AI in nonprofit finance: when, why, and how
The nonprofit sector has faced challenge after challenge since the 2008 financial crisis. Funding has become increasingly scarce (and tightly controlled by both regulators and donors) and operations increasingly complex. The pandemic has only exacerbated these trends – while also adding its own challenges. The “Great Resignation” has made competition for scarce talent fiercer than at any point since the 1950s – especially as it’s occurring in the context of an ongoing generational transition.
And as financial pressures of all kinds increase, the role of finance as a function within nonprofit organizations is evolving too.
Finance still has to function as an archive for regulators and donors – providing analyses and reporting of historical data for both compliance purposes and to find new opportunities to help the organization realize its goals in the future.
But as with other sectors, finance leaders and their teams in nonprofits are increasingly finding they need to be looking forward. Becoming trusted strategic advisors to leadership and governors, helping the organization embrace change, and providing a flexible foundation in budgeting, planning, and forecasting to embrace new opportunities.
How finance technology helps lead the transformation
Advances in technology are a major support in the evolution of nonprofit finance – from cloud platforms and apps that simplify operations and reduce administrative burdens, to mobile devices that enable your people to work well wherever they are.
There’s now little question that AI and machine learning will make for another step-change in the nonprofit operating environment. Especially in finance, where AI powered workflows will make real-time, accurate analytics and reporting a reality. And remove a great deal of the manual burden of number-crunching from your teams outside of occasional exception handling – leaving them to focus on strategic support to the organization.
What is artificial intelligence, and how does it help you?
If we’re being honest, “artificial intelligence” is a marketing term that encompasses a variety of “smart” applications. These generally use algorithmic workflows to sort data sets and identify important insights independently. When combined with “machine learning” principles, these tools can “learn” how to model and process new data sets over time, helping streamline administration and make identifying and fixing problems, identifying and embracing opportunities, and taking a more future-oriented approach possible.
It’s likely you’ve already made use of AI in one form or another in your day to day already. If you’ve used:
- Online chatbots
- Voice assistants
- Real-time translation
- Automatic transcription
- Robotic process automation (RPA)
- Text analytics
- Smart demand forecasting platforms
- Automated fraud preventions
You’ve already experienced a little of what AI can do. (We’ve spoken about RPA in particular – and its more intelligent sibling Smart Process Automation – here.)
In its more advanced applications, AI tools can not only automate repetitive tasks – they can scrape the entire internet from news sources to business’s annual reports in order to build reports on any subject you care to mention. Helping you identify areas where your organization’s services are most needed, and where your scarce donor funds can make the greatest impact on ongoing projects.
What’s the best way to integrate AI into nonprofit finance?
It’s best to think about AI less as a tool to perform specific functions, and more as a way to help you augment your team’s capabilities. It shouldn’t so much change the way your processes run, as enable you to be less involved in running them.
AI is perfect for many of the run-rate tasks that consume a great deal of time in nonprofit finance departments, but which themselves add very little value. Things like:
- Uploading, processing, and reconciling documents like invoices, receipts, and timesheets.
- Performing continuous accounting – eliminating the need for a monthly closing period and the associated strain on resources.
- Identifying fraud and the abuse or misuse of funds as soon as they occur.
- Producing analysis of trends across cash, costs, funding, and spend.
- Flagging anomalies in transactions to aid your teams in ensuring compliance (and spotting anything untoward quickly.)
- Ensuring financial data is available, up to date, and consolidated across the organization’s entire digital estate.
Turning over these tasks to the robots can help free you and your people up to focus on the future and help to inform better decision making at your organization’s leadership level.
But when’s the right time to adopt it?
There’s never a universal “right time” to bring a new technology into your organization. This is more true with AI than it is perhaps with any previous innovation, as AI isn’t really a tool – it’s a principle that underpins a whole new generation of tools that can do any number of different things.
Your adoption of AI will be driven by your organization’s own need to transition to more strategic and future-oriented approaches to managing its finances. This will mean identifying the opportunities you’ll need to embrace to make this transformation, rather than buying in to a solution and looking for a problem to fit it to.
How can Unit4 help you?
Our next-generation solution cloud ERP solutions are designed from the ground up to eliminate siloed operational models in people-centric sectors like nonprofit and charitable organizations. Our cloud-native architecture allows your organization to leverage resource-intensive emerging technologies like AI and machine learning, and our microservices delivery model and no-code customization features make it possible for everyone who uses the system to create the tools and features they need to satisfy their particular workloads and requirements – all within a single solution.
To see what Unit4 can do for nonprofits, check out our interactive industry focus here.
