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Nonprofits Need MBAs To Tackle The World’s Biggest Challenges

Nonprofit organizations need to be run just as well as any profitable business—MBAs can help make that a reality

Tue Jul 10 2018

BusinessBecause
In July 2017, a joint report conducted by the World Health Organization (WHO) and UNICEF revealed that 844 million people ‘still lack a basic drinking water service’.

Non-profit organizations though, are tackling the issue head-on. Blood:Water, a non-profit working in Africa, has reached one million people with clean water. It has also served 62,000 patients in HIV-prevalent areas.

The eradication of hygiene and sanitation issues alongside access to clean drinking water holds the key to better education, a higher life expectancy, and increased productivity in the areas affected most.

Funding cuts, however, like those in the US—the Trump administration proposed a 29.1% decrease in funding for international aid in 2018’s budget—mean that nonprofits, NGOs, and charitable organizations are suffering from a crippling strain on their resources.

Increasingly, these organizations need to be run as if they are profitable businesses—an amalgam of strong HR, budgeting, and project management is a necessity.

MBA students are well-placed to fill that role. MBAs have a penchant for holistic business practices, and more graduates should consider the nonprofit sector as a viable career option.


APAC Social Impact

The Graduate Management Admission Council’s (GMAC) 2018 Alumni Perspectives Survey recorded that only 13% of business school alumni work for a governmental or nonprofit organization. This figure drops to 10% for students who graduated between 2016 and 2017. It was 15% for students who graduated in 1990 or earlier.

Jude Newton, a part-time MBA student at Melbourne Business...

, says access to that path can be restricted by things as simple as upbringing or social circles.

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“I guess since I’ve been a kid I’ve tried to do charitable stuff,” he says. “One of my dad’s cousins is a priest in Sri Lanka, and all of us sponsor kids for their education.”

Jude explains that his experience in Sri Lanka means that he’s grown up a witness to poverty. “I always wanted, one day, to do things in developing countries,” he adds.

Before taking that leap, he’s dipping his toes in the water in Melbourne. Jude, along with four others—Suri Samsoodeen, Srinath Susarla, Natasha Arora, and Rishi Kher—co-founded Third Man Up, a nonprofit organization that runs social and sporting events to raise money for existing charities.

They focus on charities that are passionate about supporting the health, development, and wellbeing, of young people in Australia. Last year, with one sponsor, their goal was to raise AU$10,000 ($7,300) over four events—they raised AU$12,000 ($8,800). This year, with an additional sponsor, Jude admits they are hoping to reach AU$20,000 ($14,600).

When asked about whether more MBAs should consider launching careers in this sector, he beams: “most definitely!”

Many of the charities Third Man Up has come across rely heavily on ad hoc funding and support. This, Jude says, makes forecasting and planning a challenge. “These charities need to think more like for-profit businesses to bring in more revenue,” he explains, “which can only be done by those with a strong business acumen.”

Jude says that a lot of peers he has met on his MBA are eager to pursue charity work. But, “they either don’t have the time, or they haven’t found likeminded people,” he asserts. “I’m fortunate to have found that.”

The seeds of Third Man Up, you could say, were planted years ago. Srinath Susarla assisted Jude in setting up a multicultural Aussie Rules match for charity—the annual game has raised AU$8,000 over five years.

When thinking of starting Third Man Up, it was Srinath that Jude turned to first. “If he’d said no, I don’t think I’d have gone down this path,” he admits, “because I didn’t know anyone else like him who wanted to do this work.”


A Change In Attitude

Mark Salway, the director of social finance for the Center for Charity Effectiveness at Cass Business School, says he’s seen a shift in MBAs’ attitudes towards social issues.

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“For me, at the moment,” he says, “there are more social businesses being launched than commercial businesses. The trend of the zeitgeist now is to understand social issues.”

People want to think about the social value change and wellbeing more than they do the commercial. “If you just focus on money you miss that,” Mark argues.

His route into the nonprofit sector came after a corporate career failed to satisfy him. After university, Mark worked in London for three years, before running his own business, and then transferring to management consulting in the commercial sector for KPMG.

The more involved in that sector he became, the more he began to see the capital wheel turn: “The system continued to lock people into poverty,” he says.

It was then that the desire to enter the nonprofit world came to fruition. “Nonprofits didn’t have the commercial skills to grow and sustain themselves,” Mark explains, “and on the flip side commercials didn’t have the understanding of communities and society.”

Coalescing both worlds is what Mark is passionate about. He cultivates an environment of opportunity for the MBA students he teaches.

There are multiple touch points at which they can enter the frame. An example he cites is the water crisis in Africa. The African government won’t step in because they don’t want to legitimize the problem; the corporates work on the premise that there is too big a risk with minimal financial return; and the charities are too small to make a difference—this merry-go-round of problems is spinning in the middle of millions without clean drinking water.

“We need people with an understanding of the commercial and social worlds, and for them to come in and create new ideas,” Mark asserts.

The corporate world is being forced to act with a moral conscience. An article in The Economist from September 2017 highlights the growing awareness of investing in ESG – Environmental, Social, Governmental – initiatives. It’s dubbed ‘ethical investing’.

“World markets are starting to get behind ESG,” Mark explains. “Part of that is looking at environmental concerns, social impact, and how to work with communities.”

Companies must “absolutely” innovate from within. Intrapreneurs will lead that change. “Businesses and charities are trying to do this,” Mark adds, “they are desperate for the talent.”


Nonprofits Lead The Way For Social Change

Relying on governments to enact social change is a dissipating pipedream. That mantle has been passed to nonprofits and NGOs.

“In the United States, we are seeing an increased expectation that the charity sector will step in and address not only those needs and services for which they are funded by government contracts, but also for completely unsupported efforts,” says Megan Kashner, clinical assistant professor of public-private interface and director of social impact at Northwestern University’s Kellogg School of Management.

megan-kellogg-mba-nonprofit

That includes food banks, early childhood education, healthcare, mental health services, and emergency relief.

What can MBA students learn from non-profits?

“Transparency, transparency, transparency,” Megan asserts. “Today’s 24/7 news cycle and social media scrutiny is bringing for-profit business under the microscope that nonprofits have operated under for decades.”

Leaders of nonprofit organizations can teach master classes in areas such as crisis management, fiscal transparency, lean and agile business development, stakeholder engagement, public relations, and managing government regulation.

“Add to that a long history of a better understanding of hiring for diverse and differentiated talent and background, and for gender equality, and you’ve got a nonprofit sector ready to help today’s business leaders avoid potholes,” Megan adds.

Nonprofits need the business acumen that comes with hiring an MBA. Financial management skills, marketing, negotiations, human capital development, and relationship development, are key traits in demand. “When a nonprofit is seeking leadership,” Megan says, “MBAs are a strong source of talent.”

At Kellogg, dedication to this sector has been omnipresent for decades. Megan explains that the school has been treating nonprofit management as a “professional realm” and area for skill and knowledge development since the 1970s.

The growth of interconnectivity, telecommunication development, and, as Megan explains, 24/7 news cycles, means that awareness and tangible evidence of the good of business around the world is more accessible.

She adds that this highlights the need for social progress. “Global income divides, humanitarian crises, climate change, and threats to sustained access to water bring business to the table today like never before.”

Nonetheless, today’s nonprofit leadership opportunities are less likely to be roles leading dynamic enterprises, or those that use market-focused approaches to address the most prevalent of issues facing communities. They aren’t likely to be compensated well either, admits Megan.

Still, she says a rising number of MBA students and alumni are seeking to apply their skills, networks, and past experiences to enter the nonprofit sector at various touch points throughout their careers. And that, it seems, can only be a good thing.

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