Personal Experience: How MBAs and Non-Profits Can “Profit” From One Another

Prior to my move to Dallas last year, I spent three years (voluntary work) in the capacity of the finance officer on the board of a non-profit organization (that provided child care). My experience at the non-profit was post-MBA and post management consulting with PRTM. I got a lot out of the experience, and I was honored to be able to contribute to the organization.

What I got out of it:

• I found that non-profit boards tend to be more diverse than corporate boards – the experience forced me to learn how to minimize MBA jargon talk and the like.
• The board size was much larger and decoupled than one might find with boards of many corporate organizations (twelve people versus three to five) – the experience forced me to continue to refine facilitation skills because large boards can be cumbersome.
• It was often easier to connect finance with both the human policy and vision of the organization – governance at the board-level directly affected children and families (some of which are very disadvantaged [e.g., single moms, low income]), and it was gratifying to get the organization to points of commitment and resolve.
• I learned to appreciate the need for a separate operating board versus a fund raising board (something more typical of non-profit organizations).

There many things that one can bring to table for non-profits. As examples of some MBA concepts that I applied:

• Operations background – Assume that many manufacturing facilities operate at a normal load of 70% utilization. Now consider an organization like a child care organization that is make or break based on child enrollment numbers and where the budgeted numbers for the organization require breakeven to be 95% of capacity. Does this raise a warning flag that a correction is needed somewhere?
• Operations and competitive strategy – Suppose there are long waiting lists (queues) for the two-year old rooms in the facility and that capacity in the surrounding, competitive facilities is scarce. What does this like say about the price sensitivity of the market (i.e., how much the organization can raise enrollment prices)? Probably one can raise prices more than one thinks.
• Marketing – Other organizations are marketing lower prices yet they hide the fact that their coverage hours are shorter. How does your organization want to position itself in the market from a competitive viewpoint, and what concrete tactical things could be improved to make sure that people are educated about comparing apples to apples? Perhaps the organization should market itself as value-based, full-service and draw out the differences in a nice chart.
• Finance and Controller – When the financial situation gets tough, it becomes easy to want to take out small things (like water coolers), but where the dollar impact is small. Attack the problem from a different angle – first attack the problem from a "required hurdle perspective" as opposed to "a triage perspective". Use MBA spreadsheet, multimedia projector, and meeting facilitation skills to get the group on the same page as to how many dollars actually need to be cut out of the budget to affect the monthly enrollment fee for each family. Then come back and triage the budget at the line-level.
• Board governance – Non-profit boards can frequently benefit from practices used at the board-level in for-profit companies. Things like knowing about by-laws, employment laws, handling conflict of interest, etc. in the commercial sector can be adapted to the non-profit world.

For what it’s worth, I would highly recommend that MBAs look for ways to apply their skills to non-profit organizations to whatever extent they can. Some business schools like Yale have reputations for being strong in the non-profit sector, but straight-up MBAs are also good. The relationship with non-profit boards can be as little or as much as you want in many cases. The upside is good for all parties involved. You can’t always find that in the commercial sector.

Steve Shu

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