Nonprofits and the Shaping of Corporate Governance

Nonprofits have emerged as powerful forces shaping corporate law and governance, yet they remain largely overlooked in accounts of the field. This Article offers a theory that nonprofits are the missing piece in understanding some of the most significant corporate governance developments of the past decades. We make three primary contributions. First, we identify the range of nonprofits beyond traditional corporate governance actors, discuss their defining features, and explain why governance-related activism occurs through nonprofit vehicles. Second, we examine their strategic playbook, which includes legislative advocacy,  litigation, shareholder proposals, and soft law and shaming campaigns. We analyze how these strategies have shaped key corporate governance shifts, from global supply chain and benefit corporation legislation to the rise and backlash against CSR, ESG, DEI, and climate-related agendas. Third, we explore the broader implications of this phenomenon for reform proposals and the future of corporate governance.

            To that end, we observe that nonprofits have consistently operated to expand the scope of corporate governance beyond shareholder-manager dynamics, thus challenging traditional conceptions of corporate governance, incorporating competing ideologies, and fueling unpredictable chain reactions. Their global reach and varied strategies create a hydraulic effect—when one avenue of influence is constrained, nonprofits redirect efforts through alternative mechanisms. Nonprofit influence also helps explain why twenty-first-century corporate governance developments have diverged from predictions of an “end of history,” instead reflecting a global trend toward broader and more contested models of governance. Finally, shining a light on how nonprofits shape corporate governance reveals a range of normative perspectives on their constructive and concerning dimensions.