Business Degrees Add Up Pluses and Minuses for Nonprofit Managers

Lisa Lepson didn’t want to end up as the nonprofit leader who struggled to account for a $5,000 hole in her organization’s budget. She knew how bad that was after she saw that happen to the director of a charity where she once worked. Nor did she want to remain the entry-level generalist who answered the phones and had a hand in accounting and a little bit of everything else her nonprofit organization did.

So Ms. Lepson enrolled in the master’s in business administration program at the University of California at Los Angeles. She felt the degree would give her more flexibility than one focused on nonprofit organizations or public policy. Her commitment to charity work put her in the minority: Classmates jokingly referred to Ms. Lepson as “the nonprofit girl.”

But she says it was overall a very positive two years that taught her key leadership and management skills she is now putting to use as executive director of Joshua Venture Group, a New York philanthropy that gives money to Jewish social entrepreneurs.

Like Ms. Lepson, more young people are choosing to pursue an MBA to bolster their nonprofit careers. Duke University’s Fuqua School of Business, for example, reports that in the past six years interest has tripled in its course work in social entrepreneurship and nonprofit organizations. In a nod to the blurring of the lines between businesses and nonprofit groups, several business schools have added programs on social entrepreneurship in recent years; Northwestern University’s Kellogg School of Management did so in 2005, establishing a “social enterprise” program.

A Scarcity of MBA’s

But MBA graduates are still relatively rare at nonprofit organizations. City Harvest, a New York antihunger charity, has a staff of 100, two of whom hold master’s degrees in business. Trickle Up, an international group with headquarters in New York, employs two MBA’s out of a staff of 35.

Advocates of the business degree say it provides not only key leadership and management skills but also knowledge of areas like finance, marketing, operations, and strategy that can be important to running nonprofit organizations. They stress the versatility and the broad scope of the degree. They also emphasize how useful that background can be in courting corporations and donors who have earned their wealth in the business world.

“It lends a certain level of credibility,” says Pat Barrick, who oversees fund raising, marketing, and public relations at City Harvest. Ms. Barrick, who holds an MBA, joined the organization in 2000 after working in the corporate world.

Comparison Shopping

But there are many reasons to skip the MBA. Many of the skills taught in business programs can be gleaned from academic programs designed for nonprofit or government leaders, like master’s degree programs in nonprofit management, public administration, or public policy. Moreover, work experience is far more important to charities than academic credentials, and very few positions require a graduate degree, according to recruiters.

Business-school alumni and university administrators advise would-be graduate students to determine what program fits best with their individual interests. “There is no right answer,” says Josh Solomon, associate director of technical assistance at YouthBuild USA, who got his MBA from Yale University after first exploring public-policy programs. He and others encourage people to learn about the character of the degree programs they are considering, including variations in curriculum and cultures.

Business-school graduates also sound several notes of caution. Not surprisingly, the biggest one is financial. Many people finish the MBA program—or any two-year graduate program, for that matter—with debt that can top $100,000.

The federal government has started a new program to relieve nonprofit workers who remain in the field of debt, and many MBA programs forgive some loans for graduates who earn less than a certain amount.

But those programs are often complicated, and they obviously don’t bridge the difference between nonprofit salaries and the six-figure salaries that jobs at corporations often command.

At business school, being on a nonprofit career track puts a student in the minority. While many business students are incorporating nonprofit board service and social entrepreneurship into their work, few go directly into nonprofit jobs after business school. (At the University of California at Berkeley Haas School of Business, for instance, only about 3 to 5 percent do.)

And while companies often visit campuses to recruit students for jobs, very few, if any, charities are able to do so. That leaves the job hunt largely up to students, who comb alumni lists, ask professors for contacts, and make cold calls.

“It’s much more of a self-directed career search,” says Matthew Nash, managing director of Duke’s Center for the Advancement of Social Entrepreneurship, a 10-year-old institution that is part of the university’s business school. As a result, some students who enter a program with the intention of finding nonprofit work pursue corporate jobs instead. Andrea Amory, a first-year student at Northwestern’s business school, says her classmates refer to that drift as the “atrium effect.”

“We have a big atrium where people are talking about their plans,” says Ms. Amory, who will work as an intern at the State Department this summer. “Sometimes people get pulled into what everyone else is doing.”

There’s also the raised-eyebrow effect. Danielle Holly, who worked for several years for a stock exchange before enrolling in the nonprofit track at Boston University’s business school, says she had to make it very clear to potential employers that nonprofit work was her passion.

Says Ms. Holly, “When you’re going into nonprofits for the first time and you have a finance background and you’re getting an MBA, they do look at you a little cross-eyed.”

Complementary Skills

Still, many charities highly value the MBA, and a small but growing number actively seek out job candidates who have one.

Jumpstart for Young Children, an organization in Boston that works on early-childhood education, seeks to “build its brand” at business schools, according to its president, James Cleveland.

Mr. Cleveland often speaks on panels at business schools. He makes his organization available to professors for case studies. His group also recruits business-school students for internships and tries to hire at least one or two students or graduates as interns or full-time employees each year. Of 24 employees Jumpstart has such data on, five hold master’s degrees in business administration.

He says that “passion,” not academic credentials, is required and that potential employees need to be able to demonstrate that they can work in an environment in which money is scarce.

But he also believes that the MBA degree often brings different skills that complement those of the rest of his staff members: “Our business-degree folks are excellent at being deployed in more entrepreneurial or strategic settings.” For example, Mr. Cleveland cites an MBA graduate who helped turn an effort to set a world record for reading into a national fund-raising campaign.

Earning Power

People who hold MBA’s and other advanced degrees can also command higher salaries at Jumpstart, although Mr. Cleveland says they have to prove that they’re worth the extra money. It’s possible to reach the same salary range without a graduate degree, he says.

Nonprofit workers who have MBA’s say they are making more now than before the degree, but they’re not sure how great a factor the degree was in that jump.

Recruiters say they don’t see much evidence that holding a master’s degree in business equals a salary boost. Yet for positions like controller, chief operating officer, and chief financial officer, in particular, they say the MBA can give a candidate an edge.

“It can be very useful if you’re in the finance and administration side and you want to have the possibility of moving to the top,” says Brian H. Vogel, a senior principal at Quatt Associates, a human-resources consultancy in Washington.

More Flexibility

Perhaps more than other charity leaders, those with MBA’s seem to have a flexible view of their career paths and a greater desire to work in both business and nonprofit organizations or government to pursue the social good.

Ms. Lepson worked for a few years for a company started by business-school classmates who used music concerts to encourage volunteerism.

Jesse Brackenbury, director of business operations at a nonprofit parks organization in Boston, always intended to work at a business consulting firm right after school so he could later apply those lessons to government or nonprofit work.

His experience in structuring an organization’s finances, communications, and maximizing effectiveness have proved very valuable at the start-up parks organization, says Mr. Brackenbury.

But while he lauds his experience at the consulting firm, he says he wouldn’t want to spend his entire career in the business world as many of his classmates will likely do.

“I love parks; it’s nice to be passionate about your work,” he says. “I don’t imagine going back to a more strictly corporate job would offer any of the same rewards.”

What to Consider Before Pursuing an MBA

• MBA’s can graduate with more than $100,000 in student-loan debt.
• An MBA curriculum without courses on nonprofit management and social entrepreneurship may not be as useful for someone interested in a nonprofit career.
• Students on a nonprofit track may feel like outsiders among classmates headed to the business world.