THOUGHT LEADERSHIP
Unlocking Opportunity: How Nonprofits Can Leverage Corporate ESG Alignment
By: Patricia Q. Connolly, Co-Founder Connolly & Ludwig
Introduction
Nonprofit organizations are always on the lookout for opportunities to grow their impact, strengthen their mission, and build sustainable partnerships. However, many nonprofit leaders and board members may not realize that a valuable tool already exists to uncover mission-aligned opportunities with corporations: proxy statements.
These publicly available documents, often dismissed as technical or complex, hold the key to understanding a corporation’s Environmental, Social, and Governance (ESG) practices. By leveraging proxy statements, nonprofits can identify and align with
corporations that share similar values and priorities, creating partnerships that are impactful and enduring.
Understanding Proxy Statements
Proxy statements are filed by publicly traded companies with the U.S. Securities and Exchange Commission (SEC)--Form DEF 14A. These documents are designed to inform shareholders about important company decisions, such as board elections,
executive compensation, and governance policies. Beyond their shareholder-focused content, proxy statements also provide insights into a company’s ESG commitments and initiatives. For nonprofit organizations, this information is a goldmine for identifying potential corporate partners whose goals align with their mission and values.
Where to Look in Proxy Statements for ESG Information
Nonprofits should focus on the following sections:
1. Sustainability or ESG Reporting Sections
o Often, companies include a dedicated section on sustainability or ESG practices in their proxy statements. This section provides an overview of environmental initiatives, diversity and inclusion efforts, and governance frameworks.
2. Risk Oversight
o Look for descriptions of how the board oversees environmental, social, and governance risks. This may indicate whether ESG is embedded intothe company’s long-term strategy.
3. Committees and Their Charters
o Review the responsibilities of board committees, such as the Nominating and Governance Committee or Corporate Responsibility Committee. These often detail how ESG practices are managed.
4. Shareholder Proposals
o Pay attention to proposals and resolutions related to environmental and social topics. These indicate areas of stakeholder focus and corporate accountability.
CEO or Chair Letter
The opening letter often reflects the company’s commitment to ESG and highlights
recent achievements or future goals.
Example of ESG Alignment
Let’s consider Microsoft Corporation:
o Proxy Statement Highlight: In its proxy statement, Microsoft includes a dedicated ESG section outlining its progress on sustainability initiatives like achieving carbon negativity by 2030, investments in renewable energy, and commitments to diversity and inclusion. The statement also details board oversight of ESG-related risks.
o How a Nonprofit Could Align: A nonprofit focused on environmental conservation could use this information to propose a partnership with Microsoft to advance shared sustainability goals, such as collaborative projects in renewable
energy advocacy or forest preservation.
Why ESG Alignment Matters for Nonprofits
1. Enhanced Credibility and Funding Opportunities: Partnerships with companies that have strong ESG commitments boost nonprofits’ visibility and reputation.
2. Shared Value Creation: Aligning missions enables both the nonprofit and the corporation to achieve greater social impact while meeting mutual goals.
3. Long-Term Strategic Partnerships: ESG alignment fosters deeper, more sustainable relationships than one-off sponsorships or donations.
Actionable Steps for Nonprofit Leaders
1. Assign a board member or staff member to review proxy statements of target corporations annually.
2. Develop a framework to evaluate ESG alignment, focusing on mission, fit geographic relevance, and potential funding streams.
3. Use ESG information as a starting point to initiate conversations with corporateleaders, emphasizing mutual goals and impact potential.
Closing Thoughts
Proxy statements are an often-overlooked resource for nonprofit organizations seeking mission-aligned corporate partnerships. By leveraging ESG information within these documents, nonprofit CEOs, executive directors, and board members can identify and
approach corporations whose values align with their own. This strategic approach not only enhances the nonprofit’s credibility but also fosters impactful collaborations that drive meaningful change. Nonprofit leaders should view proxy statements not as
technical documents, but as gateways to unlock transformative opportunities for their organizations and the communities they serve.
By Patricia Q. Connolly, Co-Founder
Connolly & Ludwig
BoardSource Certified Governance Consultant
Connolly & Ludwig
Steering AI Adoption in Nonprofits: A Governance Blueprint for Impact
By: Patricia Q. Connolly, Co-Founder Connolly & Ludwig
The conversation around nonprofit boards and the role of AI has rapidly accelerated as organizations face increasingly complex challenges. Nonprofits are recognizing the necessity of integrating AI to enhance decision-making, streamline operations, and elevate their mission impact. However, introducing AI into nonprofit governance requires thoughtful evaluation. Boards must ensure that AI aligns with the organization’s mission, values, and resources, all while addressing the concerns of their staff and stakeholders.
Key Considerations for Nonprofit Boards
Mission Alignment
Boards must ensure that AI initiatives directly support the organization's mission. AI should enhance, not detract from, core goals such as service delivery, donor engagement, or program effectiveness. For example, AI-powered analytics can help nonprofits better understand donor behavior or optimize program delivery based on real-time data, driving stronger outcomes
aligned with their mission.
Ethical Use of AI
Ethical considerations are critical as nonprofits adopt AI. Boards should ensure that AI systems are transparent, unbiased, and compliant with data privacy laws. For example, nonprofits need to manage the risks of algorithmic bias in decision-making or service delivery. Creating policies to govern data use, privacy, and transparency can help maintain stakeholder trust while
upholding the organization’s values.
Resource Allocation
Boards must carefully assess whether they have the financial and technical resources to invest in AI. Although AI can bring significant long-term benefits—like cost savings and operational efficiency—the initial investment and ongoing support can strain a nonprofit’s budget. Exploring partnerships with tech firms or universities can provide nonprofits access to AI expertise without overwhelming financial resources.
Risk Management
Using AI introduces risks, including cybersecurity threats, data breaches, and unintended consequences in decision-making. Boards should develop a comprehensive risk management plan that addresses these risks while ensuring that AI supports decision-making without creating vulnerabilities. Collaborating with staff to implement safeguards is essential to mitigating these risks.
Governance and Oversight
AI is a powerful tool, but it should never replace governance. Boards must vigorously oversee AI’s role in decision-making, ensuring it complements rather than replaces human judgment. Establishing an AI governance framework—defining its role, setting accountability measures, and regularly reviewing its impact—will help boards integrate AI responsibly.
Ensuring Staff Buy-In and Cultural Alignment
Managing staff concerns is one of the most significant challenges for nonprofits with AI adoption. Employees may fear that AI will replace jobs or disrupt workflows if not thoughtfully integrated. Boards must address these concerns early and consistently to ensure smooth implementation and cultural alignment.
Communication and Transparency
Boards should engage staff from the outset, explaining the reasons for AI adoption, its benefits, and how it will impact daily operations. Early and transparent communication reduces fear and helps staff feel included in the organization’s evolution.
Upskilling and Training
The introduction of AI will likely require staff to learn new skills. Boards should advocate for training programs that empower employees to work alongside AI tools, enhancing their roles rather than replacing them. By investing in staff development, boards ensure that the organization remains adaptable and that employees feel valued as they transition into AI-
enhanced roles.
Change Management
Boards play a crucial role in overseeing the cultural and operational shifts that AI will bring. Change management strategies, such as revising job descriptions and adjusting workflows, will help ensure AI is integrated smoothly into the organization’s structure.
Conclusion
Nonprofit boards are essential in guiding their organizations through AI integration. By prioritizing mission alignment, ethical use, resource allocation, risk management, and staff concerns, boards can ensure AI adoption enhances governance and strengthens their organization’s long-term impact. As AI continues to evolve, boards should remain proactive,
regularly refining their AI strategies to further the organization’s mission and increase its service to the community.
Why Every Nonprofit Board Needs a Thorough Assessment for Effective Governance
By Patricia Q. Connolly, Co-Founder of Connolly & Ludwig
In today’s rapidly evolving landscape, nonprofit boards must review their governance practices. Effective governance isn’t just about meeting legal obligations; it’s about safeguarding the mission and ensuring the organization can sustainably serve its community. Conducting a board assessment is a crucial step in this process, helping boards adopt leading practices in nonprofit governance.
Key Takeaways for Nonprofit Boards:
-
Mission Alignment: Boards must keep the mission at the forefront of every decision. Each action and strategy should support the organization's long-term vision. Regular assessments ensure that board activities align with the mission, fostering a focused and purpose-driven organization.
-
Financial Oversight: Regular reviews of the organization’s financial health are essential. Transparent and proactive financial planning prevents sudden closures and ensures sustainability. By conducting financial assessments, boards can identify risks early and develop strategies to mitigate them, securing the organization’s long-term financial stability.
-
Stakeholder Communication: Clear, consistent communication with all stakeholders—including staff, donors, and the broader community—is vital. Keeping everyone informed builds trust and enables collective problem-solving. Assessing communication strategies helps boards enhance transparency and strengthen relationships with stakeholders.
-
Crisis Management: Boards should have a robust crisis management plan in place. Being prepared for unexpected events can mitigate damage and provide clear guidance during times of uncertainty. Regularly reviewing and updating crisis management plans ensures the organization is ready to respond effectively to crises.
-
Continuous Education: Board members must stay informed about governance and nonprofit management best practices. Ongoing training and development ensure that board members understand their duties and can effectively fulfill their roles. A continuous education program keeps the board updated with the latest governance trends and practices.
Conclusion:
The importance of nonprofit boards pausing to reflect on their governance practices cannot be overstated. Regular board assessments are not just a procedural task but a strategic initiative that can significantly enhance a board's effectiveness. They ensure that the organization remains mission-driven, financially stable, communicative, crisis-ready, and continuously improving.
By committing to these assessments, nonprofit boards can adopt leading governance practices, build trust among stakeholders, and ultimately ensure the success and longevity of their organizations. Let’s work together to ensure that institutions dedicated to education, the arts, and other vital missions continue to thrive and serve their communities effectively.
For more insights on nonprofit governance and board readiness, visit Connolly & Ludwig at connollyludwig.com
Empowering the Next Generation:
Nonprofit Board Members Under 30 Leading the Change
By: Patricia Q. Connolly, Co-Founder Connolly & Ludwig
According to BoardSource, a leading institution for research on nonprofit board practices, approximately 57 percent of nonprofit board members are aged 50 or over—and only 17% are under 40. (1)
The benefits of having a diverse board, including representation from different age groups, are well-documented and contribute to more effective decision-making and a broader perspective on organizational issues. The unique skills and perspectives millennials and GenZ bring, particularly in technology, collaboration, and a strong focus on social impact, can significantly enhance a nonprofit's ability to adapt and thrive in a rapidly changing environment.
Nonprofits must be forward-thinking and strategically position themselves to attract and engage younger donors, volunteers, and board members. Between 2023 and 2045, $84 trillion (about $260,000 per person in the US) in assets will be handed down to Millennials and members of Generation X and Generation Z (2) By including younger individuals on boards, organizations can better understand and connect with the values and priorities of the next generation of philanthropists.
The push for age diversity on nonprofit boards aligns with broader trends in corporate governance, where organizations are recognizing the importance of diverse perspectives for long-term success. It is essential for nonprofits serving youth to have that younger voice at the table as they are closer to the issues facing those they serve.
My advice for individuals under 30 interested in joining nonprofit boards is to remember that your personal brand is a vital asset; therefore, conducting thorough research, volunteering, networking, and acquiring relevant skills are essential before expressing interest in a board position. Completing your due diligence demonstrates a genuine commitment to the organization, which helps you understand the nonprofit's culture and operations.
In summary, I advocate for a more diverse age representation on nonprofit boards. This forward-thinking approach aligns with the evolving landscape of social impact and philanthropy. It benefits the organizations directly and contributes to the overall health and sustainability of the nonprofit sector.
Evaluating Nonprofits: Key Factors to Consider Before You Invest
By Patricia Q. Connolly, Co-Founder of Connolly & Ludwig
When approached to invest in a business, a critical part of your decision-making process involves conducting thorough due diligence. You would scrutinize financial health, market position, competition, and governance structure. Evaluating leadership is essential to ensure they have the expertise to succeed. Often, you might start with a small investment, gradually increasing it as you see a return on investment (ROI) and gain confidence in the company.
Now, replace the word "business" with "nonprofit." Would you go through the same steps? According to Cause IQ, there are 84,437 nonprofit organizations in Pennsylvania, employing 2 million people, generating $220 billion in revenue annually, and holding assets worth $503 billion. Nonprofits are the largest industry in the state, and their success is vital to the prosperity of the communities they serve. Nonprofit organizations employ about one in ten working Pennsylvanians, among the highest rates in the nation, a study from the Johns Hopkins Center for Civil Society Studies found.
Investors (donors) often support nonprofits because they are passionate about their mission. However, proper due diligence is just as crucial in the nonprofit sector as it is in the for-profit sector to ensure a return on investment. In the for-profit world, ROI translates to financial gain. In the nonprofit realm, ROI means the organization successfully carries out its mission over the long term. A deep understanding of the organization’s governance and business operations is vital for making informed investment decisions.
Before investing in a nonprofit, consider asking leadership the following governance questions. These questions not only help you make a better-informed decision but also encourage the nonprofit to apply a business lens to its operations over time:
-
What is the nonprofit’s mission and how is it being executed? Understanding the mission and how the organization plans to achieve it is fundamental. This includes knowing their strategies, programs, and metrics for success.
-
Who are the members of the board and what expertise do they bring? A strong board with diverse skills and experience is crucial for effective governance and strategic decision-making.
-
What is the nonprofit’s financial health? Review their financial statements, funding sources, and sustainability plans. A financially healthy nonprofit is better positioned to achieve long-term success.
-
How does the nonprofit measure its impact? Look for clear, measurable outcomes that demonstrate the organization’s effectiveness and efficiency in achieving its mission.
-
What are the nonprofit’s strategic goals and how are they being implemented? Understanding the organization’s long-term vision and strategic plan is key to assessing its potential for sustained impact.
By asking these questions, you not only safeguard your investment but also contribute to the nonprofit’s accountability and transparency. This approach ensures that your support is directed towards organizations that are not only passionate about their mission but also capable of delivering on their promises.
Investing in a nonprofit, like any other investment, requires a thoughtful and strategic approach. By applying the same due diligence standards used in the for-profit sector, you can make informed decisions that enhance the impact of your contributions and support the growth and sustainability of vital nonprofit organizations.
For more insights on nonprofit governance and board readiness, visit Connolly & Ludwig.
The Strategic Imperative of Nonprofit Board Education for Corporate Leaders
By: Patricia Q. Connolly, Co-Founder Connolly & Ludwig
Elevating Leaders / Advancing Board Governance/ Transforming Nonprofits/ Certified Governance Consultant (CGT) /Board Education/Nonprofit Consulting/ Board and Governance Reviews
In today’s interconnected world, corporate responsibility extends beyond the four walls of a business. Companies increasingly encourage high-potential employees to serve on nonprofit boards to develop leadership skills, enhance strategic thinking, and contribute to meaningful societal impact. However, while board service offers immense opportunities for professional growth, it also requires a deep understanding of nonprofit governance and an awareness of how both the individual’s and the company’s brand are represented.
Why Governance Education Matters
Nonprofit boards oversee mission-driven organizations, ensuring they are financially sustainable, compliant with laws and regulations, and advancing their missions effectively. Serving on a nonprofit board can be an eye-opening experience, but it can also be manageable with proper governance education. Employees need a thorough understanding of their responsibilities, from financial oversight to strategic alignment, to make impactful decisions that drive success.
Companies that invest in governance education for their employees are developing individual leaders and reinforcing their commitment to community involvement, ethics, and strategic leadership. By equipping employees with the skills necessary to serve effectively, businesses can ensure that their brand is well-represented and that their employees are contributing meaningfully to the nonprofit sector.
Balancing Personal and Corporate Brands
Board service requires employees to bring their expertise to the table and consider how their actions and decisions reflect their company’s values. Employees who serve on nonprofit boards are ambassadors of their organization, and the alignment between personal and corporate branding becomes critical. Employees must navigate this dual role carefully, ensuring they embody the company’s principles of leadership, integrity, and community engagement while fostering their brand as strategic, thoughtful leaders.
When employees represent their companies on nonprofit boards, they showcase the company’s commitment to social responsibility and community leadership. Strong governance and informed leadership are vital to ensuring that employees contribute effectively, enhance their leadership potential, and elevate both their own and their company’s reputation.
The Need for Structured Board Education
To address this growing need, companies should offer structured programs that teach employees the nuances of nonprofit governance and board service. Such programs enhance leadership skills and provide a framework for understanding how governance principles can be applied in nonprofit organizations, ensuring alignment with corporate values and driving long-term success.
The Nonprofit Governance Leadership Program Connolly & Ludwig developed focuses on this very intersection—offering high-potential employees the education and support they need to thrive in nonprofit board roles while enhancing their company’s visibility and leadership in the community. The program’s core components include:
-
Strategic Governance and Oversight: Equipping employees with tools for financial oversight, compliance, and strategic goal alignment.
-
Personal and Corporate Branding: Helping participants understand how to manage their dual roles as representatives of themselves and their companies.
-
Cohort-Based Learning and Individual Coaching: Offering a supportive, peer-learning environment and personalized coaching to deepen participants'; understanding and effectiveness.
Conclusion
As companies continue encouraging employees to serve on nonprofit boards, offering the training and resources necessary for success is vital. Board service is not just about leadership development—it’s about reinforcing the company’s brand, values, and commitment to community impact. Employees who understand governance, approach board service strategically, and align their efforts with both personal and corporate branding can become powerful forces for positive change in both the nonprofit and corporate worlds.
Investing in board education benefits the individual employee and strengthens the company’s influence and leadership across the community. The future of effective nonprofit board service lies in the preparation and education we provide to those we entrust with such critical roles.
