How to Convince Executives, Boards and Funders to Invest in AI for Nonprofits

As fewer donors are giving to nonprofits and donor retention rapidly declines, organizations are eager to find solutions. But even as staff experiment with artificial intelligence (AI), many nonprofit executives, boards and funders remain hesitant to commit financially, making the case for AI investment for nonprofits even more urgent.

Donor retention fell about 2.6% last year, reaching 42.9%, according to Fundraising Effectiveness Project results for 2024. This drop marked the fifth consecutive year-over-year retention decrease.

“If we don't stem the hemorrhaging of donors and U.S. household giving declines, … we could be in single digits by I think it's 2040 — I mean, really alarming numbers,” Tammy Zonker, veteran fundraiser and founder of Fundraising Transformed, said, citing the book, “The Generosity Crisis.”

She and other experts shared how to make the case for AI — not with hype, but with clear return on investment — last week at the Fundraising.AI Global Summit.

Show How AI Addresses Nonprofit Challenges

AI can help fundraisers improve both acquisition and retention by automating certain tasks, such as flagging lapsed donors, personalizing stewardship and predicting lifetime value, Zonker said.

“In the past, we have had the highest donor retention at the major and mega donor levels, because they get the most attention,” she said in her session, “Making the Case: How to Justify Board and Leadership Investment in AI.” “They get the face-to-face visits. They get the thank-you calls. They get the handwritten notes. They get that personalized communication. But now, of course, with AI and AI-augmented stewardship, we can send very personalized stewardship communications to mid-level donors, to first-time donors [and] to donors below that major gift threshold.”

But it’s also important not to overlook the staffing and associated training components of this equation. In the end, Zonker noted fundraisers tend to gain back eight to 10 hours each week by implementing this emerging technology. To ensure organizations actually alleviate fundraiser burnout and turnover, don’t view the time savings as a way to pile on more work, but as an opportunity for staff to strategize, innovate and build stronger donor relationships.

“How many of you actually have time to think versus what's next, back-to-back meetings, eating lunch over the steering wheel or the keyboard?” she said. “… So the point is, AI can help with staff retention, it can reduce turnover, and it can actually have us thinking and doing a higher quality of work.”

Turn AI’s Impact Into Return on Investment

To get buy-in from leadership and the board of directors, Zonker recommended creating a clear case for support and return on investment by framing AI investment the same way as you would for foundation or corporate partners, as well as individual donors: problem, solution, resources and impact.

“What we need to do is take that mindset, … turn it inward to how we want to apply artificial intelligence and share that message with our boards, with our executive leaderships, with the folks who are going to free up those budget dollars for the training and development and the AI adoption,” she said.

She suggested building return-on-investment scenarios tailored to your organization’s capacity and appetite for piloting AI. For example, consider conservative (5% retention lift), moderate (10% retention lift) and bold (15%-20% retention lift) outcomes — and calculate the long-term revenue gains.

“You want to be able to package those [projections] up to build confidence that you're taking care of donors, you're stewarding these dollars, you're protecting the organization, and you are laser-focused on increasing revenue, retention, reducing staff turnover [and] giving a donor a better donor experience,” she said.

Overcome AI Hesitancy

On the funder side, foundations are increasingly interested in supporting AI implementation for mission enhancement. Their biggest concern: Is AI the best solution?

“There's a lot of concern about AI being a shiny object, that they're just going to get proposals to use AI, it's not actually the best way to solve the problem that's being surfaced in the proposal, and then concerns about a grantee's technical capabilities to be able to execute the proposal,” Sarah Di Troia, chief innovation officer and managing director of OutcomesAI at Project Evident, said in the session, "Making the Ask to Grantmakers to Support AI Implementation."

Increasingly, Di Troia said, some foundations are developing their own AI grantmaking rubrics to guide due diligence. To help win over foundations, Laila Brenner, head of philanthropy at TalkingPoints, who participated alongside Di Troia in the session, encouraged nonprofits not to classify their entire tech stack and associated staff salaries as overhead to avoid hitting any funders’ overhead ratio ceilings.

“If you're putting so much of your important talent and your tech stack into your overhead ratio, you're not really serving yourself,” Brenner said. “These are expenses that are directly leading to impact. And you have to pay your people and you have to pay your vendors in order to get this work done, so make sure that you're really budgeting this in a transparent and smart way.”

Building Trust With Transparency

Just like with where technology and tech staff fall within your budget, investments in AI or technology in general are not quick fixes. They require ongoing attention and adjustment. When adding AI features to your tech stacks, Brenner advised being candid with funders about both successes and challenges.

“It's just absolutely critical that you never go into a conversation or a proposal or a funder report and it's all rainbows and sunshine,” she said. “You have to be honest about the challenges that you're facing because those are the challenges that they want you to tackle.”

You may encounter funders specifically focused on certain aspects of tech adoption, which can be difficult if you’re in the research and development stage. So, it’s also important to have the ability to educate funders about steps, such as how your organization has experimented with the technology and has implemented an ethical framework to prevent harmful outcomes.

“You may fail,” Brenner said. “And actually failing sometimes is the most important thing that you can do, because you go out and you try things and you find out what works and what doesn't work. So sometimes we found ourselves having to educate the funder on that journey.”