Nearly a million nonprofit jobs were lost in 2020, and an estimated one-third of all U.S. nonprofit organizations may shutter within two years. During a time of extreme crisis, many of those that have survived and thrived were forced to make significant changes, most notably in their approach to raising money.
Zoom meetings and virtual fundraising events became ubiquitous, and a growing number of organizations accelerated the adoption of increasingly inexpensive artificial intelligence tools aimed at improving the quantity and quality of giving. Our research indicates that A.I. is creating opportunities to not only increase the amount of money raised but to significantly improve the relationship between donors and organizations.
Even with the end of the pandemic in sight, nonprofits should continue to experiment with these new technologies. By automating work previously done by people, A.I. products allow fundraisers to deepen their understanding of donor needs and interests so they can interact with them in more personal ways.
Our report, Unlocking Generosity With Artificial Intelligence: The Future of Giving, funded by the Bill & Melinda Gates Foundation, identified a multitude of ways A.I. is and can be used to improve fundraising. It can:
- Match donors to causes they care about on a large scale, increasing the likelihood that they will give multiple times.
- Quickly comb through mounds of donor data to identify which potential donors should be the focus of fundraiser efforts.
- Personalize engagement efforts and communications so that smaller donors receive the same personal touch as larger donors.
While the potential is great, we found most nonprofits have a long way to go to both adopt and effectively integrate A.I. tools into their fundraising practices. The promise of A.I. for fundraising isn’t just to work faster, it’s to do a better job of authentically connecting with current and prospective donors. For instance, one of A.I.’s most exciting benefits is freeing staff members from administrative and rote tasks, which allows them to direct more time and effort to strengthening relationships with donors and constituents.
For the most part, that promise is not yet reality. To date, little effort has been made to use A.I. to change standard transactional fundraising — which has led to abysmal donor retention rates of just 40 percent after one year and 10 percent after five years.
On a broader scale, the nonprofit world is just beginning to address challenges critical to the equitable and ethical use of A.I. by all nonprofits, including concerns about data privacy and the use of commercial platforms that aren’t transparent about how their algorithms are developed and used. We also found that larger, better-known nonprofits were more likely than smaller, newer groups to have the resources to take advantage of new technologies. This exacerbates donors’ tendency to give only to better-known causes and leaves behind underresourced, grassroots groups battling systemic inequities on the ground.
To address these challenges and fully embrace A.I.’s potential to elevate fundraising to new levels of engagement and effectiveness, nonprofits and foundations should zero in on the following key strategies:
Use A.I. to personalize donor experiences. A.I.-powered tools can customize donor appeals at every level at a speed and scale far beyond what is possible for individual fundraisers. They can search donor databases and the internet to identify patterns in the types of appeals and causes that existing and potential donors responded to in the past. Fundraisers can then use these insights to target stories and content that are likely to resonate with individual donors. To do all this effectively, nonprofits need to choose the right A.I. application, making sure it suits the size and technological capability of the organization.
Use A.I. to cultivate stronger relationships with donors. Imagine if fundraisers had the time to call donors to ask how they’re doing and explore what their causes mean to their supporters emotionally and personally. And imagine if they had the bandwidth to connect donors to one another so they could share their stories and deepen their commitment to important causes.
A.I. frees up fundraisers to do all of this by eliminating hours of desk research, scheduling, or updating donor records. Instead, fundraisers can take time to get to know donors and provide them with opportunities to learn more about the organization, making it more likely they will want to donate when fundraisers ask for money. Support from nonprofit chief executives, top leaders, and boards is critical to effectively make this transition to relational forms of fundraising, which require fundamentally different tasks than transactional approaches focused on asking for donations.
Commit to more and better data to feed A.I. Most nonprofits don’t have enough data individually to power A.I. systems or the infrastructure to collect accurate bias-free data. We’re talking Library of Congress amounts of data. Some turn to third-party commercial data vendors to supplement their donor databases without questioning the original source of the data or the methods used to identify race and gender.
Fortunately, there is a better solution. Nonprofits can create their own data collectives with like-minded organizations or join existing collaboratives that pool data from different groups, giving A.I. tools the massive data loads they need to perform effectively. For example, GivingTuesday’s Data Commons analyzes when, how, and why donors give to a cause by compiling and sharing data from organizations that join the collaborative. Strict protocols are in place to protect privacy, and participating organizations can use the data for their own research.
However, much more work needs to be done to create data collaboratives across the nonprofit world. Grant makers could use their convening power to help nonprofits develop standard measures of data efficiency and effectiveness that would enable groups of organizations — say, food banks across a metropolitan area — to use A.I. to improve their services and fundraising. They could also fund data-collection efforts to help nonprofits create larger stores of data.
Promote ethical and equitable uses of A.I. Foundations have a role to play in bringing together major technology, philanthropy, and nonprofit players to establish norms for the ethical use of A.I., particularly in the areas of giving and fundraising. These efforts should focus on ensuring client and donor data is protected and that smaller nonprofits have the same ability to reach donors through A.I. as their larger and more established counterparts. An example of the kinds of norms that need to be established can be found in NetHope Solutions Center’s A.I. Suitability Guidelines, which includes a tool kit for helping nonprofits evaluate, develop, purchase, and use A.I.
Foundations have the opportunity to play a critical role in shaping A.I. use by the nonprofit world. We know what happens to commercial technology when revenue needs outweigh privacy and ethical considerations. But we also know the remarkable possibilities when A.I. is used ethically and effectively to transform giving. This is the moment to make sure that happens on a large scale.
