Sep 26 2023

Why AI Is a Critical Catalyst for Nonprofit Success

Digital fundraising supported by artificial intelligence can be a powerful tool for nonprofit operations.

Digital fundraising is an essential tool for nonprofits. It can take many forms, from requests to support a friend’s cancer 5K run on Facebook to massive, integrated email campaigns.

What might feel seamless today is actually the result of decades of nonprofits working to incorporate digital techniques in their fundraising. In recent years, nonprofits have implemented artificial intelligence to support these efforts, greatly enhancing the impact.

Today’s digital fundraising can mimic and amplify what nonprofits have always done: solicit funds, track donors and streamline processes. AI enables faster, more accurate and more targeted fundraising than traditional approaches. This allows nonprofits to direct their energies where they will do the most good: supporting their missions and communities.

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How Digital Fundraising Supports Nonprofits

The use of AI in fundraising begins with organizational software. Donor management systems, which are similar to customer relationship management software, help nonprofits track their donors and organize their budgets.

Where organizations might once have relied on commercial software (such as spreadsheets, which don’t track relationships) or built their own tools from scratch, they now use AI to cut code-writing time in half, reports McKinsey. From there, digital tools allow nonprofits to measure the frequency and impact of their donations.

Donor management systems and other digital tools excel at identifying and targeting donors. They help nonprofits spot industry influencers and drive engagement with them, support targeted outreach with segmented email lists and boost direct engagement with donors through text messages and other mobile strategies.

When the American Lung Association doubled down on its digital fundraising, it found new audiences who supported its mission. Leaning into its video distribution platform and influencer campaign with actress Laura Dern, the ALA boosted its digital fundraising by 27 percent year over year.

READ ON: Learn how your organization can deliver a better digital experience.

AI Can Help Nonprofits Segment Their Audiences

More than just enabling organizations to reach new donors, AI allows them to segment their audiences, helping to identify where their efforts will be most effective.

“The people that are interacting with your organization are not all the same, and you should not treat them all the same,” Cherian Koshy, vice president of development at the nonprofit Merit America, told The Chronicle of Philanthropy. “Someone who’s given to your organization for 20 years is very different from someone who has not given to your organization before.”

This ability to target donors can fine-tune outreach, granting organizations visibility into when to hit fundraising hard versus when to share other messages.

For example, nonprofits have sent more emails so far this year than they did in 2022, but email has accounted for less online revenue than it did last year.

Cherian Koshy
Someone who’s given to your organization for 20 years is very different from someone who has not given to your organization before.”

Cherian Koshy Vice President of Development, Merit America

AI Makes It Easier for Donors to Engage

The ability to seamlessly donate online and through mobile devices isn’t the only way digital fundraising supports the bottom line for nonprofits, but it has become one of the most important: From 2018 to 2021, online giving grew 42 percent and shows no signs of slowing.

And this isn’t just among digital-native philanthropists; millennial, Gen X, and boomer donors all prefer to give online, and all are more inspired by social media and email than by direct mail to donate.

EXPLORE: Find out about how AI and Machine Learning can help your business.

AI Helps with Digital Fundraising 

AI supports precisely what makes donors tick: regular reminders for recurring donations, ease of setup for automatic donations and the ability to easily share with donors’ networks. It also allows for visual campaigns on social media, expanding nonprofits’ reach. In fact, digital ad placement among  nonprofits grew 28 percent from 2021 to 2022, according to M+R, a company dedicated to nonprofit marketing.

That ease enables donors to take fundraising into their own hands. For example, crowdfunding uses digital platforms to create mini-networks for fundraising with minimal operational investment from the nonprofit organization.

Digital fundraising is now ubiquitous thanks to its effectiveness; with just a few taps on their smartphones, users can respond to solicitations and make donations. AI-supported fundraising is positioned to further alleviate nonprofits’ burdens, freeing them to focus on their missions.

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