Red flags and stress tests

There are various ways for nonprofits to conduct their assessments of performance and vulnerabilities, impending risks and capacity for resilience. Well-run nonprofits will already have reasonably good access to financial information that can provide guidance on asset, liability, and income-related strategies. However, other margins of slack are typically not well documented and will require the development of new data streams and reporting formats. These efforts must be customized to the particular needs, vulnerabilities, and capacities of individual organizations. Smaller organizations may wish to develop very modest informational systems consistent with their resource constraints, and they may decide to draw on external consultants or the expertise of their board members to help. Larger organizations may be able to develop more elaborate systems, using internal staff and board capacity, and technical consultants. Essentially, nonprofit leadership can focus on resilience by creating informational structures that direct their attention to organizational risks and capacities to address those risks. In this way, nonprofits can develop themselves as learning organizations by following the data generated by dashboards, executive briefings, and stress tests, in order to make current adjustments in their operations and build their infrastructure for the future.