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The Case for MBAs in the Nonprofit Sector

February 2008

There is a lot of buzz out there about MBAs joining the ranks of the nonprofit sector. We wanted to find out what is behind all the buzz. Are nonprofits really hiring MBAs? Are MBAs interested in working in the social sector? What are some of the challenges that nonprofits face when considering hiring candidates with MBAs?

The Aspen Institute, in its 2007-2008 publication Beyond Gray Pinstripes, reports that over 30 percent of 112 schools of management 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 curriculum, Net Impact, a nonprofit organization that helps business school students use their skills for social impact, reports that only 6 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 even a demand for these types of hires? This article describes the success that two organizations have found in hiring MBAs, outlines some of the challenges associated with hiring candidates with MBAs, and provides some suggestions for overcoming those challenges.

Nonprofit Finance Fund: MBAs Positively Affect Programs and Culture

Catherine Gill believes that hiring MBAs into nonprofit positions creates a valuable win-win. As the director of the Nonprofit Finance Fund (NFF) in New England, Catherine oversees a budget of $1 million and a staff that delivers financial and advisory services to community-based nonprofits. An MBA herself, Catherine values the perspective and skills MBAs bring to nonprofits.

"MBAs bring hard skills like financial know-how to NFF, but that's not all," Catherine says. "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 affect 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."

Catherine notes that one of NFF's biggest draws for MBAs is the intellectual stimulation of the work. The advisors and analysts at NFF deal with complex business problems on a daily basis, ranging from working with organizations to securing funding for large-scale capital projects to helping nonprofits understand the impact of their finances on program outcomes. According to Catherine, the sophisticated nature of this work requires "people with 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 Outstanding Analytical Skills

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

"The MBAs on our staff help round out our core competencies. Some staff bring a deep understanding of philanthropy to our work, while others possess research design expertise. [The MBAs on staff] complement that institutional knowledge with razor-sharp quantitative and analytical skills as well as performance assessment experience," says Kevin.

Being able to apply sophisticated analysis to foundation performance is just one asset of having MBAs on staff. Kevin also explained that being able to understand their clients quickly is a critical piece of CEP's work. He finds that MBAs excel at this task. "We focus on the largest philanthropic funders ... 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. Kevin says 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."

Kevin believes that more and more nonprofit opportunities are opening up to MBAs, largely because of the growth of the social entrepreneurship field. "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 complementary 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 Challenge

Although some nonprofits have been successful in attracting, hiring, and retaining MBAs, there are challenges involved. For example:

Salary–There is some truth that nonprofit employers cannot match the market salaries MBAs expect to earn, but 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 response to the discrepancies between nonprofit and corporate salaries, some funders, namely venture philanthropists, recognize the compensation piece of recruiting in-demand business talent and allot targeted funds for team development. 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 such as 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, Net Impact, and Starting Bloc have successfully created more visibility for career opportunities among MBAs. Still, nonprofits need 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. This period is also when companies are doing on-campus recruiting. Since most nonprofits don't plan their hiring that far in advance, these organizations potentially miss out on candidates. One solution is for nonprofits to consider planning ahead for one or two key positions for which recent MBA graduates would be perfect and making early commitments for these hires.

Internship Opportunities—According to the 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 New Sector Alliance, but the overall lack of formalized programs within organizations and the sector at large limit this form of early "recruiting" of MBAs. If internships are not possible, nonprofits can engage MBA students early through programs such as 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's 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 offices 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 descriptions. For more ideas on this topic, read .

The good news for nonprofits is that it is absolutely possible to overcome these and other challenges in hiring MBAs; it just takes commitment, creativity, and flexibility. This commitment will pay off, as securing talent with strong business knowledge and analytical thinking skills can have deep impact on an organization's effectiveness and scalability.

Commongood Careers
© 2008, Commongood Careers

Commongood Careers is dedicated to helping today's most effective social entrepreneurs hire the best talent. Founded by nonprofit professionals, Commongood Careers offers personalized, engaged services to job seekers and organizations throughout the hiring process as well as access to a wealth of knowledge about careers in the social sector.