The Case for MBAs in the Nonprofit Sector

The Aspen Institute, in its 2008 publication “Beyond Gray Pinstripes,” reports that over 30 percent of the 112 schools of management surveyed offer a special concentration focused on social and environmental issues. Additionally, coursework and academic research on social and environmental issues has increased dramatically in the past few years. Even with increased access to such curricula, Net Impact, a nonprofit that helps business school students use their skills for social impact, reports that only six percent of MBA graduates plan on pursuing careers in the social sector.

What will it take to get more MBAs into the social sector? Is there a demand for these types of hires? This article describes the success that two organizations have found in hiring MBAs and outlines some of the challenges associated with hiring MBAs as well as some strategies for overcoming such challenges.

Nonprofit Finance Fund: MBAs are Essential to Programming and Organizational Culture

Catherine Gill at the Nonprofit Finance Fund (NFF) believes that hiring MBAs into nonprofit positions creates a valuable win-win proposition. As the current Director of NFF Capital Partners and former Director of NFF New England, Catherine has overseen teams that deliver financial and advisory services to community-based nonprofits. An MBA herself, she sees the unique perspective and skills MBAs bring to nonprofits.

“MBAs bring hard skills like financial know-how to NFF, but that’s not all,” Gill said in a recent interview with Commongood Careers. “They also bring a really sharp understanding of teams and how to access resources that aren’t always obvious. The MBA degree is incredibly broad and teaches people how to approach problems from different angles.”

In addition to offering business savvy, MBAs can impact an organization’s culture in positive ways. “As a result of having MBAs on staff, our culture is more operational and streamlined. There’s an organization-wide emphasis on efficiency. Our culture values processes and understands how they can help us more efficiently fulfill our social mission.”

Gill describes that one of the biggest draws for MBAs at NFF is the intellectual stimulation of the work. The advisors and analysts at NFF deal with complex business problems on a daily basis, ranging from securing funding for large-scale capital projects to helping nonprofits understand the impact of their finances on program outcomes. According to Gill, the sophisticated nature of this work requires “people with good degrees…strong educational backgrounds who understand the value of the work we do, as well as understand why this work is interesting and satisfying.”

Center for Effective Philanthropy: MBAs Bring Analytical Skills

Kevin Bolduc is Vice President of Assessment Tools at the Center for Effective Philanthropy (CEP), a nonprofit that provides management and governance resources to define, assess, and improve foundation performance. Overseeing the design of new tools and the refinement of CEP’s suite of current assessment offerings, Bolduc depends on the analytical expertise that MBAs bring to his team’s work.

“The MBAs on our staff help round out our core competencies. Some staff members bring a deep understanding of philanthropy to our work, while others possess research design expertise. The MBAs on staff complient our institutional knowledge with razor sharp quantitative and analytical skills, as well as performance assessment experience,” said Bolduc.

Bringing a sophisticated understanding of analysis to understand foundation performance is just one asset of having MBAs on staff. Bolduc also explained that being able to quickly understand their clients is a critical piece of their work, which he finds MBAs are prepared to do. “We focus on the largest philanthropic funders, which are sophisticated and complex organizations that face unique challenges. MBAs possess the ability to develop strong relationships and communicate with these organizations effectively about their program performance.”

Additionally, MBAs are prepared for internal organizational change and growth. Bolduc said that “the MBAs on staff help us maintain and develop processes and structures that allow us to grow quickly. They understand that a nonprofit is more than just running programs. It’s also about management, leadership, and scalability.”

Bolduc believes that more and more nonprofit opportunities are opening up to MBAs, largely because of the growth of the field of social entrepreneurship. “MBA skill-sets are more relevant than ever. Looking at social problems through an analytical lens is becoming the norm for nonprofits, particularly as foundations and nonprofits hold themselves more accountable for producing quantifiable results. MBAs bring a complientary skill-set to those taking more traditional paths into the sector, and together these skills build a stronger and more accountable social sector.”

The MBA Hiring Challenges and Solutions

While some nonprofits have been successful in attracting, hiring, and retaining MBAs, there are also several key challenges involved, including:

Compensation:

While there is some truth that nonprofit employers cannot match the market salaries MBAs expect to earn, more and more nonprofits are realizing that they may need to pay a higher salary or offer a signing bonus to secure MBA talent. In many instances, a salary of $75,000 is considered to be a baseline for MBA grads in major cities who have limited work experience (less than five years) outside of college and graduate school. Compensation levels are higher for those with more work experience in addition to the degree. In response to the discrepancies between nonprofit and corporate salaries, many universities are now offering funds to help match a portion of a nonprofit’s salary or to offset student loans for those who pursue nonprofit careers. In cases where higher salaries are not possible, nonprofits can offer other forms of compensation that may be appealing to MBAs, such as greater management responsibilities or more senior titles than a recent graduate would receive at a for-profit company.

Visibility on Campus:

On-campus recruiting is a costly and resource-intensive effort even for corporations like investment banks and management consulting firms. Because most nonprofits cannot afford to participate in on-campus recruiting programs or form relationships with MBA career development offices, graduating MBA students don’t have access to information about nonprofits and therefore often don’t consider the option of working in the social sector. Nonprofit career fairs organized by campus social entrepreneurship clubs or organizations such as Idealist and Net Impact have successfully created more visibility for nonprofit career opportunities among MBAs. Online social networks and major print media coverage can also help to raise a group’s profile with this group. Still, nonprofits need to make and seize more opportunities to present their organizations to MBA candidates and to develop relationships with career development officers who can present nonprofit opportunities to graduating students.

Timing:

Typically, graduating MBAs begin their job searches in the fall of their second year, when for-profit companies are doing on-campus recruiting, and most have secured offers by the January-to-March timeframe. Since most nonprofits do not plan their hiring that far in advance, and even socially dedicated jobseekers get nervous by March when all of their friends have jobs but they do not, the nonprofit sector generally misses out on almost all MBA hiring opportunities. One solution is for nonprofits to consider planning ahead for 1-2 key positions a year for which recent MBA graduates would be ideal. Then, structure the roles for January hires and June start dates while advertising the roles to graduate school networks.

Internship Opportunities:

According to Harvard Business School, more than 30 percent of last year’s MBA graduates went on to full-time positions at the companies where they held internships the previous summer. There are some opportunities for prospective MBAs to intern at nonprofits, such as through Education Pioneers and New Sector Alliance, but the overall lack of formalized programs within organizations and the sector at large limits this form of early recruiting of MBAs.

Summer internships may easily be paid or unpaid, and an increasing number of universities are offering to cover a summer stipend for students who wish to work in the social sector. The largest challenge for nonprofits is to structure a highly valuable and engaging role for a well educated student that can be started and completed within 2-3 months. If internships are not possible, nonprofits can engage MBA students early through other programs like Wharton’s Nonprofit Board Leadership Program, which places MBA students on local nonprofit boards.

Cultural Expectations

: Because of the relative lack of information about nonprofit careers presented in business schools, MBAs may carry some misconceptions about what it is like to work at a nonprofit (i.e. they are disorganized, have no internal systems, and do not follow business best practices). On the flip side, nonprofits may be skeptical about an MBA’s ability to fit into their organizational culture. Nonprofits need to share as much as possible with MBA students and career development officers about the work of the sector and the opportunities available for MBAs. In addition, organizations need to ensure that their culture is clearly communicated throughout all materials, including their web site and job postings.

The good news for nonprofits is that it is possible to overcome all of these and other challenges in hiring MBAs. It just takes commitment, creativity and flexibility. This investment will pay off as securing talent with strong business knowledge and analytical thinking skills can deeply impact an organization’s effectiveness, efficiency and scalability in pursuit of its mission.


This article was written by Commongood Careers and is published under a Creative Commons Attribution-NonCommerical-NoDerivs 2.5 License.

For more information about nonprofit and socially entrepreneurial careers, visit Commongood Careers at http://www.commongoodcareers.org