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 MBAs at the Crossroads of
Corporate and Nonprofit America

The audience members looked like the business students they were – neatly groomed twenty-somethings in button-downs and polo shirts, asking questions about cost-benefit analysis, emerging markets, and the quantification of corporate achievements.  But the sessions they attended had titles like “Using the Market to Solve Environmental Challenges,” and the achievements they sought to quantify were the impact of corporate philanthropy and social responsibility.

These business school students and their professional counterparts were participants in the 12th Annual Net-Impact Conference at Columbia Business School November 11-14.  Net-Impact is a group of close to 10,000 MBA students and professionals “committed to using the power of business to create a better world.” (1)  Thirteen hundred and fifty-nine participants attended the event, a record for the organization founded in 1993 as Students for Responsible Business. (2)

What was most striking about the conference, though, and the dynamic way the participants engaged with the array of topics relating to social change, was the evidence it provided for the current trend toward an increasing alignment between the nonprofit and business sectors.  Students interested in social change are currently showing an interest in business school, intending to use their degrees either to bring soul to corporate America or bring capitalism’s skills into the nonprofit sector.

This is evident in both sectors, as corporate social responsibility is increasingly a major buzzword in boardrooms, and nonprofits are increasingly adopting business strategies to survive in a funding environment that gets more competitive every year.  This change is pronounced at the business school level.  According to the Aspen Institute, in their biannual Beyond Grey Pinstripes 2003 survey, examining the presence of social responsibility offerings and their integration into the schools’ curricula, the 100 participating schools reported more than 950 electives dealing with social or environmental issues, almost 70% more than the number of such courses reported in the 2001 survey. (3)  The same schools reported twice as many events such as conferences, speakers, and seminars that dealt with topics like sustainability, globalizations, and corporate ethics, increasing to over 700 such events. (4)

As the culture of both business schools and the professional world changes, students are pursuing MBAs as a path to create social change, rather than the masters’ degrees in Public Administration or Non-Profit Management many such students have pursued in the past.  Shilpi Shah, a recent graduate of Columbia Business School, decided to pursue an MBA as a step toward her goal of starting a nonprofit.  According to Shah, she saw starting a nonprofit much like starting a business and wanted to build the related skills her undergraduate engineering degree had not taught her.  Raymond D. Horton, a professor and director of the Social Enterprise Program at Columbia Business School, agrees that this is a key benefit that business school training can offer future leaders in the nonprofit sector.  According to Horton, “In the past, they would have either gone to a professional school, like the School of Social Work, or to an MPA program, but I think they’re going more to business schools now, because business schools teach them how to lead and manage organizations, which are skills in short supply.”

Students also see MBAs as a source of increased power to create change.  Rob Frederick, the manager of corporate social responsibility for Ford Motor Company took a different path than Shah, choosing to apply the values of the nonprofit sector within a business context.  He sees his MBA from the University of Michigan as the source of an opportunity to create change from within one of the country’s most influential corporations.  According to Frederick, “I have been attracted to working from within business, because I think that’s where the resources, the power and influence, and the ability to make change (are).  If you can make small changes inside a company like Ford, you can make a really big impact.”  This idea is supported by Marc Brammer, a Senior Analyst at Innovest Strategic Value Advisors, an investment research and advisory firm with a specialty in analyzing the impact of environmental performance, social performance, and governance: “The advantages inherent in approaching sustainability from a business context is that you have a lot more power and legitimacy in the capitalist society in which we operate.”

The advantages of Frederick’s position also come with disadvantages, and his position may not be appealing to everyone with his interests and values.  While he has more access to the company’s management than environmental activists lobbying for better fuel economy or more hybrids, he must work within the parameters of the corporate environment.  Frederick calls attention to the choice recent graduates must make between working for a progressive company that already “gets it” and being a part of making change at a company “that is coming up the learning curve” on issues of social responsibility.  On a larger level, young adults interested in social change must make a decision between working outside the system, in the traditional role of lobbyist or activist, and working inside the system, where one many have to settle for small and slow changes, but where one has the power to have a direct impact and access to some of the country’s most powerful decision makers.  For the latter group, an MBA can teach students to “communicate in the same language,” as Frederick puts it, as the business community in which they will operate. 

Frederick believes the MBA can also be helpful to the former group, the individuals interesting in working in the public sector to make changes that often require participation from the private sector.  An “MBA prepares you for a role within business, but also for a role outside, if you want to be someone provoking change, to understand the business models, and to understand the risks and opportunities that businesses face.”  Here, too, the ability to communicate in the same language as those one is trying to persuade is a valuable skill, and an MBA may provide the credibility the similarly-trained CEO requires to pay attention to the non-profit leader. 

For either group, Brammer offers both an inspiration and a warning.  On the upside, he says, “There is a great deal of value to be gained in the business context as you learn to expertly frame sustainability issues in short-term economic thinking modes and in terms of profitability and economic progress, rather than in other ‘value frames.’”  At the same time, “The greatest advantage is also the greatest weakness.  Capitalist systems only value things in monetary terms which tends to be limiting and short sighted.  While it is important to learn how to frame things this way given the dominance of this system and approach, it can be disheartening and depressing to always have to approach things this way.”

So what is driving these students, interested in social change, to see an MBA as the key to achieving it?  For students who want to go into nonprofit management, like Shah, one factor may be the changing funding landscape.  In 2003, there were 964,418 501(c)(3) organizations in the United States.  That’s approaching double the 575,690 such organizations that existed in 1993.  At the same time, U.S. philanthropic donations have increased from $148.4 billion in 1993 (in inflation-adjusted dollars) to $240.72 billion in 2003. (5)  The 67.5% increase in competition for funding outstrips the 62.2% increase in dollars available over the same time period.  While the difference is not overwhelming, in a sector where every dollar counts, the better a manager is trained to be efficient, cut costs where possible, and seek alternate streams of revenue – in short, a manager who is trained in the skills required to run a company that can survive the rigors of capitalism – the more likely the nonprofit will successfully find and channel the resources required to fulfill its mission.

For those nonprofits seeking a piece of the $13.46 billion that corporations donated in 2003, the ability to speak the corporate language that Frederick highlighted as key to persuasion becomes important again.(6)   The Net-Impact conference session entitled “Strategic Philanthropy” was also indicative of a trend in the sector, wherein corporations are looking more and more to their community involvement departments to help the company reach its corporate goals.  A nonprofit leader who can understand the business model, as Brammer advocates, and thus demonstrate how an affiliation with his or her particular nonprofit will help the company’s bottom line has a significant advantage over competing grantees.

None of this is to say, of course, that the recent business school graduate is the answer to every nonprofit’s prayers.  Shah and Horton both point out that no professional school fully prepares its graduates for their career, and that on-the-job training is crucial to truly understanding the field and building skills.  Shah also mentions that the differing mentalities between MBAs and more traditional nonprofit leaders, like MPAs , can cause “culture clash and friction.”  MBA’s “expect a certain level of corporatism in the organizations that they work within that isn’t necessarily going to be there,” which can be to the benefit or to the detriment of the organization. 

Shah, Horton, and Frederick are also all involved with businesses schools with special programs in social responsibility, Shah and Horton with Columbia’s Social Enterprise Program and Frederick with the Corporate Environmental Management Program at Michigan, a joint program between the Business School and the School of Natural Resources and the Environment.  The Aspen Institute’s Beyond Grey Pinstripes categorizes only fifteen of the 100 surveyed schools as “on the cutting edge” or “with significant activity” in the areas of social and environmental responsibility education.  The rest of the schools were listed as “with moderate activity” (21 programs) or merely commended for participation. (7)  While the training required to produce these hybrid leaders may be becoming more available, it is hardly pervasive.

Even the programs that offer opportunities in social responsibility may fail to integrate them into the curricula for the majority of mainstream students.  According to Frederick, both businesses and business schools “need to find ways to move this into the finance discussion, move this into the marketing discussion, the product development discussion.”  He believes such education will be much more powerful if schools integrate it throughout their programs, so all students are exposed to the concepts and bring them forward into the wide array of careers they choose to pursue.  The Aspen Institute has found that this is one of the areas in which business schools need more work.  Despite the previously-discussed increase in elective courses for the students with a specific interest in social change, Beyond Grey Pinstripes 2003 found, “Compared to the previous survey, the number of core courses with social and environmental content is up, but the improvement is marginal.” (8)

For the individuals interested in social change through MBAs, the picture is increasingly bright.  Net-Impact’s growing participation is encouraging, and the Aspen Institute’s biannual reports direct interested students toward the programs most suited for their interests.  If business schools follow their lead and integrate social responsibility into the core curriculum, such education will become even stronger and more prevalent.  In the meantime, the students seeking out this education for themselves may become a crucial bridge between the sectors.  As they enter their careers, they have the training and the opportunity to learn from both sectors and bring the best of each together, to help nonprofits in their ongoing quest to effectively accomplish their social goals, while bringing the public sector value on social improvement into the heart of the private sector.

Footnotes:
 
1.Net-Impact.  http://www.net-impact.org/.  Dec. 3, 2004.
2.Liz Maw.  Opening Speech, 12th Annual Net-Impact Conference, Nov. 12, 2004.
3.The Aspen Institute.  “Findings.”  Beyond Grey Pinstripes.  http://www.beyondgreypinstripes.org/results/findings/trends_highlights.cfm.  Dec. 3, 2004.
4.The Aspen Institute.  “Findings.”  Beyond Grey Pinstripes.  http://www.beyondgreypinstripes.org/results/findings/trends_highlights.cfm.  Dec. 3, 2004.
5.Giving USA Foundation – American Association of Fundraising Counsel Trust for Philanthropy/Giving USA 2004
6.Giving USA Foundation – American Association of Fundraising Counsel Trust for Philanthropy/Giving USA 2004
7.The Aspen Insitute.  “Findings.”  Beyond Grey Pinstripes.  http://www.beyondgreypinstripes.org/results/findings/top100.cfm.  Dec. 3, 2004. 
8.The Aspen Institute.  “Findings.”  Beyond Grey Pinstripes.  http://www.beyondgreypinstripes.org/results/findings/trends_highlights.cfm.  Dec. 3, 2004.
 


About The Author: Jessica Stannard-Friel is an Associate Director in the Philanthropy Division of Changing Our World, Inc., a national firm helping corporate philanthropists plan and implement their strategic giving.

You may contact the author at: jstannardfriel@changingourworld.com

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