Technology and AI for Greater Nonprofit Impact

Artificial Intelligence (AI) has emerged as a transformative force in the modern digital era, revolutionizing various sectors, including nonprofits. While the application of AI in this sector is still in its early stages, it holds immense potential to streamline operations, boost efficiency, improve the donor experience and amplify impact. However, the path to AI integration is challenging, particularly for nonprofits that need more resources or knowledge to navigate this complex landscape.

AI Integration in Nonprofits: Opportunities and Benefits

AI can redefine the operational landscape for nonprofits by automating routine tasks such as invoice processing, email drafting, donor engagement and event coordination. This shift allows organizations to focus more on their primary mission, while AI tools provide valuable insights and data to guide informed decision-making. Additionally, AI-driven analytics can decipher donor behavior, recognize trends and forecast future outcomes, enabling nonprofits to strategize their fundraising efforts effectively.

Furthermore, AI’s ability to analyze and interpret data extends beyond number crunching, strengthening the writing process for case notes and file development. AI tools can pinpoint weaknesses or areas for improvement, enhancing the quality of the content.

Consider a situation where a foundation receives hundreds of grant applications from nonprofit organizations. Manually sifting through these applications to find those that match the foundation’s funding thesis can be laborious and time-consuming. However, AI can significantly streamline this process. By uploading all the applications into a chat interface, AI can analyze the data and extract a meaningful narrative with citations of all responses that meet the specified criteria. This saves time and ensures a more accurate and efficient selection process.

AI can also provide insights that go beyond surface-level analysis. For example, if you have a report or a document, you can use AI to identify discrepancies or contrasting material within the text. Manually performing this task with an extensive report on complex topics like climate science or education policy can be challenging and time-consuming. However, with AI, conflicts can be easily identified, providing a deeper understanding of the content.

Challenges and Risks Associated with AI Adoption

Despite the numerous benefits, AI adoption in nonprofits has challenges. A significant barrier is the need for more understanding and awareness of AI and its potential advantages. Many nonprofits have yet to navigate the early stages of AI adoption, with only a small fraction currently utilizing AI. AI’s perceived cost and complexity also pose a hurdle, as nonprofits often operate within tight budgets and may be hesitant to invest in AI due to concerns about cost and implementation.

Moreover, AI adoption has inherent risks, such as information accuracy, trust issues and data breaches. Public AI might occasionally furnish information that lacks factual accuracy, emphasizing the importance of responsible AI usage. AI’s application in customer service can sometimes lead to generic responses that might not suit the situation, highlighting the need for appropriate and sensitive AI system design and programming.

Strategies for Effective AI Implementation

Many nonprofits express interest in AI but are unclear about where to begin, and choosing the right AI product is crucial for your business. The market is flooded with AI products, each boasting unique features and capabilities. It’s vital to conduct comprehensive research to select a product that matches your business needs and objectives. Cost-effectiveness is another important factor to consider when choosing an AI product.

To harness AI’s full potential, nonprofits must overcome adoption barriers and cultivate a culture of digital innovation. This requires understanding their unique needs and objectives, identifying suitable AI solutions, and implementing them in alignment with their mission and values. Choosing the right AI product is crucial, and organizations should conduct comprehensive research to select a product that matches their business needs and objectives while considering cost-effectiveness.

Nonprofits should also implement robust internal controls, acknowledge potential risks, and take protective measures. AI-based internal controls are becoming a norm for asset stewardship, and board members should inquire about the technology-based tools used to strengthen the control environment and protect the organization’s assets.

Mitigating Risks and Ensuring Responsible AI Use

As cybersecurity threats, particularly AI-focused ones, become more common, nonprofits using private AI must understand the risks of opening another port for their private AI. Securing these digital vulnerabilities and ensuring the legitimacy of AI tools is essential to protect against reputational risks and targeted attacks affecting constituents, employees, and the organization’s mission.

To safeguard against these risks, nonprofits should consider implementing measures such as appointing the right people in the right roles, promoting regular cybersecurity awareness, ensuring policies and procedures are in place, managing third-party risk, conducting cybersecurity due diligence, and having a disaster recovery plan.

The Future of AI in the Nonprofit Sector

Looking ahead, AI’s future in the nonprofit sector is promising. Blockchain technology can automate the tracking of expenses related to restricted grants, while the Internet of Things (IoT) can assist nonprofits in managing their resources efficiently. For example, an IoT system monitoring a food warehouse’s temperature can adjust the air conditioning, resulting in significant cost savings. AI can also enhance storytelling through artificial and virtual reality, improving how nonprofits communicate and share their mission.

AI holds the potential to significantly redefine operations in the nonprofit sector, offering benefits such as increased efficiency, improved productivity and insightful data. To fully capitalize on these advantages, nonprofits must select the right AI tools and use them effectively, aligning their implementation with the organization’s mission and values.

As AI evolves, nonprofits must remain receptive to new ideas, continually reassess and refine their use of this revolutionary technology and ensure responsible AI system design and programming. By implementing robust internal controls, acknowledging potential risks, and taking protective measures, AI can become a powerful tool for nonprofits to fulfill their mission and positively impact the world.

For more information, please contact your Grassi Nonprofit Advisor, David M. Rottkamp, Partner and Nonprofit Practice Leader or Hassan Khan, Technology Consulting Partner.

David M. Rottkamp David M. Rottkamp, CPA, is an Audit Partner and Nonprofit Practice Leader, at Grassi. David has over 36 years of experience providing audit and advisory services to the not-for-profit and health care industries. David focuses on organizations serving individuals with special needs, religious organizations, educational institutions, membership associations, social service providers, healthcare providers, foundations, and the arts and culture world. David’s technical knowledge allows... Read full bio

Hassan Khan Hassan Khan is a Technology Consulting Partner at Grassi where he leads the Technology Advisory Practice.  He has 20+ years of experience in Technology Accounting, Operations & Business Process Optimization, Strategy & Governance, Risk Analysis, Offshoring, and Enterprise Intelligence. Hassan’s practice areas include implementation of technology risk management frameworks, development of tailored regulatory compliance frameworks focused on GDPR, CCPA, GLBA, PCI, HIPAA and FERPA,... Read full bio

Categories: Advisory