Managing Nonprofits: Doing Good Takes Some Doing
Monday, October 1, 2007
You wouldn’t know it from the headlines, but the nonprofit world is facing a crisis.
Thanks to staggering and heavily publicized donations by Bill Gates, Warren Buffett and other big donors, funds for nonprofits have nearly doubled in the past decade. They grew last year by 12 percent, more than three times as fast as the rest of the economy.
But all this generosity leaves these organizations with a problem they didn’t have before: They will need 640,000 new senior managers in the next decade to fill positions created by the sector’s growth, as well as vacancies left by retiring baby boomers. That’s the conclusion of the Bridgespan Group, a nonprofit consultancy.
Where will these managers come from?
If trends continue, MBA programs will produce more than a million graduates trained to be senior managers in the next 10 years. But most of them will prefer Gates’ and Buffett’s path to changing the world: Make your fortune in private industry and then turn to philanthropy.
It’s a fine, high-impact path to follow. But there’s a catch: Gray-haired philanthropy alone cannot change the world.
During the years that new MBA graduates are earning their millions, the nonprofit organizations are working every day to alleviate poverty, improve education and boost the environment and public health. They need talented leaders who can manage donor dollars as well as if they were shareholder investments in the profit world.
By carefully measuring results, which many nonprofits traditionally do not track, MBA-style managers can improve efficiency while satisfying the demands of the increasing numbers of donors who seek to maximize their “social return on investment.” Those studying for MBAs are trained in marketing, finance, accounting, operations and organizational leadership – all of which nonprofits sorely need.
But only 6 percent of MBA students plan to enter the nonprofit world after graduation. That’s not surprising, given average private-sector salaries of more than $100,000 for fresh MBA graduates. At a medium-sized nonprofit, an average program director – a typical role for a new MBA – makes less than $70,000.
Still, some MBAs do choose the nonprofit sector. The directors of Women’s World Banking, the Appalachian Mountain Club, the Children’s Defense Fund, Outward Bound and the Center for Effective Philanthropy all have MBA graduates from Harvard Business School, for example. Bruce McNamer, an alumnus of Stanford’s Graduate School of Business, is president and chief executive of Technoserve, a nonprofit dedicated to rural economic development. Lucy Perkins and Karen Seabury, both Wharton School MBA graduates, hold executive roles in Ashoka: Innovators for the Public and the MacArthur Foundation respectively.
But nonprofits could use a more steady stream of people with MBAs, and they are beginning to get help in that direction. Some private companies are offering to lend MBAs and other business managers to nonprofit corporations. The Conference Board, a business membership and research organization, urges nonprofits to find retiring private-sector executives. Many business schools help pay off loans of students who choose low-paying nonprofit careers.
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