Columbia Business School's "Ideas@Work" blog had an interesting post last week entitled "The Nonprofit MBA." The premise was that in a time of unprecedented challenge for non-profits, hiring a MBA may be a way for social sector organizations to tap into management expertise that can help them survive. (Since MBAs are a lot cheaper now than they used to be!)

But, as Ray Horton argues, just going out and hiring a MBA is no panacea. Just because someone has an MBA doesn't make them an expert on nonprofit management, doesn't help them to understand your mission, and may actually even do harm. As Professor Horton states,

"The misconception that businesses are always better-managed than nonprofits because they have the profit motive is a tired one that needs reconsideration. Many of those so-called well-managed businesses are now bankrupt (some, as we've seen, in more ways than one). An inventory of organizations in the United States, from the most well managed to the most poorly managed, would find many nonprofits that are better managed than most businesses and many businesses that are more poorly managed than most nonprofits."

Does this mean that a nonprofit cannot benefit from the professional management expertise that a MBA brings to the organization? Not at all. In fact, nonprofits and for-profits are more similar than you might think. Again, quoting the article:

• Businesses and nonprofits have to compete to raise money from external sources. Nonprofits have to attract grant income, but increasingly they raise money by adding earned-income components, selling select goods and services that are related to their missions, or by some combination of both.
• However businesses and nonprofits acquire their resources, they have to spend resources -- there are all sorts of allocation decisions that are fundamentally the same.
• Businesses and nonprofits have to organize their production processes similarly to figure out the most rational way to produce a product or provide a service.
• Businesses and nonprofits have to contend with governance issues, they have boards of directors, they may face going out of business and they may face similar challenges when they've grown beyond the vision of their founders.
• Increasingly, businesses and nonprofits finance themselves the same ways: selling bonds, entering capital markets and competing for capital funds.

So what does this mean for us in the nonprofit space? We should take advantage of the management skillset that a MBA brings to the table, but recognize that management skills alone are not enough. So hire that MBA and give her the opportunity to learn your organization's culture, history, and mission -- so that she can help you lead, manage, and grow your organization to achieve your mission results.

• Strategic Growth and New Hires (February 11, 2011)