This post was written by Tim Scales, a second-year MBA candidate with a focus on social impact and entrepreneurship, in October 2016. Prior to Fuqua, he worked in support of the nonprofit arts and culture sector in New York, Massachusetts and North Carolina as a producer, marketer and consultant. At Fuqua, he is a CASE Fellow and cabinet member of the Net Impact Club. This past summer, he interned with the nonprofit consulting firm TDC in Boston.
Before business school, over the course of a decade in and around the nonprofit sector, I became well acquainted with the perceived tension between nonprofit mission and for-profit management. This would often play out at the board level, in conversations about planning and strategy. One side would say, “If we ran this organization more like a business, we could generate higher returns!” while the other side would counter, “The success of our mission isn’t measured in financial metrics!” The tension led occasionally to inventive compromise and a refined strategic direction but more often to an unproductive mash-up of conflicting ideas.
I’ve felt that same tension during my first year of business school. As I gained technical expertise and financial knowledge, I would wonder why these MBA skills weren’t more widely used in the nonprofit sector. But then I would attend a nonprofit board meeting and remember that the present value of a social program is much more complicated than discount rates and free cash flows. I knew that a balance could – and must – be achieved but I had yet to see that compromise effectively negotiated.
This past summer, however, I had the opportunity to explore that middle ground through an internship with the consulting firm TDC. A nonprofit themselves, TDC works closely with nonprofits, foundations and public sector clients to develop strategic plans, evaluate programs, and provide other specialized research and analysis services. Over my eleven weeks, I worked with several teams on a wide variety of activities across the spectrum of TDC’s work.
On my first day, I read through a stack of TDC’s reports to bring myself up to speed on their practice and process. The first was Getting Beyond Breakeven, an influential study that explores the idea of “capitalization” in the nonprofit sector, which I learned means basically the health of an organization’s balance sheet and how that influences their operations and strategy.
I used the principles of this report in several activities over the summer, including an analysis of the financial health of several hundred nonprofits across a particular geographic region and mission focus. Incorporating my past experience in the nonprofit sector, my financial knowledge refined through the MBA program, and the tools and industry knowledge gained through my internship, I was able to turn a data dump of tax returns into meaningful insights about how this sector is functioning on a financial level and how strategic choices by individual organizations affect their capitalization and financial health.
This technical work was fascinating and challenging. What was most valuable to me though was seeing how this MBA-friendly quantitative analysis will be incorporated into the larger activity. The work doesn’t stop here, drawing conclusions about the effectiveness of the sector based on financial health and “value creation”. Neither does it downplay the financial side, focusing solely on mission-related outcomes and “lives touched.” Instead, both perspectives will be integrated and the interplay between them explored through further analysis and conversation. Both views will be given the weight that they deserve, with the understanding that financial success and mission success are inextricably linked and can both build and constrain the other.
I don’t pretend that my work this summer has resolved this tension for me. It has, however, provided a valuable example of how this work can be navigated and given me skills and experience that will both inform my second year at Fuqua while also influencing my career path and goals. I am grateful to TDC for the opportunity and to the SIF Scholarship for supporting my social impact career path.
The Summer Internship Fund (SIF) enables first year Duke MBA-Daytime students to learn about the rewards and challenges of social sector management without making a significant financial sacrifice. In addition, the program enables organizations that otherwise could not afford to hire MBA student interns to benefit from students’ expertise. The SIF has supported more than 170 students, distributed nearly $520,000, and helped to further the mission of many nonprofit and government organizations. Funds are raised through student fundraising and from donors who believe in the mission of the program. If you would like to contribute, you can donate online using your credit card.