Teaching Business Skills to People With a Social Mission

Oviemo Ovadje is the first to admit that he had no idea how to create a business plan when he flew halfway around the world to attend a two-week business boot camp here at Santa Clara University.

The Nigerian physician did know that women in his country were dying during complicated childbirths because he couldn't get untainted blood to them fast enough. He thought he had an answer, but to make it work, he needed investors -- and advice.

"Someone is crying for life but I have no blood, and the solution is right in the body of the woman who is going to die if I do nothing," says Dr. Ovadje.

The doctor has the rapt attention of a panel of Silicon Valley business professors and technology gurus as he describes how his fledgling nonprofit organization, EAT-SET, created a machine that vacuums blood from the body of a patient with internal bleeding, purifies the blood, and pumps it back into the patient's body. The emergency blood-transfusion device can be a lifesaver.

But in order to make it widely available, Dr. Ovadje must create a compelling business plan that will attract investors and turn his dream into a reality.

Around the country, business schools are creating and expanding programs that help nonprofit managers like Dr. Ovadje apply bottom-line business skills to mission-driven projects. Courses in nonprofit management and related fields like social entrepreneurship are booming.

Several factors account for the surge of interest from students. First, turned off by stories of corporate greed, students are eager to find ways to make a contribution to a post-9/11 world. Second, with 1.4 million nonprofit organizations in the United States competing for government and philanthropic funds, charities need skilled fund raisers and administrators. In addition, their leaders are worried that scandals like those at United Way and other charities have shaken public confidence. They want to reaffirm it.

"Everyone in the nonprofit sector is trying to do more with less," says Liz L. Howard, associate director of the Center for Nonprofit Management at Northwestern University's Kellogg School of Management. At the Kellogg School alone, enrollment in nonprofit-management courses has tripled, to around 200, since 2001.

"Over the past five to seven years, there's been a veritable explosion in this area," says Ms. Howard.

Some of Kellogg's students plan to work for charities, while others hope to serve on boards. A Kellogg course on board governance, which drew 20 students a few years ago, is now capped at 60, with a waiting list.

In fact, the demand for nonprofit-management courses is so strong that about 100 colleges and universities offer concentrations in the topic -- with most of those in schools of business, public administration, and social work. That's up from 76 in 1995 and 17 in the mid-1980s, says Roseanne M. Mirabella, an associate professor of political science at Seton Hall University, in New Jersey, who is tracking the growth in nonprofit-management education. And more than 240 colleges, she says, offer at least one course in the subject.

Social Entrepreneurs

At Santa Clara University, business and engineering professors have teamed up with high-tech marketing specialists, engineers, and investors to work with one niche in the nonprofit world: social entrepreneurs. Those are people who apply business solutions to social problems, for instance, by creating a company that helps homeless people find jobs.

The Global Social Benefit Incubator, sponsored by Santa Clara's Center for Science, Technology, and Society, brought 15 representatives of these fledgling groups together over the summer. Dr. Ovadje and his classmates -- whose costs, other than their travel expenses, were covered by private donations from Silicon Valley businesses and foundations -- met with local experts to brainstorm, network, and develop business plans.

Next year Santa Clara M.B.A. students will get involved with the entrepreneurs through an elective course in which they will be assigned to help one or more of the organizations. Students might, for instance, perform market research or study ways to address public-policy barriers.

The groups that participated won awards for their ideas and came from 10 countries: Argentina, Canada, Costa Rica, India, Jordan, Laos, Nepal, Nigeria, South Africa, and the United States.

One of the projects is a wire bridge with a suspended carriage that whisks people safely over monsoon-swollen rivers in Nepal. Another participant demonstrates a self-powered radio for some of Africa's poorest people.

After two weeks these social entrepreneurs say they've gained skills that will help make their projects sustainable over the long haul.

"These have been watershed weeks for me," says Kristine Pearson, executive director of the Freeplay Foundation, a six-person organization based in Cape Town, South Africa, that provides the solar-powered and wind-up radios.

"This experience has focused my thinking on where we go from here. The need is enormous, but to make it succeed, I have to be lean and mean in my operations."

The lean-and-mean strategy will also impress potential investors, who are demanding greater efficiency and accountability when they're handing out money to nonprofits.

"Social-benefit investments have to be efficient and effective, and they have to be sustainable," says James L. Koch, a professor of management at Santa Clara who founded the Science, Technology, and Society center. "Investors don't want to write checks forever."

The Elevator Pitch

David and Haydi Sowerwine know that all too well. In 1996, they started a group called EcoSystems out of their home near Kathmandu, Nepal. Since then, they've installed nearly two dozen wire bridges thoughout Nepal, and are completing an elevated "wire road" that transports people and cargo through rural parts of the country without having to clear valuable farm land to build roads.

Financing the projects is always a struggle. "The people who need it have no money to pay for it," Mr. Sowerwine tells his fellow entrepreneurs at Santa Clara, many of whom nod knowingly.

After building the organization, "we want to hand the baton to someone else, but we want to make sure the company is viable," he adds. He also wants to develop new performance-based incentives to encourage investment in his group.

"What we need are a couple of professors to be part of the scheming and planning and strategy work," Mr. Sowerwine says.

In addition to the help he received during the M.B.A. crash course, he has been assured that he will have student research support next year.

Dr. Ovadje says he's feeling more confident about his blood-transfusion organization after learning what, in Silicon Valley, is referred to as an "elevator pitch." The idea is that an entrepreneur should be able to pitch an idea to a potential investor in the time it takes to reach his or her floor.

At first glance, the concept seems oddly out of context in a country where most people have never seen an elevator. But Dr. Ovadje says it works just as well in the dusty corridors of rural clinics as it would in a Silicon Valley elevator.

"I am a medical doctor with no business sense," he says at the end of his crash M.B.A. course at Santa Clara. "But now, if I were approached by a potential investor, I'd know what to say to get their attention."

Efficiency and Integrity

One of the things nonprofit managers learn in these sessions is the importance of conveying a sense of integrity, as well as mission.

The demand for nonprofit managers with impeccable business skills, including integrity, has grown as scandals in the nonprofit world have damaged fund-raising efforts. The reputation of the United Way was tarnished in the mid-1990s when its national president was convicted of fraud for misusing the organization's assets. Two years ago scandal struck again, this time in the United Way organization in the Washington D.C. area, when the former chief executive pleaded guilty to defrauding the charity of nearly $500,000.

In another high-profile case, questions about how the American Red Cross distributed relief money after the September 11 attacks prompted Bernadine P. Healy to resign as president.

And earlier this year the Internal Revenue Service began auditing the Nature Conservancy -- the world's largest environmental organization -- because of a series of questionable financial transactions. While awaiting the results of the audit, the organization has overhauled its Board of Governors and strengthened its conflict-of-interest and audit policies.

Meanwhile, some charities are also being squeezed by higher insurance premiums because of wrongdoing in other groups. Big Brothers Big Sisters of America, for example, has seen significant increases in its liability premiums because of fallout from the child molestation cases involving the Catholic Church.

Faced with so many financial constraints, nonprofit groups cannot afford to be inefficient. But a study published in Harvard Business Review last year concludes that the nonprofit world is wasting around $100-billion a year -- money it could recoup by streamlining administrative duties, distributing funds more quickly and efficiently, and restructuring the way it provides services.

Business schools, always on the lookout for a niche of new students, have responded to such findings with an array of courses and programs. And their growth would be even greater if it were not for a couple of factors. Training students to work for charities has a downside for business schools. Those graduates are likely to earn lower salaries, which can drag down a business school's perceived prestige. (National rankings factor in the starting salaries of graduates, so a school that churns out investment bankers will score more points than one that produces charity managers.) In addition, the price tag of an M.B.A. can be especially steep for someone interested in moving up the nonprofit ladder.

But the schools that are offering nonprofit management are moving forward. Case Western Reserve University offers a "master of nonprofit organizations" degree that is jointly offered by the schools of management and social work, with participation from professors in law, as well as in the arts and sciences.

When Case Western started its program in 1984, many people were convinced that it would not succeed, but today it is considered one of the country's most successful programs.

"Some people in the nonprofit sector were initially skeptical about bringing M.B.A.-trained people directly into their sector without an appreciation of the difference between nonprofits and for-profits," says Dennis R. Young, a professor of nonprofit management and economics who directed the university's program from 1988 to 1996.

"It was important to build programs that adapt management principles to the context of nonprofits," where the bottom line is usually mission, rather than profit, he says, and where staffs are often made up of volunteers, rather than paid employees.

The Harvard Business School, where about 11 percent of the M.B.A. students come from non-profit or public-sector fields, offers a Social Enterprise Initiative that coordinates the courses and support services available for students interested in jobs in the nonprofit world, as well as those who plan to pursue initiatives for socially beneficial jobs. Students can apply for loan forgiveness and sign up for internships or summer fellowships with nonprofit groups.

The 10 courses offered through the initiative cover a range of issues, including global poverty and AIDS in Africa, and examine how such concerns affect nonprofit groups, as well as private and public companies.

Nihar S. Shah, a second-year M.B.A. student at Harvard, serves as co-president of the business school's Social Entrepreneurship Club, which has more than 300 members. He is considering working as a nonprofit consultant after he graduates, or at least working closely with that sector as a volunteer or board member.

"We're trying to build leaders in the community," he says, "not just leaders in business."