Nonprofits are facing an engagement crunch. AI can help them do more with less

At the midpoint of this year, nonprofit executives were hit with the realization that, whereas donations across the U.S. continue on the rise, with affluent households giving an average of $33,219 as per the 2025 Bank of America Study of Philanthropy, the number of actual donors has sharply dropped. 

Two decades ago, nearly two-thirds of households gave annually. Today, fewer than half do. While the desire to donate is still present, a shrinking number of donors are carrying more of the load, the report found. 

As the donation landscape concentrates, it’s likely to have ramifications for nonprofits in a number of key ways. To start, fundraising strategies could get more competitive, with the large number of nonprofits targeting a shrinking pool of high-value households for donations. 

AI is one approach that nonprofit executives can leverage to address the broader participation trends affecting the industry. Whereas the technology is already commonly used by many nonprofits to help with admin and content creation tasks, the next phase is about strategic applications to support long-term strategies. 

The technology should not be viewed as another software category for nonprofits to purchase, but evaluated as an operating layer that can reduce the cost of delivering existing processes, increase staff capacity and, in some cases, extend services beyond what a human-only model can support economically.

In this paradigm, the organizations that benefit the most from AI will be those leveraging it to redesign high-volume workflows and create more capacity without proportionally increasing headcount; not necessarily those that deploy the most tools. 

And as the funding landscape concentrates significantly, here’s how AI can help nonprofits demonstrate value and engage with donors more strategically.

The biggest opportunity is workflow economics

Growing confidence in the potential of AI is tangible across the nonprofit sector. Here, 47% of respondents to the State of AI in Nonprofits: 2025 study believe AI can significantly boost their organization’s productivity and efficiency. 

The study also found that larger nonprofits, with annual budgets exceeding $1 million, are adopting AI tools at nearly twice the rate of smaller organizations (66% vs. 34%), underscoring a growing digital divide.

However, while 85.6% say they are exploring AI tools, only 24% have a formal strategy for deployment, revealing a major gap between interest and actionable planning.

Moving nonprofits away from standalone use cases that focus on individual AI products and towards a much more comprehensive and organization-wide strategy is the opportunity now arising. This looks at how the technology can meaningfully and specifically support a nonprofit’s operational objectives. 

But first, stakeholders can zero in on workflow economics. Every organization has workflows that consume significant amounts of employee time without directly advancing the mission. These are non-negotiable tasks that lay the foundation for other initiatives, including coordinating schedules and preparing reports. 

As nonprofits grow, the workload volume of such associated tasks also increases. The traditional way to handle this has been to hire more administrative staff, but AI creates another option. 

The solution is not about removing staff, which are both essential for all-hands-on-deck cases and to provide human judgement in cases of managing exceptions. But, when a process involves large volumes of structured or repetitive work, automating portions of it while keeping their core staff in place is the answer. 

This moves AI from a standalone software product into a strategic operational tool; it’s not about simply making an employee 10% faster, but to determine whether an entire workflow can operate with fewer manual interventions. 

Not only can this demonstrate to high-value donors that the nonprofit is able to transparently manage resources from an operational perspective, but it also means that no dollar goes to waste on inefficient systems.

Fundraising needs leverage, not just personalization

Given how AI is already a common tool for nonprofits, fundraising has long been a natural fit for the technology. However, leaders must move beyond looking at the technology as a software tool to create  brochures or draft emails and instead focus on its potential to change the economics of fundraising amidst the participation crisis.

Fundraising teams already have access to donor databases, segmentation strategies and communication programs which is a major advantage. AI is a way to leverage this opportunity further and remove the constraint of execution capacity. 

The more interesting question is whether AI allows a fundraiser to manage a larger portfolio of relationships without making those interactions feel less personal. If automation can eliminate the administrative layer surrounding fundraising while maintaining relationships at its core, the result is not merely greater productivity but, potentially, bigger fundraising capacity, too. 

During a period when the total number of donors is falling, fundraising strategy needs to involve ways to improve donor engagement and build long-lasting relationships. AI, in this context, is just one way that fundraising teams can improve their performance economics. 

Think predictive modeling to score prospective donors by likelihood to give and estimate gift sizes, lookalike modeling to find leads that resemble top donors and automating donation acknowledgement letters. These are pillars that have the most measurable ROI, improving on precision and magnifying genuine connection. 

Communication may be one of the biggest untapped opportunities

Beyond the current landscape, nonprofits can move beyond the borders of generative AI as the limit of the technology to more practical applications.

Many nonprofits still depend heavily on telephone interactions, particularly organizations that provide community services and healthcare-related support, which all demand contact centers for continuous support. 

Many of these calls are often sensitive in nature, where callers may be in a period of extreme crisis or urgent need; these aren’t the short simple calls other sectors manage on the daily, and staff can often be speaking to the same caller for hours to discuss their case. 

As things like the cost of living crisis pinch harder, nonprofits have seen the number of calls spike. For example, Sacramento County’s 211 helpline was inundated with calls for food assistance in the wake of government funding cuts.

At the same time, many organizations often have few options beyond allowing callers to wait on hold or go to voicemail when volumes spike, as increasing call center capacity comes with a notable cost. AI voice systems can change that economics. An AI-powered answering system can handle routine inbound calls, answer frequently asked questions, collect information, schedule appointments, route callers and escalate conversations when a human is needed.

This leaves trained support staff in place to deal with ongoing cases and support the most urgent calls, while general callers receive a timely response through a virtual receptionist. It also removes the need to leave callers on hold for long periods. Instead of treating voicemail as the end point of a missed interaction, organizations can use AI to make the phone line an active service channel.

Here, too, it’s not about replacing phone staff. In many situations, a nonprofit should absolutely not, and instead prioritize the human touch that has historically categorized its operations. But the opportunity is reserving human capacity for conversations requiring empathy and professional judgement, while allowing automation to absorb predictable volume around those interactions. 

For a nonprofit handling thousands of calls a month, that distinction can translate into significant operational savings, and, perhaps most importantly, preserving the relationship-building efforts they have made throughout years with communities in need and donors alike. 

AI underpins the modern nonprofit 

Amid the participation crisis affecting fundraising, nonprofits can find a powerful way to improve the overall economic performance of the organization through AI. This moves the technology beyond a standalone software product into a strategic lever to boost performance, engage with funders and support one’s community. 

AI, here, can be the driver of the sector, as well as a way to protect and extend human relationships. The pool of donors has narrowed, competition for their attention has intensified, and overcoming these hurdles has nothing to do with using the most tools. 

Rather, it’s all about using AI to free nonprofits’ teams to do what only people can: build trust, show up for communities and make every donor feel seen and appreciated.