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Article: The Road Less Profitable

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The Road Less Profitable

It's rare to hear about B-school students looking for nonprofit jobs these days.  It's not sexy, lucrative, or ultimately dependent on any hot new technologies.  Did I mention that it's not lucrative?  When people from the tech world say "it's not about the money" with that wide-eyed, 'no, really' look, you know they're lying.  But in nonprofit, it can't be about the money - the salaries and perks just don't compare.  If you're getting into the nonprofit sector, you'll need to get by on pure passion.

Nonprofit organizations account for 8 percent of the US economy, and 10 percent of the workforce - making it one of the fastest growing business sectors in the country.  As these organizations evolve and become more like for-profit companies in structure, industry professionals are looking to attain management-level education.  And universities, (which are also increasingly being run like Fortune 500 companies) are rushing to develop programs for them.  According to a study currently being conducted by Seton Hall University, only 17 American universities offered graduate programs with a concentration in nonprofit management.  By 1997, that number had grown to 76.  According to Nonprofit Genie, an online site devoted to the industry, 15 percent of nonprofit management programs are run through business schools. 

Why an MBA?
People gravitate to MBA-related programs because they want to apply traditional business ideas and skills to the nonprofit sector.  Many large nonprofits are more like major private-sector companies than the small "charitable organizations" that people usually think about when they hear "nonprofit".  These organizations are run just as efficiently as for-profit businesses; but at the same time, no one's pretending that nonprofits and for-profit enterprises are indistinguishable.  The specialized programs touch on the core values that differentiate nonprofits from the rest of the business world.  Typical courses offered include fundraising, nonprofit financial management, ethics, volunteer management, nonprofit law, leadership and handling boards of directors.  ~ Many nonprofit MBA programs also focus on the relationship between the nonprofit sector and the government.  For example, UC Berkeley's Haas School of Business offers a summer program in Washington DC which focuses on government issues. Stanford's Graduate School of Business offers courses on Public Policy.  An understanding of public policy, lobbying and legislation can be invaluable to an organization that depends on government funding for its survival.

Internships
No matter what their focus, MBAs should look for summer internships related to their intended future careers. Some MBAs have taken advantage of internships aimed at those exploring nonprofit careers.  At Haas, for example, there is a student-run fund called Students for Students (S4S), which gives stipends to students who choose to work for nonprofits or public sector organizations during their summer internships.  The money comes from first-year Haas students who work in the private sector and volunteer to help their classmates.  Stanford GSB has a similar program - the Stanford Management Internship Fund, which raises money from faculty, staff, alumni and students working in the private sector to subsidize students summering in nonprofit and government organizations.  And at Dartmouth's Tuck School, the student-run Nonprofit Fund helps students locate (and sometimes create) summer opportunities, then provides them with stipends.

Back to the real world
But after graduation, MBAs face meager compensation. MBA salaries in the nonprofit sector are often little higer than they are for non-MBAs. "They just don't compare to what you see in the public sector," comments Sally Locke, Assistant Director of the Public and Nonprofit MBA Program at Boston University.  MBAs, who normally bear heavy debt burdens from financing MBA educations, can't afford to take jobs at nonprofits. ~ On the other hand, there is scholarship and grant money available for nonprofit professionals - it just takes some work to find them.  Some B-schools also have loan forgiveness programs for students who take low-paying nonprofit jobs after they graduate.  And when they say low-paying, they really mean low. Locke points out that "the salary cap is so low for those programs that most people can't afford to take the jobs that would make them eligible." For example, students at Stanford, Northwestern, Yale, and the University of Chicago with need-based loans are usually eligible for the Loan Forgiveness Program as long as they work for the government or a tax exempt organization and their gross income is less than $30,000 a year.

Another option is to find a short-term subsidized program right out of school.  Like clerkship programs for law school graduates, there are organizations that hire newly minted MBAs who don't want to go the traditional corporate route.  One notable opportunity exists in The Urban Enterprise Corps, which was launched in 1994 by the University of North Carolina's Kenan Institute of Private Enterprise (a branch of the Kenan-Flagler Business School).  The program recruits MBA graduates from the top 30 business schools and places them in 2-year stints in the public sector.  Students are trained to provide managerial and technical assistance to minority- and women-owned businesses.  The salary?  $35,000/year.

For a list of schools offering MBA (and other graduate-level) programs with a focus on nonprofit work, go to nonprofits.org.