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Finance and Non-profit Can Go Hand-in-Hand

Less than a week after my last exam, I was eager to leave school behind and jump into my work as a financial analyst at The Home for Little Wanderers. As I saw it, the primary benefit of working in a nonprofit organization for the summer would be the opportunity to actually get something done, make change within an organization, and not just theorize about the myriad of possible solutions for business problems that we discussed relentlessly throughout the first year.

I went to the video store and rented “Cider House Rules.” It seemed like the perfect field research to prepare me for my summer working at one of New England’s largest social services agencies serving more than 1,500 children each year. Unfortunately, I quickly found out that those idyllic rural Maine scenes have more in common with an orphan’s experience back in 1865, when The Home for Little Wanderers was founded, than with a child’s experience in today’s modern system of child welfare.

The problems that The Home for Little Wanderers face are real life. Most of the children served by The Home are in the custody of the state for a variety of reasons including abuse, neglect, parent incarceration, or the parents’ simple inability to pay for necessary medical and developmental services. These days, there are no foundlings swaddled in blankets left on doorsteps with notes that say, “Please find him a good home.”

The Home operates 35 distinct programs ranging from prevention programs and clinical services to adoption and foster care support and residential and special education facilities. The programs are funded by a mix of government contracts, private support, and the agency’s endowment – making financial management both very complex and critical to the organization’s success.

In addition to ensuring every day that each child receives the appropriate services for his or her unique needs, The Home must effectively manage its internal operations as a 1,000-employee organization with an annual budget of $55 million. As one of only two financial analysts in the entire organization, I worked on a variety of projects throughout the summer. My first priority was working with the CFO to move the annual budget through the Finance Committee and ultimately the full Board of Directors before July 1. While this work was just as unglamorous as it sounds, I had tremendous exposure to the inner workings of the Board and the executive staff of the agency.
In an era of belt-tightening for nonprofits, I was not surprised to be given the task of recommending expense reductions. In analyzing The Home’s residential (and most expensive) program model, I pulled out the tools of my HBS education and identified cost drivers and the gaps between planned and actual expenses, and made my recommendations.

To my surprise, the CFO had me present these findings directly to the program directors and then work with them on strategies for reducing costs. In my mind, I kept hearing my Finance I professor’s refrain, “Okay, you’ve crunched the numbers, now present it to the CEO and recommend next steps.” For me, that was the most interesting part.

Like any good MBA student, I couldn’t look at expenses without looking at revenues, so I also focused on improving billing procedures and shortening the cash conversion cycle, which is a pretty daunting task when you’re working with the government. The benefits of the new procedures I put in place won’t be visible for a while, but I’m confident that they will free up resources that can be put to use in providing more care to the children in The Home’s programs.

My summer experience allowed me to have a direct, hands-on impact nearly every day, which was a nice counterbalance to my first year at HBS. It also showed me just how valuable MBA skills are to the management of nonprofit organizations, and further proved to me that managing a large enterprise is complex business, in both the private and nonprofit sectors.

Since 1982 the HBS Nonprofit and Public Management Summer Fellowship has provided financial support to current MBA students who choose to work in nonprofit and public sector organizations during the summer. Over the life of the program, over 350 students have participated in the program, with a record 48 students for summer 2001.
Sponsored by the HBS Initiative on Social Enterprise and the Social Enterprise Club, the Fellowship is funded by the School and alumni donors. The program has three principal goals:

o To enable students to take jobs in nonprofit and public enterprises where their HBS training will provide significant benefits to the organization and the community it serves;

o To expose students to the rewards and challenges of public and nonprofit management;

o To enrich the HBS community and the quality of the MBA education by increasing the number of students with experience in the nonprofit and public sectors.
For more information, see: Social Enterprise

March 25, 2002
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