renewal window, we should aim to learn from our mistakes, adjust our procedures, and modify our behavior. The checklist can be part of that adaptation. But the checklist can also be so much more, serving as a tool to spur proactive management decision-making, start evaluations earlier, and avoid doing things the same old way, resulting in less management embarrassments and more organizational innovation.
Joanne M. Duncan is principal at JM Duncan Consulting, where she provides strategic, financial and operational analysis and planning to nonprofit organizations.
