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I've had a lot of conversations about the looming specter of pending legislation, HR 9495 and specifically what organizations should be thinking about to make sure they've dotted their I's and crossed their T's in case of additional government scrutiny and a chilled funding landscape. So in this episode I'm going to zero in on the four areas of your organization I think you should be focused on to fortify yourself in the face of increased scrutiny and vulnerability. I'm going to include two to three specific questions to ask in each area and a concrete action you can take if you do nothing else. Welcome to the Nonprofit Mastermind Podcast. I'm Brooke Richie Babbage. I've been in the social impact game for 25 years as a social justice lawyer turned two time nonprofit founder and leader turned growth strategist and coach for leaders around the country. I grew my nonprofit from me and an intern in a tiny closet to a high impact seven figure organization. And along the way I learned so so much about how to build an organization that has real impact and how to do it without burning out. In this podcast I share the nuts and bolts of all of it so you can do that too. We dive into the mindset, strategies and tactics of how to scale a high impact organization and how to do it in a way that's truly sustainable. So let's start by getting on the same page. For those of you who don't know what it is, the HR9495 bill is the Stop Tariff Financing and Tax Penalties on American Hostages Act. It's a mouthful. You don't have to remember all of it. The most relevant part for most of us is that one of the provisions of the legislation is that it can strip the tax exempt status of organizations deemed tied to terrorism or dangerous. Now, I'm not going to get into a breakdown of the whole bill here. For a really great overview I recommend visiting the ACLU website or the New York Lawyers for Public Interest website. They're following this closely and have a really great perspective. What I want to do on this podcast is zero in on why so many nonprofits are asking me questions about this, why so many organizations are concerned, and to give you some concrete actions you can take to fortify yourself for whatever is coming this year. Now, many of the lawyers paying attention to this bill as it makes its way through Congress are concerned that it grants the government, and especially the executive branch or broad new powers to investigate and functionally shut down and silence nonprofits that it deems dangerous. The concern is that the language in the bill is vague and it can be interpreted broadly to deem organizations dangerous without that much proof or evidence that they are actually tied to terrorism and thus shut them down. Now, this is particularly concerning for nonprofits that are engaged in grassroots work, advocacy work, social justice efforts more broadly, especially those deemed counter to the administration's interests. And that's something that the incoming administration has made pretty clear. Organizations doing human rights work, working on reproductive rights, environmental justice, those speaking out against the administration, a lot of those are the organizations that have reached out to me to ask, hey, what should we be focused on if we do nothing else? Right. A lot of the small growing organizations that don't have a huge crisis communications department or really a really sophisticated board that's on top of things like compliance, they're concerned that they will be vulnerable to additional scrutiny. There's also a concern that this can have a real chilling effect on the activities, the speech, even the funding of nonprofits. Because the language of the bill can be interpreted so broadly, it's not actually clear to many nonprofits who's at risk of being investigated or shut down or even what actions might trigger deeper scrutiny. So the key here, the key to fortifying yourself in 2025 or beyond, no matter what's coming, and this I want to emphasize is beyond this particular legislation, this is any organization that feels that they may be vulnerable to a not great audit, to increased sort of interrogation or scrutiny, no matter what's coming. The key is organizational resilience. Now, I'm really fired up about this. I actually wrote about this in my most recent newsletter, and I'm gonna be talking a lot more about this this year. This idea of organizational resilience, it's my core focus for 2025, making organizations stronger. And the reason that it is the core to your response here is that this is a time to really focus on making the bones of your organization strong. Because a strong organization can withstand almost anything. It may bend, but it won't break. Specifically, if you do nothing else, I'm going to recommend that you pay attention to four key areas. Focus on these four areas as we talk about facing the possibility of increased scrutiny. The four areas are mission alignment, governance, compliance, and transparency. Now, I've created an entire toolkit, as is my nature. It's called Resilience. Ready? It includes discussion guides, audio trainings, checklists, models and templates for everything I'm going to talk about here, and you can get that@brookerichybabbage.com ResilienceReady I love creating resources to actually help you take action on the things that I talk about. One of the things I mentioned in my recent newsletter is that taking action, this sort of movement in the direction of actually fortifying your organization and building organizational resilience is something that I'm really focusing on. So most of what I talk about in my Leadership Forward three to one and here in the podcast I will link to some resource that I have that you can access here. It's the Resilience Ready toolkit. Brooke Richiebababich.com ResilienceReady okay, first, first area to focus on mission alignment. You want to tighten up the ways in which you document and communicate mission alignment and impact. Now these are really foundational. They strengthen your legitimacy more broadly with donors and funders by demonstrating that your programs, your activities, everything you do and spend money on and resources on everything is focused on your stated purpose. Now this reduces the risk of misinterpretation or accusations of misuse of funds. This is something that a number of the organizations that I have worked with over the years, particularly because my roots are in social justice and advocacy work. This has come up and by focusing on tracking the ways in which what you do and documenting the ways in which you do are mission aligned and that the impact you're having is measurable and real, it builds trust and credibility with your stakeholders and it protects you when and if there is deeper scrutiny. Now this last point about the credibility with the donors and the funders is actually really important. I just want to highlight that because I believe that leaning into building strong donor communities is going to be really important this year. It's going to be critical as a way of navigating the potential chilling effect that all of this might have on funding. And I'm going to do a newsletter specifically about that. I did one in towards the end of last year. I will link to the show Notes to the last I'll link in the show notes to the last one where I sort of highlight things, responses to the chilling effect of funding and ways to lean into building a strong donor community. And if you have not already signed up for my newsletter, I recommend doing that. I'm going to be focused on a lot of these issues in more concrete ways in that newsletter. It's Leadership Forward 321 and you can access that@brookruchyoubabbage.com LeadershipForward so within this bucket of mission alignment and impact, there are a few questions that you and your leadership team and your board can ask first, are we actually staying true to our mission? Take a real look at the extent to which your programs and activities align with your stated objectives in your founding documents. This may seem seem obvious to you, of course we are. But it's actually, it's actually really easy to look up years into doing work and not that you actually have experienced or undergone any mission drift, but it's not actually clear to people, to onlookers, to additional stakeholders or outside stakeholders how the outcomes that you're achieving tie back to your stated mission. So just making sure that that is clear is important. Second question how do we define and measure success? Clear mission aligned outcomes I'm a really big fan of logic models that state outcomes and link those outcomes to specific activities and inputs. These kinds of outcomes and metrics for determining how far or close you are to those outcomes help ensure intentionality and help ensure that the impact that you're actually bringing about, that your funding is going towards is mission aligned and that helps defend your organization's activities in the face of scrutiny if necessary. And finally, if you engage in advocacy, even if you are not an advocacy organization, which organizations are allowed to do? I just want to make sure that I say that you just want to ask if your activities comply with the basic IRS and legal guidelines for advocacy and lobbying. Now, one action that you can take if you do nothing else is focus on data collection and impact communication. Make sure that your data collection is in order and that your metrics are clear and that they align with your stated mission aligned outcomes. So that's my recommended action. I have inside the Resilience Ready toolkit a data alignment tracker. I also have an advocacy and lobbying cheat sheet that you can use. There are a lot of organizations that have started dipping their toe into different kinds, particularly of grassroots advocacy. I'm a huge fan of doing that, of linking what you do on the ground as systems change. If that's something you're interested in, you can get that cheat sheet to make sure you're doing it right. Inside the Resilience Ready toolkit@brooke ritchiebabbage.com ResilienceReady okay, second bucket. Preparing your board for effective governance now under increased scrutiny. A well prepared board is make sure that your organization is meeting your legal requirements and your fiduciary its fiduciary duties. A disengaged or uninformed board increases the risk of oversight failures. It makes it really easier for things to slip through the cracks. Conversely, a strong engaged board helps ensure alignment between Strategy and mission, holding the organization accountable to its stated goals. And I will add, it does this without getting in the weeds. Those of you who are longtime listeners have probably heard me talk a lot about the proper role and level of focus of a board. It is not to do the work of the leadership team. It is not to do the work of the staff. It's not even to check the work of the staff. The staff does not work for the board. However, in this case, governance looks like making sure that the organization is doing work that's mission aligned. And this is especially vital when demonstrating legitimacy and transparency to stakeholders. So, three questions that your board can ask you, the leadership team, the executive director can ask of board members are One, do our board members clearly understand their fiduciary responsibilities? This includes oversight of legal compliance and financial transparency. Second, has the board identified key risks facing the organization? This is a big area of focus for the board. That's the level the board needs to be focusing on, helping the leadership to identify key risks. Has the board done that? And does the board understand its role in addressing those? And finally, are the relevant board committees or officers? And here I'm thinking about your audit committee and your governance committee. Are they ensuring compliance and making sure accountability systems are in place? Now, one concrete action that you can take that sort of brings these three questions together is to have your board conduct a board review and create a risk register. What I'm calling a risk register. This is basically have the board assess and document the ways in which the organization is meeting legal and financial compliance requirements. And then develop a single simple document outlining potential organizational risks and assigning oversight responsibilities to specific leadership team members and board members where relevant. So also inside Resilience Ready, you will find a discussion guide what every nonprofit board should discuss now to avoid future problems. I'm also probably going to do an audio training about that and pop it into the toolkit. And then there's some worksheets and models for the board review and the risk register. There's also a compliance checklist. And this is particularly helpful for smaller organizations where you may not have such an active governance committee that might be helpful for you. Okay. The third area is compliance. Now, these are not sexy. And the reason that I'm highlighting these in this podcast is because. Because they aren't sexy, right? Because these are the things that can be overlooked and sort of pushed to the back burner when we're trying to, quote, unquote, do the work. But these are the kinds of housekeeping areas of focus that we want to make sure at least once a year we are focusing on. So I thought that this would be a helpful list. And this compliance area is absolutely on this list. Okay. This is really foundational. Even without this pending legislation, legal lapses like missing filings, outdated bylaws, these can be seen as red flag, red flags. Robust compliance systems provide a foundation for navigating any unexpected challenges. They help make sure that you're ready to respond quickly and effectively to any type of scrutiny. This can be the government, this can be major donors, this can be board members, any kind of stakeholders, auditors, any organizations that receive government money or are interested in receiving government money. This is going to be a big one. So the questions you want to ask here, a few questions are one, pretty simple. Are all required federal filings and state registrations, things like around charitable solicitation, for example, are they up to date? And for the state registrations, are they up to date? In every state where we operate, this is an important one. Second, are our systems capable of handling increased scrutiny from anyone? Again, any external stakeholder, strong infrastructure, things like well organized records, well organized and transparent donor databases, secure communications tools, These are things that can protect against compliance gaps and depending on the nature of the work that you do, data breaches, very, very important to pay attention to. And again, the kind of thing that particularly for small and growing organizations, can be overlooked. And third, do we have written policies addressing emerging risks? Right. If you do the work, if you take the action that I recommended in the board governance section and you identify these emerging risks, do you have anything that responds to them? So here I'm going to actually recommend two actions. The first is they're simple. The first is to conduct a legal audit. Use a checklist. I have one in the resilience ready toolkit to review your bylaws, your IRS filings, your state registrations and other compliance areas so that you can identify the gaps and figure out how and when you're going to address them. And then second, develop and update your core policies. Right? You want to have a donor privacy policy, you want to have whistleblower protections. So you want to have these basic policies to stay ahead of potential risks. And I've included some great model policies and templates for you. So if you're worried about not having some of those, you can check them out in Resilience Ready toolkit. Now the fourth area is financial and operational transparency. Again, this sounds wonky, this sounds blech, really unsexy. But I cannot emphasize how important these are. Transparent financial Systems and practices are important because they reassure donors and funders that their money is being used responsibly. That is really critical always, and it's particularly critical if you are concerned about heightened scrutiny. This kind of transparency also makes sure that your nonprofit is organized and ready to provide documentation during any audit or under increased scrutiny. Now, there are two questions that I recommend you ask here. First, do we have documented internal financial controls? Right. This is a really basic one. You want to have them documented and you want to make sure that they are the right ones. And then second, are we transparent about our funding sources? Advocacy organizations in particular should be ready to explain where funding is coming from and where it's going, especially from large donors or grants. These are things that can raise questions about influence. Even if you're not concerned about questions being raised about influence, even if you're not an advocacy organization, having transparent donor and funder records, even internally, is really important for audits. This is how we build trust and credibility with our stakeholders. And so figuring out through annual reports, impact reports, etc. How to share that those funding sources is really important. Now, finally, the the concrete action step that I recommend here is really just about these internal financial controls here. I recommend making sure that they are up to date and in order. You want clear policies for approvals, dual signatures, expense tracking, how you handle restricted funds. This will just strengthen your oversight and accountability all in. Just like with the compliance. I've included a bunch of checklists and model policies around financial control inside the resilience ready toolkit. I also have a guide 5 non obvious risk areas nonprofits often overlook and how to address them. And that'll be inside the toolkit. So to recap whether or not you're concerned in the immediate future about heightened scrutiny, these four areas that I recommend focusing on will make your organization stronger. It will help you build better relationships, trust and credibility with your stakeholders. And it will make you less vulnerable to any scrutiny coming down the pipeline. The four areas are mission alignment, governance, compliance, and transparency. I firmly believe, firmly believe that a strong organization can withstand anything. And if you focus on these areas, you will shore up your organization in ways that will make you stronger across the board. I hope this was helpful and I'll see you back here next week for more masterminds. Thanks so much for joining me this week. If you enjoy this podcast, I would love for you to leave a rating and a review. I read every single one and they really do matter. I also share extra tidbits and resources building on what we talk about here in my newsletter, Leadership for 321. You can sign up by texting the word impact to 66866. And finally, definitely check out the links and resources that I mentioned this episode at brookrichybabbage. Com Podcast. See you next week.