AI tools have revolutionized nonprofit work by taking the guesswork out of fundraising, allowing organizations to focus more energy on their top prospects. Now, over half of nonprofits are using AI in some capacity to support their charitable goals.
Further, nonprofit supporters want to see organizations leveraging these innovative solutions. According to Nonprofit Tech for Good’s Online Donor Feedback Survey, 74% of online donors think nonprofits should use AI to assist in marketing, fundraising, and administrative tasks.
As you can see, the stage is set both internally and externally for your organization to develop a comprehensive, cohesive AI strategy that carries you into this new fundraising era. In this guide, we’ll review what your organization needs to know about how AI can support your strategy and where to start. We’ll cover:
- What is AI Fundraising?
- AI Fundraising Use Cases
- Benefits of AI Fundraising and Donor AI Solutions
- Ethical Considerations of AI Technology in Fundraising
- How to Start Fundraising with AI
- Finding the Right AI Fundraising Approach
AI fundraising can support multiple aspects of your nonprofit’s strategy, from digital fundraising to prospect cultivation. Let’s dive in by reviewing what exactly AI fundraising entails.
What is AI Fundraising?
Before defining AI fundraising, let’s establish what AI is. Computer scientist John McCarthy, considered a “founding father” of AI, defines artificial intelligence as “the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence, but AI does not have to confine itself to methods that are biologically observable.”
AI tools use machine learning to mimic human intelligence, completing tasks and functions that would otherwise require human intervention.
Therefore, AI fundraising uses AI technology and algorithms to support nonprofit fundraising efforts. Some AI fundraising tools use nonprofit data, such as donor or constituent data, to predict future behaviors. Other solutions help organizations automate manual processes or determine the next steps to secure a donation.
Next, let’s explore use cases for AI fundraising tools.
AI Fundraising Use Cases
According to a report from Stanford’s Institute for Human-Centered Artificial Intelligence (HAI), around 80% of nonprofits that use AI leverage it for supportive work (finance, human resources, technology, communications, etc.), while only about 60% deploy AI for mission-related work (working with clients, implementing programs, or making grants).
AI fundraising tools run the gamut, from chatbots to tools that detect fraud and automate communications. If your nonprofit is interested in using these solutions for more than just supportive work, there are plenty of opportunities to branch out to access innovative resources that support your mission and goals.
Here are a few ways that these tools can support your fundraising efforts:
Content generation
Generative AI solutions like ChatGPT produce images, text, videos, and audio in response to instructional input. Generative AI tools are especially useful in the content generation or brainstorming process. Fundraisers can use these solutions to:
- Develop blog post ideas.
- Generate eye-catching email subject lines.
- Research unfamiliar topic areas.
- Draft social media posts and email content.
- Write grant applications.
- Identify useful questions for donor satisfaction surveys.
- Create fundraising scripts for phone calls or in-person donation requests.
- Brainstorm ideas for fundraising campaign themes, slogans, or taglines.
Remember that AI-generated content can contain factual errors and lack authenticity, which can decrease the quality of your content and even negatively affect your SEO strategy. That’s why it’s important to manually edit any AI-generated content to reflect your nonprofit’s unique brand and voice and fact-check it for accuracy. These practices will help maintain audience engagement and trust.
Predictive analytics
Nonprofits can train AI tools to develop predictive models using their unique datasets. Predictive analytics anticipate future donor behavior by assessing a nonprofit’s existing dataset for patterns and trends.
Predictive models can take several different forms, such as:
- Models for giving behaviors, such as preferred giving channel, likelihood of renewal, and likely next gift amount.
- Predictive scoring, including engagement scoring and RFM (recency, frequency, and monetary) value.
- Models for giving program success, such as annual giving, major giving, planned giving, etc.
One of predictive modeling’s most useful applications is identifying prospects. The next section explores this use case in more detail.
Prospect identification and development
AI can streamline wealth screening results verification, prospect profile development, portfolio optimization, and more.
For example, at BWF, we build AI predictive models to help organizations identify prospects who are most likely to:
- Start giving when they haven’t before (This strategy is often used in higher education fundraising to reach alumni or in healthcare fundraising to connect with patients.)
- Reactivate, or start giving again when they haven’t for a while
- Renew, or give again this year after they gave last year
- Upgrade, or give more than they have been giving
- Become major or principal donors by giving at a significant level
- Become legacy donors by making a gift as part of their estate plan
See how our AI solutions transform data into actionable insights
Once you’ve identified your top prospects, you can direct more of your fundraising team’s time and attention to stewarding these potential donors.
Next action recommendations
With the information gathered throughout the prospect research process, the BWF team helps fundraisers take this analysis a step further by leveraging AI models to determine the right:
- Ask amounts. We build models that predict the amount a prospect is most likely to donate, letting you know how much you should request from them.
- Channel mix. Our models also help predict which prospects will respond best to different outreach methods, such as emails, paper mailings, phone calls, events, etc.
- Messaging. We can also help determine what type of messaging a prospect is most interested in, like historical/legacy stories, innovative initiatives at your organization, your leadership’s vision and direction for your organization, or stories from a peer about why they give.
Our AI tools eliminate the need for guesswork and equip your organization with clear-cut, data-driven insights about the next steps to take to ensure a high return on investment (ROI) for your fundraising efforts.
Business simulation
Fundraising analytics tools allow nonprofits to look inward to determine how external factors and internal progress affect future fundraising performance. For example, you can analyze external economic conditions alongside your nonprofit’s unique fundraising situation to predict your organization’s overall performance over the next few months.
BWF provides AI-powered business intelligence tools on demand that are tailored to participating organizations’ goals and speed of business for personalized results.
Donor journey mapping
Each supporter takes a slightly different path to becoming a donor. Some click with your mission right away, while others require more careful cultivation to start supporting your cause on an ongoing basis.
AI fundraising solutions help manage each step of the donor lifecycle to optimize your nonprofit’s outreach and meet donors at their level. For example, these tools can help group supporters based on their first contact with your organization, whether via your website, email, social media, direct mail, or events. Then, you can determine the right touchpoints to use with each donor at each stage of the process.
Carefully tracking the donor journey allows you to determine your most impactful outreach methods and create a repeatable process that can be applied to multiple donor segments.
Constituent perception tracking
What do your supporters think of your nonprofit? Fundraising professionals constantly consider this question as they seek to improve the donor experience.
With AI technology, you can stay updated with your constituent’s feelings and opinions, tracking their interactions over several platforms, including:
- Social media interactions
- Survey feedback
- Email engagement
- Website behavior
By assessing supporter sentiments across multiple platforms, you can create a fuller picture of what your constituents think of your organization and how you can create a more positive, personalized experience for them.
Benefits of AI Fundraising and Donor AI Solutions
When used correctly, AI fundraising can streamline your fundraising team’s work, giving them more time to spend on donor meetings and other personal outreach efforts that leave a lasting positive impression. AI fundraising offers benefits such as:
Increased administrative efficiency
AI solutions allow you to spend less time on routine administrative tasks, streamline the data collection process, and free up your staff to connect with prospects one-on-one.
Better-executed strategies
All fundraising organizations try to raise as much as they can, but their short and long-term strategies will differ given certain factors. AI fundraising tools help organizations identify which strategies will empower them to raise more and adjust their approach for the maximum impact.
Consider the following examples of what these optimized strategies might look like in practice:
- Perhaps an organization’s first-time donor counts have recently decreased, so they want to focus on increasing the number of donors at the lower gift levels. This organization would benefit from a greater focus on donor acquisition or reactivation.
- Another organization may start a campaign specifically to raise money for a new building. In this case, their strategies should focus on upgrades and major/principal giving.
- Maybe an organization has recently faced budget cuts. This team would focus on renewals because it’s less expensive to retain a donor than to acquire a new one.
In each example, AI fundraising tools can step in to identify the problem and the right solution to help organizations act with urgency to reach their goals.
Increased ROI
Adopt a data-driven strategy that allows you to focus your efforts on the most qualified prospects and the marketing methods that resonate with those prospects.
Here are a few examples of ways you can boost ROI with AI fundraising insights:
- It’s much cheaper to send an email than a paper mailing, so you can cut costs by knowing who prefers email anyway.
- Using prospect research, you can identify who among your direct mail list will most likely renew. You might send these individuals more letters and postcards than those in your contact list who aren’t as likely to give again.
- You can identify donors who are most likely to upgrade their giving level and assign them to a gift officer’s portfolio. That gift officer’s close rate may be double what it would be without this accurate information.
AI insights can help you determine which communication channels, messaging/tone, and prospect development pathways are most useful for reaching your fundraising targets.
Ethical Considerations of AI Technology in Fundraising
AI fundraising is evolving quickly, and new ethical concerns continually arise as fundraisers seek to balance efficiency with maintaining supporters’ trust. However, the HAI report found that 78% of nonprofits don’t have an AI usage policy, leaving organizations potentially vulnerable to security and ethical risks.
Organizations should have internal ethical discussions before engaging in AI fundraising. Establish ethical practices regarding:
- Data privacy. Set internal policies for ethical data sourcing. Look into sector-specific regulations to ensure your practices comply with relevant legislation. For example, educational institutions and healthcare organizations must comply with FERPA and HIPAA. Also, investigate the data-sourcing practices of any prospect development tools or partners you work with. Ensure these solutions are transparent about their approach to data sourcing and protection.
- Due diligence. Draw boundaries for whether or not to accept certain gifts based on ethical grounds and incorporate those guidelines into your prospect development process.
- Informed consent. Secure consent from donors before incorporating their data into your AI fundraising processes and allow supporters to opt out. Be clear about how you’ll use their information, whether to help identify new donor prospects, better personalize communications, etc.
- Accountability. Create a policy for assessing ethical breaches or data security issues. Regularly review your AI tools and practices to ensure they align with relevant local and national security regulations.
Setting these guidelines before diving too deeply into the AI fundraising process is essential. Ethical issues can stop your AI fundraising program in its tracks and erode public trust. Anticipating and addressing issues before they arise can save your organization major headaches down the road.
If you need support when implementing an ethical AI approach, BWF offers responsible AI services, including an AI readiness assessment. In this assessment, we’ll review your organization’s operations and systems to align your goals and priorities with innovative AI opportunities. We’ll analyze your AI literacy, opportunities, challenges, and risks to pave the way for effective and ethical AI implementation.
How to Start Fundraising with AI
If you’re ready to launch a new AI strategy for your organization, the following steps will help you effectively adopt tailored solutions. Use these tips to get started with AI fundraising:
1. Understand your needs.
What are your goals for adopting AI fundraising techniques? Identify your goals with the help of the list of use cases above.
For example, does your organization need help identifying a wider range of major donor prospects? In that case, a donor prospecting tool may provide the most support. Do you want to get a better handle on what your audience members think about your organization? Turn to a constituent perception tracker for greater insight.
2. Research the available tools.
Use the internet and recommendations from other nonprofits to explore tools that offer the functionality you’re looking for to achieve your goals. Evaluate AI solutions based on the following criteria to ensure you find the right fit for your needs:
- Accuracy: Assess the accuracy rates of any AI tools you consider to ensure they’re as high as possible. The higher the accuracy, the more valuable insights you’ll be able to glean from them.
- Security and data privacy: Review the security credentials of your top options. Ensure they protect data privacy through encryption and alignment with relevant security laws in your region or country.
- Price: Set a budget for your AI fundraising efforts and compare your options to find a cost-effective solution that meets your needs without sacrificing functionality.
- Scalability and flexibility: Ensure your AI solution can scale up alongside your fundraising efforts as you bring more donors into your fundraising landscape. Your AI solution should offer flexible pricing models based on your organization’s usage needs, and it should continuously be updated with innovative new features.
- User reviews: Read reviews from real customers who have used the AI solutions you’re considering. Pay attention to how users describe the backend user experience as well as the quality of the results they’ve been able to achieve.
- Integration with existing fundraising tools: Your AI solution should work alongside your nonprofit’s existing fundraising tools, such as your online donation platform and CRM. Verify that any AI solutions you choose directly integrate with your existing tech for a smooth transition.
Don’t hesitate to ask for a demo or free trial of your top options to see how they work in practice before choosing a tool to invest in.
3. Create your AI policy.
Use the ethical considerations highlighted above to shape your AI use policy. Reference your nonprofit’s distinct accountability structure to create a chain of command that will jump into action if something goes wrong with your AI usage. Consult with your nonprofit’s legal team to ensure you’ve covered your bases regarding relevant AI legislation in your area.
4. Implement your tools effectively.
Work with an AI fundraising consultant or the software provider to get your tools up and running quickly and your questions answered. Prioritize setting up integrations first to avoid any data falling through the cracks.
5. Train your staff to use the tools ethically and productively.
Meet with your staff regularly (once or twice weekly as needed for the first month) to train them on your new AI solutions. Share your AI use policy and require staff members to take an assessment to ensure they understand the policy.
Clearly explain the situations where you will and won’t use AI. For example, you could say that you’ll use AI to help streamline donor prospect identification, but you won’t use generative AI to draft emails to major donors. This will help you strike the right balance between automation and personalization in your outreach strategy, ensuring you don’t lose the special personal touch donors seek.
6. Track metrics to evaluate your progress.
Track relevant metrics to understand the impact of your AI tools on your fundraising strategy. For example, let’s say you want to use AI to improve your fundraising email campaigns. Track relevant data points such as email open, click-through, and conversion rates, and compare those metrics to past email campaign results. Update your AI models and tweak your strategy until you get the desired results.
Finding the Right AI Fundraising Approach
As mentioned, fundraising consultants who leverage AI tools offer slightly different approaches to AI fundraising. The key is finding the right partner who aligns with your organization’s fundraising goals.
It’s important not to rush into AI fundraising before researching the options available to you. Many AI tools with machine learning algorithms target general philanthropy data but don’t offer features that consider your organization’s unique characteristics and marketing goals.
Explore BWF’s Donor AI
BWF combines IBM Watson’s AI toolkit with our prospect development and segmentation expertise to develop AI solutions tailored to each organization’s unique target audience and goals. Our groundbreaking Donor AI solution works in harmony with your existing technology, including your CRM, marketing and engagement tools, enterprise systems, and data warehouse, as depicted in this graphic:
This lets you leverage your existing internal data to create predictive models customized to your unique audience and goals. Specifically, we offer multiple predictive AI options depending on your nonprofit’s needs:
- Pipeline development
- Campaign optimization
- Donor engagement and donor base growth assistance
- Healthcare fundraising
- Membership growth
If you already have models in mind that will help drive your strategy, you can choose a custom solution and build your own package. If not, you can select our Essentials package, which offers four models: major giving, planned giving, reacquisition, and renewals.
We support a variety of AI fundraising goals by:
- Working at your nonprofit’s speed. We implement and deploy AI tools using a timeline that aligns with your business and data management goals.
- Maintaining transparency. Transparent and open communication fosters trust and better results.
- Designing your unique AI applications thoughtfully. We do not take a “plug and play” approach but instead tailor our AI tools to your unique needs.
- Building on your existing fundraising strategies. We see AI fundraising not as a full replacement for your current fundraising approach but rather as an additional tool in your toolkit that helps extend your reach even further.
As you can see in this timeline, we’ve been providing nonprofits with innovative fundraising solutions for over 40 years.
Ultimately, our services focus on gaining insights into how best to deploy resources to achieve the desired outcome — helping clients raise as much as possible now and laying the groundwork to do so again for years to come.
Learn more about our AI fundraising approach in this quick video:
Wrapping Up
Now is a great time to launch your AI fundraising initiatives, but remember to do so with caution and expert help when needed. How you establish your AI fundraising program now can set the tone for more efficient fundraising well into the future, meaning it’s crucial to do your research and due diligence.
Looking for more resources on fundraising in the modern era? Start here:
- Fundraising Predictive Analytics: Expert Tips for Nonprofits. Predictive analytics are the foundation of prospect identification and development. Learn more about this effective AI fundraising approach in this complete guide.
- The 2024 Nonprofit AI Quick-Start Guide: Tips for Success. Explore additional tips for getting started with AI quickly at your nonprofit.
- 8 Steps to Create a Powerful Annual Giving Campaign. AI fundraising can play a major role in helping organizations determine which prospects to prioritize during their annual campaigns. This guide explains how to set up an effective annual campaign.
Let’s Talk
Find out how BWF can partner with you to launch your AI fundraising strategy.
