A YouTube video of Milton Friedman was cued up on a whiteboard in front of 14 business school students late one morning in 2015. Before their professor pressed play, she turned to the class.
“Is my point in playing this for you that Milton Friedman is right and you should all memorize what he said?” she asked.
From the room came a chorus of loud "No"s. The professor, Donna LaSala, nodded. “It’s just one opinion among many,” she said cheerfully.
The students in the classroom were all masters in business administration candidates at Presidio Graduate School, a 150- student institution in San Francisco that bills itself as a progressive alternative to mainstream business schools.
The school offers an MBA in sustainable management, a certification tailored for people who want to use business to “create a more just, prosperous and sustainable world,” according to the school's mission statement.
In theory, plenty of business schools pursue that mission by offering classes on sustainability and ethics and touting efforts to recruit a more diverse faculty and student body. But many would argue that elite programs have not yet reached their goal of grooming ethical leaders or diversifying their classes. Women made up 29 percent of business school graduates in 2015, and black, hispanic, and American Indian MBAs accounted for 15 percent, according to Bloomberg's survey of more than 9,000 students who graduated in 2015. After a string of elite MBAs were nabbed for insider trading and other bad behavior in the wake of the financial crisis, researchers at top business schools built a coalition devoted to promoting broader ethical teaching at their institutions. In August, the White House invited hundreds of business schools to Washington and asked them for a commitment to enrolling more women and minorities.
While other B-schools work to expand their reach and shed their old boys' club stigma (with some success—Bloomberg data show that the share of women in business schools has increased six percentage points since 2007), Presidio resembles the school they say they're trying to become. Its current MBA class is 56 percent female, and ninety percent of Presidio graduates work in sustainability posts, according to Presidio's president, William Shutkin. That can mean impact investing, working within a utility company on the renewables portfolio, or working in a mainstream grocery business on sustainable food sources.
But the school has sacrificed prestige and funding in pursuit of its vision. Presidio charges $65,520 total, about 52 percent of what a top-ranked business school does, and its graduates make a median base salary $80,625, compared with the $120,000 or more that students at high-earning elite schools made after they graduated in 2015, Bloomberg data show.
With less affluent graduates, the school can’t raise all that much from alumni to supplement its tuition revenue. The school gets 80 percent of its $4.5 million in annual revenue from tuition and the rest from grants. Shutkin said the school is desperately trying to grow. But Presidio doesn’t have the brand appeal of local competitors such as Stanford Graduate School of Business or Berkeley Haas School of Business, and it hasn’t yet captured the attention of do-gooders nationwide (80 percent of its students are from the Bay Area, according to the school).
The school has stayed solvent by keeping expenses low, Shutkin said: Students spend most of their time completing coursework away from campus, and show up for classes only once a month. The school has a small core of faculty, rents all its buildings, and doesn’t shell out for such things as lavish post- exam dinner events and end-of-semester open bars—mainstays at some top business schools. It has slowly expanded its student body, from 22 students in 2003 to a peak of 250 in 2011, as its name recognition has increased among networks of young people seeking to make capitalism a force for good.