Contingency protocols, are an important part of risk management. Let’s remember that risk management is the process of identifying, assessing and controlling threats that can affect an organization. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters. A contingency plan is a proposal devised for an outcome other than in the usual (expected) plan, and non-profits, and NGOs are not different from other organizations, in the sense, they are not safe from all those risks, that is why it is important for them to generate contingency protocols.
The Commons, an organized task force, comprised of twenty members, working in diverse institutional and family foundations, law firms with specialties in philanthropic governance and tax issues, financial advisors, and nonprofits, developed some risk-management tools to encourage philanthropy funders to create a deliberate risk profile and integrate risk management best practices into their philanthropic practice.
The Commons, advise on how to build contingency protocols using a 5 steps framework: First, set aside contingency resources, to determine how much contingency resources you would need, they created a list of guiding questions to determine the appropriate size and scale of contingency resources. Second, establish criteria, develop a list of criteria for evaluating requests for contingency funding. Possible criteria may include: urgency of request, the level of impact at risk for the project, the likelihood that contingency funding preserves desired impact, etc.
Third, establish decision-making protocols, outline decision-making protocols that clarify the roles of your team, in the case of a fast-acting decision-making committee, your organization should outline who will serve on the committee, how it makes decisions, and the process by which one would convene a session. Fourth, communicate process to grantees, it is important that grantees know who to contact if they encounter a challenge with their project. Finally, communicate decision to grantees, you should share with your grantee the amount of contingency funding approved, the date of disbursement, and any additional requirement. If the request is denied, provide the reason for the denial, this is important because it would help grantees avoid bringing similar request in the future.