The advancements made possible by artificial intelligence are transforming the fundraising landscape. AI tools help take the guesswork out of the fundraising process, allowing organizations to focus more of their energy on their top prospects.
You may have recently started hearing more about AI fundraising and want to learn how to jump in. In this guide, we’ll review what your organization needs to know about how AI can support your strategies and where to get started. We’ll cover:
- How Artificial Intelligence Can Support Fundraising
- Benefits of AI Fundraising
- Ethical Considerations of AI Fundraising Technology
- 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 some of the most effective uses of AI fundraising.
How Artificial Intelligence Can Support Fundraising
AI fundraising tools run the gamut, from chatbots like ChatGPT to tools that can detect fraud and automate communications. Some of the most effective AI fundraising tools are those in the data analysis, prospect segmentation, and predictive analytics realm. Here are a few ways that these tools can support your fundraising efforts:
- Predictive analytics – Nonprofits can train AI tools to develop models using their unique data sets.
- Prospect development – AI can streamline wealth screening results verification, prospect profile development, portfolio optimization, and more.
- DEI modeling – Expanding your DEI initiatives is possible with analytics that help foster diversity among your internal team and prospect pool.
Since it’s so critical for effective fundraising, let’s take a closer look at how AI can help optimize the prospect development process.
Using AI to Boost Prospect Identification
If you choose to work with an external partner to propel your AI fundraising efforts, you’ll discover each firm leverages AI prospecting tools slightly differently. Here 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
With this information, we take our 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 where to focus your fundraising efforts.
The key aspect to keep in mind with all of these use cases is that the AI tools aren’t taking over your fundraising team’s job. Your outreach and messaging still need a human touch to build genuine supporter relationships. AI tools simply provide the research-driven insights you need to make better decisions about where to direct your attention.
Benefits of AI Fundraising
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
Spend less time on routine administrative tasks, streamline the data collection process, and free up your staff’s time to rededicate their efforts to connect with prospects one-on-one.
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 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.
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 a lot 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 is most likely to renew. You might send these individuals more letters and postcards compared to 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.
Essentially, 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 Fundraising Technology
AI fundraising is evolving quickly, and new ethical concerns continually arise as fundraisers seek to balance efficiency with maintaining supporters’ trust.
Organizations should have internal ethical discussions before engaging in AI fundraising. Establish ethical practices regarding:
- Data privacy. Set internal policies for ethical data sourcing. 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.
- DEI considerations. Establish data collection procedures that promote diversity in your prospect pool and avoid perpetuating harmful stereotypes. Consult the Apra DEI Data Guide for guidance on DEI data collection, storage, and usage.
It’s essential to set these guidelines before you dive too deeply into the AI fundraising process. 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.
Finding the Right AI Fundraising Approach
As mentioned, fundraising consultants that leverage AI tools each offer slightly different approaches to AI fundraising. The key is finding the right partner that aligns with your organization’s fundraising goals.
It’s important not to rush into AI fundraising before researching the options available to you. There are plenty of AI tools that feature machine learning algorithms that target general philanthropy data but don’t offer features that take your organization’s unique characteristics and marketing goals into consideration.
For example, BWF combines IBM Watson’s AI toolkit with our prospect development and segmentation expertise to develop AI solutions that are tailored to each organization’s unique target audience and goals.
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 this year and laying the groundwork to do so again for years to come.
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:
- Digital Fundraising | 7 Powerful Campaign Ideas to Try. A strong digital fundraising strategy is essential for any modern organization. Here are seven campaign ideas to consider adding to your fundraising plans.
- 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. Learn more about how to set up an effective annual campaign with this guide.
- University Fundraising: 9 Tips for Better Donor Engagement. University fundraising requires careful prospect research to identify potential alumni donors. The tips in this guide will help your university take its fundraising campaigns to the next level.
Find out how BWF can partner with you to launch your AI fundraising strategy.