AI Adoption and the Ethical Use of Data 

Nonprofit organizations faced daunting challenges in 2025, the result of rising operational costs, an increase in demand for services, and a decrease in private donations. But the collapse in government support hit hardest, with as many as a third of nonprofits reporting some kind of public funding disruption, according to an Urban Institute report. These disruptions impacted vital programs such as mental health services, job training initiatives, disaster relief efforts, and emergency shelters, whether that took the form of a delay, a freeze, or a stop work order. At the same time, public awareness of these measures remained surprisingly low, minimizing the pressure on public agencies to restore funding. 

This perfect storm has led many nonprofits to cut programs and staff while seeking innovative funding solutions such as mergers, partnerships, and new revenue streams. Meanwhile, nonprofit leaders look to increase the efficiency of their business processes and free up staff time for mission-critical activities.  

Nonprofits, by necessity, compile large amounts of information: program data, donor histories, outcome evaluations, beneficiary demographics, and internal performance metrics. This material often gets set aside because staff members lack the time or tools to make sense of it. For the most part, nonprofits still rely on manual processes, spreadsheets, and staff knowledge to handle core functions.  

But AI is making—and already has made—impressive strides. According to a recent Bonterra survey, more than two-thirds of nonprofits and funders currently use AI tools, primarily in operations, finance, and IT departments. The technology also holds promise for fundraising and communications, where the data for each individual can be analyzed to inform highly personalized interactions. Further, AI-powered insights can help nonprofits better understand donor behavior, anticipate giving patterns, and maximize outreach efforts. 

The Bonterra survey also found widespread concern, though, about data use. With no built-in constraints, AI tools can inadvertently mine and expose sensitive information beyond the scope of a given prompt. Nonprofit leaders and their funders stress that for AI to be of any use at all, it must incorporate safeguards that ensure ethical and responsible operation—free from bias in data or algorithms and from compromise in privacy. This idea applies not only to donors and prospects, but also clients, beneficiaries, and the community. 

To this end, the development of an AI usage policy is essential, together with appropriate staff training and strict usage limits. This calls for establishing protocols on ethics and data privacy that can likewise prevent accidental breaches. Intellectual property compliance must also be addressed to avoid copyright or trademark infringement. Other safeguards may similarly be needed to maintain transparency and provide accountability. 

Integrating AI with existing CRM platforms that have built-in controls for data storage and access strengthens data governance. When a nonprofit introduces AI into a CRM platform such as Salesforce or DonorPerfect, it’s not starting from scratch: it’s working within a framework that’s designed to handle sensitive constituent information. The technology continues to offer new possibilities for organizations using CRM platforms, such as context-aware automation, predictive analytics for constituent segmentation and personalization, and targeted marketing campaigns. A recent Journal of Business Research study provides an in-depth take on this type of integration, with practical guidelines for successful outcomes. 

While AI systems have the potential to provide invaluable insights and efficiencies to nonprofits, they’re only as reliable as the data they’re trained on and how it’s processed. That said, taking a cross-disciplinary approach to AI adoption in the workplace increases the likelihood of success. Nonprofit leaders should reach out to experts from a variety of disciplines—legal, cultural, ethical, technical—whether that involves staff members, board members, or external advisors. A diversity of backgrounds and perspectives helps protect against bias and discrimination, leading to more beneficial and reliable outcomes. 

Fast Forward’s Nonprofit AI Policy Builder, a tool designed to help nonprofits draft their own AI policy, is a practical starting place. The tool makes it easy to take the first step toward a responsible, mission-aligned strategy for employing AI. It’s free and accessible, and uses AI to help nonprofits develop a customized policy framework.  

The resulting framework can help clarify who to reach out to and sharpen the follow-up questions that should be raised with staff members, board members, and voices beyond.