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Managing Risk Versus Managing Reward

Balancing risk and reward is critical to good stewardship and long-term organizational sustainability.

Parochial schools take their responsibility to their donors seriously. Because some or all of the funding for a school comes from donors (institutional grants, congregational support, or individual gifts), schools feel like they are spending other people’s money. Minimizing risk is one of the ways to manage that responsibility.

However, too much risk avoidance stifles growth and limits the Christian school’s ability to serve the people the donor is hoping to help. Fortunately, donors understand the challenge and only ask that schools be prudent. Where is the balance between risk and prudence?

The balance is created by first considering the reward. What is the reward that must be created to better serve the mission and the children and families (increased capacity to serve, offering new services, venturing into a new market, etc.)?

What are the risks associated with pursuing the reward? What are the steps that can be taken to minimize the potential effect of each known risk? What are the costs associated with each of the known risks?

Once you assess the risk, it is time to build a plan and begin pursuing the rewards. The children and families need the rewards you have envisioned and everyone wants the children and families to have them.

Next Step:

Envision a better future for your children and families then determine what your school can do to enable your children and families to experience that future (rewards)

Determine the risks associated with adding the new rewards to your existing rich offerings

Create a plan that will deliver the rewards and mitigate the risks

Share the plan with your donors and help them understand how the rewards fit with the donors’ vision of a better future for the children and families

There are two points to consider. First, it is impossible to conceive of a plan that incorporates all possible risks. Therefore, every plan needs a reserve for the unexpected.

The second point is that letting risk determine what is prudent stops progress. A lack of progress hurts your children and families, reduces the potential value of your mission, stifles enrollment, lowers student retention, and lowers the sustainability of your school.

You have the skills to manage the risks your school faces. You also have the skills to reward your donors by maximizing the value of their gifts.

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