Rise of AI in Fundraising: How Nonprofits Can Get Started

Artificial intelligence (AI) usage is rising, with 63% of organizations worldwide intending to adopt this technology within the next three years. In the nonprofit sector, charitable organizations increasingly leverage AI to streamline their operations, especially fundraising.

With the right AI fundraising tools, your nonprofit can save time, conserve resources, and deliver a better supporter experience—ultimately accomplishing more for your mission. Let’s review several focus areas where your organization can start incorporating AI.

Donor Segmentation

Segmentation is likely already part of your fundraising strategy. Placing donors into relevant groups helps you deliver more relevant information, fundraising asks, and follow-ups. While you can manually segment donors, AI improves the efficiency of your efforts.

How to Incorporate AI into Donor Segmentation

• Refresh your data. The more accurate and complete your donor data, the more precise your segmentation efforts will be. Audit your nonprofit CRM to identify any gaps. Then, reach out to your supporters to gather missing information or conduct a data append to acquire this data more efficiently.

• Use AI to develop donor segments. Once you have enough donor data, use AI to sort donors into relevant categories automatically. These tools can combine demographic data, giving history, and communication preferences to create specialized groups that enable personalized communications and opportunities. For example, you may identify a cohort of major donors in the Houston metro area. Based on this information, you may decide to host a major donor appreciation event in the heart of Houston, helping you build stronger relationships with this group.

• Leverage machine learning. As people grow and change, you should adapt your segmentation efforts accordingly. Machine learning algorithms can improve your segmentation efforts by analyzing donor behavior and adjusting your segments in real time. For instance, if a one-time donor contributes again, the algorithm may remove them from the one-time donor category and sort them into a repeat donor group instead.

Communication

Consider all the touchpoints you have with donors. Developing a communications strategy that caters to each supporter’s needs and strengthens your relationships with them can be overwhelming. AI can streamline your communications and ensure you reach your supporters with the right messages.

How AI Can Enhance Communication

• Send personalized messages to segments. AI can help you build donor segments and communicate with them. Develop different messaging and content for different donor groups and automate these communications. For example, Bloomerang’s donor database guide explains that “an animal shelter might have a segment of supporters who prefer dogs and another for those who prefer cats.” This organization may set up a communications stream that automatically sends updates on its dog adoption efforts to dog lovers and shares details about its cat rescue program with cat lovers.

• Automate thank-you messages. Experts recommend thanking donors within 24 to 48 hours of their initial contributions to ensure they feel appreciated as soon as possible. While you may want to follow up with more personalized thank-you notes later, automation allows you to send thank-you messages immediately after donors contribute. You may even incorporate some personalization by creating different email thank-you templates for different donor segments and setting up your automation to trigger these messages based on factors like age or donation amount.

• Analyze donor feedback. Whether you collect feedback via social media, surveys, email, or a combination of these channels, parsing through donors’ thoughts can be time-consuming. Using AI-driven sentiment analysis tools, you can efficiently analyze donor feedback, identifying the general tone of donors’ responses and pulling out their most frequent concerns. That way, you can easily pinpoint fundraising improvements that align with donors’ preferences.

Predictive Analytics

While you can’t see into the future, you can use analytics to predict donor behavior and make well-informed decisions. Predictive analytics leverages algorithms and machine learning to transform donor data into actionable insights.

How Predictive Analytics Can Improve Fundraising

• Identify potential donor upgrades. Using donor engagement and giving history data, predictive analytics empowers your team to find donors most likely to upgrade their support and reach out to them accordingly. For example, the algorithm may identify a subset of recurring donors who regularly attend events and engage with your content as excellent candidates for planned giving.

• Forecast donor retention. With an average one-year donor retention rate of 44% in 2023, nonprofits must take advantage of any opportunity to keep donors around and lock down their support. Predictive analytics use engagement-level data like email opens, event participation, and donation frequency to predict when certain donors are likely to stop giving, allowing you to develop intervention plans and re-engage these supporters before they lapse.

• Pinpoint the right time to make an ask. Fundraising isn’t just about having the right messaging but also the right timing. Predictive analytics can leverage historical data to determine when donors are most likely to give—whether after attending an event, participating in advocacy, receiving a fundraising email, or meeting with your nonprofit’s team in person.

AI-Driven Chatbots

Considering that 68% of people have used a customer service chatbot, it’s no surprise that this AI tool is now prominent in the nonprofit world. Charitable organizations increasingly use AI-driven chatbots on their websites to improve the user experience.

How AI-Driven Chatbots Can Support Fundraising

• Answer common donor questions. Before contributing to your organization, donors may have questions about the fundraising process or your nonprofit in general. Answer these questions more efficiently with an AI-driven chatbot. For example, the tool might respond to questions like, “How can I make a donation?”, “Is my donation tax-deductible?”, “What’s the difference between legacy giving and planned giving?”, and “What impact will my donation make?”

• Assist with donation forms. Use your AI-driven chatbot to reduce donor abandonment rates and help users navigate your donation page. The tool can guide donors through the process by collecting their contact information, suggesting donation amounts, and processing payments.

Using AI balances your fundraising approach, allowing you to streamline certain processes and save time you can dedicate to other areas. Stay up to date on current AI trends to keep your organization at the forefront of nonprofit fundraising best practices and pursue your mission as efficiently as possible. As you get up and running with AI, develop an AI policy that promotes responsible usage and ensures transparency with donors.