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A recent report entitled The AI Readiness Path: Key Insights for Nonprofits and Funders, which combines studies from Bonterra and Hanover Research, shows leaders of both sectors believing that AI will transform the work of nonprofits and their funders, but they are also mindful of its challenges and potential for invading the privacy of their data. Bonterra, which surveyed 547 nonprofit leaders, and Hanover Research, which surveyed 300 CSR and foundation decision-makers, found that almost all (over 80 percent) funders have a positive perception of AI as a streamlining tool (e.g., monitoring budget allocations, evaluation program effectiveness, and visualizing impact data), and they believe that AI will benefit the overall efficacy of CSR initiatives and grantmaking. They also believe that AI will help nonprofits optimize their grant applications. But they also worry about the use of private data that many nonprofits have on their clients as well as the need for transparency in nonprofit decision-making. A majority of nonprofit leaders (over two-thirds) are already using AI tools in their work (primarily in operations, IT, and finance departments), and they believe that AI has the potential of positively impacting their work further. However, nearly all of the respondents (over 90 percent) are concerned about how AI might use their data, nearly 40 percent report that concerns about bias, privacy, or security are actively limiting their AI use, and only 21 percent trust AI to deliver accurate results. “Throughout my career of advising nonprofits on fundraising strategy, I have never seen technology as transformative for the sector as AI. But the hesitation is valid,” said Kimberly O’Donnell, Chief Fundraising and Engagement Officer at Bonterra, in an email message to this writer. “Social good organizations handle extremely sensitive information, and many feel that privacy could be threatened by AI. But if AI is adopted securely and ethically, it can help nonprofits fundraise smarter, streamline administrative tasks, and take action with minimal lift.” Given these concerns, Bonterra advises nonprofit leaders to embrace human-AI collaboration with the emphasis on the “human” piece. AI can draft and make suggestions, but for every task, a human reviewer should sign off on the output. Nonprofits should use tools with access controls and clear AI cues and operate within secure, governed platforms rather than relying on public tools, particularly when dealing with personally identifiable information or protected health data. Nonprofit leaders should ask vendors for plain-language explanations of how tools are trained, how data is retained or shared, and exactly where AI appears within a product. Bonterra suggests that funders outline clear policies to clarify what AI use is allowed in grant applications as well as establishing guidelines for mitigating bias and ensuring data quality. Funders should also implement explainability protocols and mandate human review for any AI-assisted scoring and offer training and technical support to help grant recipients build a foundation for responsible AI use. “The key to scaling impact lies in technology that enhances human potential, not replaces it,” said Scott Brighton, CEO at Bonterra, in an email message to this writer. “The sector wants to utilize AI, but hesitation still exists. Almost all (92 percent) of respondents are concerned about data protection and ethics, and until that is addressed, AI can’t meet its full social good potential. Our goal with this report is to show the value of AI adoption and give guidance on how to ethically integrate the technology into their operations.” For those nonprofits that have yet to embrace AI tools, Bonterra recommends starting by turning on AI features in existing tools such as CRMs to avoid new licenses and then tracking minutes saved on everyday tasks. Focus on fundraising and communications first – deeper dives into analytics and reporting can wait. And finally, begin with experiments that last four to six weeks in order to more easily monitor results. Funders can set an example for nonprofits by hosting working sessions that walk through real grantmaking tasks with live examples and mapping common processes where AI can assist and where human review is non-negotiable. Funders can also circulate highlights from pilot programs along with templates and prompt examples so that applicants can borrow proven approaches. Adopting AI tools is a journey that all nonprofits and funders will eventually have to embark upon. But organizations that exist for the social good need to build in protections for their clients and beneficiaries that are transparent and ethical so that the human touch isn’t lost in the AI shuffle.
