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Using Your MBA at a Nonprofit

Most MBA graduates envision a lucrative position in finance, consulting or corporate management. They overlook opportunities in a huge, and growing, sector of the economy: nonprofits. However, a growing number of MBA graduates are discovering nonprofit opportunities that demand a higher degree of responsibility and promise more rapid career advancement than the private sector can promise. These positions also offer greater job satisfaction and the power to affect positive social change. Plus, nonprofit salaries for MBAs are often higher than most graduates assume.

I. Why Choose a Nonprofit?

Compensation

MBA students often wrongly assume there is no money to be made at nonprofits. However, many universities, hospitals and major charitable organizations offer salaries on par with most for-profit corporations. For example, a recent piece in Fortune Magazine reports that the lowest starting salary for Stanford graduates who landed nonprofit jobs was $75,000, much higher than the lowest salaries for MBA graduates who went into technology, media and entertainment.

Size

Because of its sheer size, the nonprofit sector is rife with potential. According to the Nonprofit Almanac, in 2010:

  • 1.6 million nonprofits registered with the IRS
  • The nonprofit sector contributed $804.8 billion
  • Public charities reported $1.51 trillion in revenue
  • Nonprofits accounted for 9.2% total wages and salaries in US

If this trend continues, opportunities for MBA graduates in nonprofits will only keep growing. Even in difficult times, like the recession of 2007-2009, nonprofits weather economic downturn and continue to thrive. While employment in the business sector decreased, employment increased by 4% in nonprofits, and wages increased by 6.5%. Though 50% of the organizations surveyed in the Urban Institute’s report in 2013 experienced a decrease in government funding, most did not have to cut programs or payroll. Only 14% of these nonprofits reduced the amount of clients they served during the recession. MBA graduates can offer their business and finance expertise to growing nonprofits that could benefit from their guidance.

Edge

As competition in the global environment rises, so does the need for business experts in nonprofits. MBA graduates have an edge in this sector, where there’s high demand for their skills but not many business graduates applying to nonprofit positions. Employers benefit from the management and organization skills graduates provide, as well as their expertise in finance and leadership.

Quality of Life

As nonprofits grow, MBA graduates have the opportunity to take on more responsibilities faster than at large corporations. Nonprofit jobs offer the chance to make a bigger impact and effect positive change in communities. This kind of reward separates working in nonprofits from working in the business sector.

Many high-profile social enterprises are led by MBA graduates. For example, reportedly about 10-12% of Habitat for Humanity’s staff worldwide hold MBAs. Nonprofits are giving MBA graduates the opportunity to use their skills not only to address social issues, but also to find profitable solutions to social problems.

Nonprofits typically provide stable relationships and flexible work schedules. In contrast, the public sector trend more toward unpredictable, stressful environments.

II. Getting Hired

The growth of the nonprofit sector is opening up more opportunities for MBA graduates. Nonprofits recognize the need to hold themselves more accountable for producing measurable results. According to a survey conducted by the executive placement firm Nonprofit HR Solutions, 44% of respondents expected to create new positions within their organizations, while 72% did not anticipate eliminating any positions. This suggests the industry has the resources to create more jobs.

Before pursuing nonprofit opportunities, MBA graduates should be prepared to:

  • Identify and research the organizations that interest them most
  • Start building relationships within that industry
  • Develop relevant skills
  • Decide if the benefits of working in nonprofits (flexible environment, power to create social change, etc) outweigh those of the private sector (higher salaries)

What They’re Looking For

Nonprofits operate and compete like businesses. Most MBA graduates discover their skills and training readily translate to the nonprofit sector. Such skills include:

  • Experience working in teams
  • Problem solving
  • Ability to anticipate and prepare for change
  • Research design
  • Performance analysis
  • Sales experience

Many of these skills are directly transferable. Sales experience could easily transform into fundraising prowess within a nonprofit. MBA graduates will naturally bring in a diverse, more objective viewpoint to nonprofit settings.

Researching the nonprofits you’re interested in will lead you to the other skills you’ll need to pick up. Both an understanding of philanthropy and experience in community building are examples of assets you’d need in the public sector.

Demonstrating a passion for the mission of the organization, not just the job, is key to finding work at a nonprofit.

Connecting with Nonprofits

Nonprofits generally don’t use recruiters. Although demand for MBAs is growing in the public sector, it can take considerable research to make a connection with the right organization. A good place to start that’s often overlooked is Craigslist. Though its design may appear outdated, Craigslist provides connections to new employment opportunities every day. Many local nonprofits advertise position openings in the “nonprofit sector” section of the job postings. If interested in a specific organization, it’s easy to search for them by name.

Other starting points include:

Although there are fewer internships for MBAs in the nonprofit space when compared to the private sector, those that do exist are designed to give students the experience needed to excel in the job market. Education Pioneers offers a Graduate School Fellowship that connects business graduates with full-time consulting roles with the potential to impact leading education organizations. If accepted into the program, graduates can expect to earn a salary ranging between $50,000-$80,000 for a one year placement.

Other internship opportunities can be found through organizations such as:

Nonprofits reach out to MBAs before graduation for internship and full-time job interviews through programs like:

III. Making an Impact

The nonprofit sector offers MBA graduates excellent opportunities to create meaningful economic and social change. On the MBA Tour, a website linking aspiring MBAs with leading business schools, Crystal German, a graduate of the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill, describes how she started a second career at a nonprofit.

After working as a financial manager for a Fortune 500 company, she attended business school to enter the public sector. Today she works for the North Carolina Institute of Minority Economic Development, developing economic parity solutions for racial and ethnic minorities as an alternative to taxpayer funded government programs. As the Director of Finance, she is responsible for creating relationships that provide access to capital for growing businesses that have traditionally been shut out of the capital markets.

German said her nonprofit experience gives her a deeper appreciation for community involvement and social change. Because of her work, communities are stronger and both the state of North Carolina and its residents are better off.

MBA graduates impact nonprofits through their ability to:

  • Access non-obvious resources
  • Secure funding for large-scale capital projects
  • Explain impact of finances on program outcomes
  • Streamline workflow
  • Market to the public
  • Approach problems from new angles
  • Build better teams

IV. Starting Your Own Nonprofit

A growing number of MBAs are putting their skills to work for causes they believe in. Instead of measuring performance in return on investment, these social entrepreneurs prioritize effecting positive change.

It’s useful for MBA graduates interested in forming their own nonprofits to gain experience in the business sector before striking out on their own. This strategy gives aspiring social entrepreneurs time to identify the areas of service that appeal to them, refine their ideas and build a network.

The first step is to make sure other organizations aren’t already doing the same type of work in the community. By adding new services, it will be easier to secure financial support.

As with any business endeavor, you must develop a business plan that outlines the following:

  • A mission that fills an indispensable need
  • A plan to deliver high-quality, responsive programs and services
  • Ways to identify targets for reliable and diverse revenue streams
  • How to establish clear, irrevocable lines of accountability
  • How to secure adequate facilities in a suitable location

The business plan provides the foundation necessary for addressing several mandatory legal formalities:

  • File articles of incorporation with the Secretary of State or other appropriate state agency. These contain basic information on the organization, like its name, registered agent and the address of its principal office. Most state agencies that oversee incorporation will provide templates and/or instructions.
  • Apply for exempt status with the Internal Revenue Service. There are two types of nonprofits that qualify for tax exemption: 501(c)(3) (charitable, religious and educational organizations) and 501(a) (other nonprofit or tax-exempt organizations).
  • Register with all states where charitable fundraising activities are planned. The majority of states require registration in advance of engaging in any fundraising or solicitation activity.
  • Note that laws and procedures will vary in each state.

The Foundation Center, an organization dedicated to connecting aspiring nonprofit business leaders with the resources they need to succeed, provides a state-by state guide to startup resources such as nonprofit associations, legal support organizations, technical assistance, state filing agencies and more.

Revenue Streams

Unlike the private sector, nonprofits don’t have clearly defined sources of funding. For-profit businesses create value for customers, who then pay for that value and fund the corporation. It’s a little more complicated for nonprofits. Sources of revenue for nonprofits include:

  • Earned income, which includes revenue from subscriptions, gift shop sales, program ads and ticket sales
  • Philanthropic contributions from private donors, which can come from individuals, foundations and corporations
  • Direct government subsidies, like grants and loans

Board of Directors

The board of directors make up the governing body of your organization and are largely responsible for its actions. Selecting initial members can be daunting. Seek people who are:

  • Passionate about the mission of the nonprofit
  • Competent in business and organization
  • Willing to give time and money
  • Strategic thinkers with long-term success in mind

MBA graduates are accustomed to working collaboratively on teams. They can use their experience to select board members that will ensure the success of the nonprofit.

V. Further Reading

A career in the nonprofit sector can be both challenging and rewarding. With their business and private sector knowledge, MBA graduates are uniquely qualified to transform and enrich society for the greater good. The following links contain information about the ways MBA graduates are making a difference: