Facing Federal Budget Slashes, More Nonprofits Are Turning To AI

Nonprofits may be outpacing for-profits in AI adoption in some use cases, studies show.

President Donald Trump’s passed budget plan, which he dubbed the “big, beautiful bill,” aims to cut $1.7 trillion from the federal budget, according to the White House.

Many of these cuts will impact nonprofits that provide social services like education, housing, and combating poverty and hunger. The National Council of Nonprofits raised the alarm about the budget bill before it passed both chambers of Congress and was signed into law by President Trump on July 4 . The bill, “if enacted, would harm nonprofit organizations nationwide and the people they serve,” the organization said on its website.

Nonprofits May Outpace Private Sector In Some AI Use Cases

In its 2024 State of Nonprofit Digital Engagement Report, Twilio, which offers a customer engagement platform, surveyed 1,440 nonprofit employees and 1,500 nonprofit end users, between March 21 and April 11, 2024, about their AI usage.

The report found that 90 percent of nonprofits are leveraging AI. Most nonprofits said they were using AI for communications, largely for engagement and marketing.

Moreover, AI applications for the United Nations’ 17 sustainable development goals (SDGs) — a blueprint for countries to mobilize and take action against global hunger, poverty and other societal challenges — have surged 300 percent since 2018, according to a study from Google. Many nonprofits align with specific SDGs to “attract support and build relationships with partners with similar values,” according to a report from Philanthropy News Digest.

However, nonprofits have also expanded their use of AI in other areas of their work with budgets cuts on the rise, according to Parshant Dhand, the chief innovation officer of Advance Solutions, which partners with ServiceNow, an enterprise platform that offers services for organizations to achieve operational efficiency.

Dhand and his team have worked with nonprofits over the last decade, and in his role with Advance Solutions, helps nonprofits build new technology solutions.

One of those nonprofits is run by Tammy Scudder. Scudder said she spent about six months incarcerated, which she described as a “terrible, horrible experience.”

Nonetheless, that experience gave her a “vision and a need to want to change the system in a way that’s positive for other women and others who are in reentry,” Scudder said, who ended up founding the Indiana Reentry Corp. (IRC).

“We want to serve all individuals who are coming out of incarceration and give them the full support that they actually need in order for us to help contribute to lowering the recidivism rates,” she said.

But as with many nonprofits, well intentions are often at odds with the reality of securing funding and expanding operations to meet goals.

Nonprofits And AI Becoming ‘An Evolution’

To meet those challenges, more nonprofits like IRC are embracing AI more in their organizations, Dhand said, citing looming and existing budget cuts plus a push to streamline operations.

“It’s an evolution,” he said. “With the recent budget cuts and all of that, [nonprofits] have to answer the call to become more efficient ... that’s where AI kicks in.”

For example, nonprofits are turning to AI for automation.

“AI agents for different functionalities ... are playing a big role in automating different aspects of a particular process,” he said.

Nonprofits are using AI now for a host of purposes, including fundraising, finance, procurement, and even mobilizing volunteers, Dhand said.

Scudder said that her organization’s mission involves a “lot of holistic care that isn’t provided or even available here in Indiana and in most states right now, and now with the budget cuts for nonprofits, that just becomes even harder to do.”

With Advance Solutions’ assistance, IRC was able to set up “a platform and a CRM solution that will allow us to track all of our participants, track their progress, help us to find better solutions to support the whole individual so that they are able to successfully reenter into society,” Scudder said.

Dhand also spoke about how Advance Solutions’ partnership with ServiceNow works with other nonprofits.

“One of the goals is we want to end world hunger. We worked with the UN agency ... but then to achieve that goal ... they have to hire people who survey different countries, and they work on securing food and have a long-term sustainable plan for food,” he said.

“But as they work, we want them to be more efficient in achieving their results. And that’s where the AI plays a big role,” he added.

Dhand said one of the most effective areas AI has helped nonprofits with is their work in disaster and emergency response situations.

“One of the organizations that we’re currently working with as they currently deploy volunteers in the field to do surveys or to do different aspects, or even in case of a disaster response, you want to provide aid in a disaster or emergency response type of area,” he said.

“How do you recruit those volunteers? You want to have a repository of those volunteers, but you want to mobilize them based on the need that you have and the skills that the volunteers have in a bit more automated fashion,” he added.

“Within our solution as soon as you have an emergency situation, it automatically spins up a volunteer campaign that, with just one approval, can go live. You don’t need to have resources to create that. And then it automatically communicates with the volunteers who match the skill set and who are available in that location ... they can just accept the call and then participate in the relief efforts,” he said.

“Now imagine doing that manually or imagine doing that without having robust workflow capabilities or AI capabilities. It can be very, very time-consuming. That’s just one example where our AI solution can help,” he continued.

Some of Advance Solutions/ServiceNow’s other nonprofit customers include World Central Kitchen, UNICEF, and the Red Cross, Dhand said.

While Scudder said she doesn’t have a tech background: “I’m very curious when it comes to technology. It fascinates me at a high level. And I’ve actually been using AI when it first came out ... I was like, ‘Oh my god, this is incredible.’ I can do so many things with this. It’s given me the information quickly that I need, and in order to help provide Advance Solutions with the information they need from me.”

“For instance, we’re building our job board currently with Advance Solutions as part of our technology stack. I can go online quickly and just type in something; it’s way better than Google. You get so much more information. It would take me days to research a lot of that information otherwise,” she added.

Scudder said AI has been her “saving grace.”

“It’s helped me develop the programs and the curriculum and the criteria for everything that we’re doing as a foundation, not just for IRC, but also for inPower Her, which is an element of the Indiana Reentry Corporation for women that we’re putting into play.”

How Nonprofits Are Funding AI

Nonprofits tend to be more risk-averse and budget conscious, perhaps even more so than for-profits. So how can they afford to implement AI?

“Different organizations are funded differently, and they always have a budget to run their operations. I think the ask here is that, as we work with them, they are allocating their budgets towards implementing these solutions, which in the long run is helping them become more efficient,” Dhand said.

Scudder also spoke about how her organization is funding its AI implementation.

“To be real honest with you, we don’t have funding,” she said. “Advance has graciously worked with us to build a technology stack that is beneficial, not just for IRC, but for other nonprofit organizations within the reentry space.”

Dhand weighed in on Advance Solutions’ focus on nonprofits with its AI technology and platform.

“I think these nonprofit organizations are truly like the backbone of our society, and there are so many ways in which they make a difference, whether it’s the kind of use cases that I talked about and all the great work that all the UN agencies are doing, and we’re here to help them in whatever way we can,” he said.

“AI has made things so much easier for me, personally, to be able to give Advance Solutions the information they’re looking for, while also giving me and IRC the information and technology that we need in order to put everything into place and build us a platform that has full case management, that has the ability for us to be able to track our participants at a level that keeps them accountable, while giving us feedback information on how we can better support them,” Scudder said.