Conventional wisdom about nonprofit fundraising considers these two statements equally true: 1) Acquiring new donors loses money, and 2) Future gifts from new donors make up for the money lost on acquisition.

Alas, only one of them is true. Acquiring new donors does, indeed, lose money, often estimated at 50 percent of the initial gift. However, according to Blackbaud, fewer than a quarter of those initial donors will renew their gift. The math gets even worse in out-years, as 60 percent of donors lapse year after year.

We recently released a report funded by the Bill and Melinda Gates Foundation on using artificial intelligence (AI) for fundraising and philanthropy. The report outlines ways that nonprofits are beginning to use AI to increase giving, and while the fact that the most powerful technology in history can help nonprofits raise more money didn’t surprise us, we were surprised by how much opportunity nonprofits have to use AI to re-imagine and re-humanize fundraising.

AI automates tasks that previously only humans could do. The field isn’t new—it’s been around for decades—but it’s recently become much less expensive, making it available for everyday use and by smaller organizations.

AI tools for increasing fundraising currently include:

  • Online chatbots that serve as conversational interfaces between organizations and the public
  • Software to identify prospective donors from internal data sets
  • AI-powered tools that identify prospective donors on social media platforms and through other public sources of information
  • Algorithms that analyze donor data and suggest how to personalize appeals

We’ve been thinking about the time development staff could save by using AI. We see a great opportunity for development teams to patch the holes in the leaky bucket of fundraising, and enable their organizations to move from transactional to relational fundraising.

Read the full article about revolutionary AI funding strategies by Allison Fine and Beth Kanter at Stanford Social Innovation Review.