One of the first questions we explore with clients who are thinking about a new funding program is their tolerance for risk. And by that we mean not just whether they are willing to take a chance on an important issue or program with high potential that might not succeed, but what other factors might drive the decision (implicitly if not explicitly). For some, the primary risk issue will be the potential to have an impact on the issue itself and the opportunity cost of not succeeding. For others, like a recent corporate client, it was the impact on corporate reputation and brand image, understandable for a corporation that is just starting out in grantmaking in a volatile industry.
We probed a bit at the meeting, but later over coffee Sheherazade and I realized that what they needed was a simple tool they could use now and in the future to help them assess the risks of the options they were considering – a tool that was compatible with their overall corporate goals and risk strategy. We have found that without clarity on risk tolerance funders will either find themselves in hot water with a program or will, by default, be so cautious that their granting program does not make a significant impact.
The tool we developed balances risks with opportunity to avoid over-caution; and although it was developed for a particular corporation, we thought it would be of interest (hopefully of use) to others working in the field. Note that this tool is designed for issue or program selection, not for individual granting decisions. (We will be addressing grant decision tools in a future posting.)
So here it is, feel free to use it however you wish: Risk Tool
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