Non-profits plan AI push but lag on back-office reform

Non-profit organisations are placing artificial intelligence at the centre of their strategic plans but remain constrained by manual processes and fragmented back-office systems, according to new international research commissioned by software firm Unit4.

The study, conducted by IDC and titled "Mission Impact Through Unified Insight: Modernising the Nonprofit Enterprise", found that a large majority of non-profits are planning investments in generative and predictive AI. It also identified significant gaps in data integration and financial processes that limit the impact of those plans.

AI on the roadmap

IDC surveyed non-profits of different sizes and found 83% have generative AI investment on their strategic roadmap. A further 67% have plans for predictive AI. The figures suggest that most organisations in the sector now see AI as part of their medium-term operating model.

Larger non-profits report a more advanced approach. Among organisations with more than 1,000 employees, 87% have an AI strategy linked to business transformation objectives. Only 32% of organisations with 250 to 999 employees report a similar link. This highlights a divide between larger and mid-sized entities in how AI is embedded in wider organisational change.

Respondents identified several priority use cases. These include predictive maintenance and asset management. They also include data entry and documentation, and automated report generation. The emphasis sits on areas where AI can reduce repetitive workloads and improve the speed and quality of information.

Survey participants also distinguish between automation and augmentation. In the next 24 months they expect automation in real-time insights and reporting. They also expect automated workflows that reduce manual errors. In finance functions, respondents view AI as a way to augment work in Accounts Receivable, Accounts Payable and Financial Reporting.

Rafael Artacho, Director AI Product Incubation at Unit4, said the sector's current environment shaped its response.

"Given all the volatility nonprofits face, it is understandable they view AI as a vital way to maximise their available resources," said Rafael Artacho, Director AI Product Incubation, Unit4. "They also appreciate AI can provide a variety of benefits from predictive analytics to automation and augmentation. Larger organisations may be slightly further ahead in assessing the technology, but this is also a great opportunity for smaller organisations who can adopt AI integrations as part of packaged solutions tailored to their specific sector and needs."

Manual processes persist

The research also points to structural issues in how non-profits manage enterprise resource planning data. These issues affect policy, legal, compliance and financial workflows.

Some 45% of respondents still use manual processes for policy, legal and compliance workflows. Large non-profits report difficulty obtaining real-time or near real-time status updates and other information. In addition, 39% of all respondents say financial information gathering and reporting is cumbersome.

The study identifies three top operational challenges. These are operational risk and compliance oversight, limited technology adoption and integration, and siloed information. The combination reflects a reliance on older systems and workflows at a time of rising expectations on transparency and reporting.

Cloud and integration

Respondents indicate that technology modernisation offers a route toward better data use. They see potential in unified data and AI-driven innovation, which they associate with new user experiences, higher transparency and deeper measurement of impact.

More than half of respondents, 54%, say they prefer public cloud deployment for back-office applications. A smaller group, 26%, prefer hybrid cloud. This signals a shift towards cloud-based platforms as non-profits reassess their systems.

Non-profits are placing particular emphasis on integration between core back-office systems as they move into the cloud. All respondents say they plan to integrate finance and accounting with HR. More than 90% plan integration between operations management and programme and project management. Around 82% want to integrate procurement, purchasing and sourcing.

The organisations expect these integration projects to create a single source of truth for information. They link this outcome with several benefits. These include better visibility into processes. They also include a unified view for consistent compliance, improved data quality for decision making with AI, stronger financial controls and compliance, and more streamlined processes.

Strategic pressures

Non-profits face ongoing financial and operational pressures, which shape their technology priorities. Respondents list several main business challenges that they believe improved integration could address.

Raising funds, securing grants and building donor relationships ranks highest, cited by 40% of respondents. Financial sustainability follows at 34%. Measuring and demonstrating mission impact is cited by 31%. These figures underline a focus on income, resilience and evidence of outcomes.

Respondents also align integration and AI efforts with their strategic priorities. These include fundraising, financial growth and diversification. They also include improving the delivery of mission outcomes and growing mission impact and outcomes. The expectation is that better data and more automated processes will underpin these ambitions.

Ruthbea Yesner, Vice President Government Insights, Education, and Smart Cities at IDC, said organisations recognise the role of back-office systems in that shift. "With the significant challenges facing nonprofits today, there is a real appetite to embrace innovation as a means to achieving strategic ambitions," said Yesner. "A key starting point must be increased integration between core backoffice applications, because this will enable the single source of truth necessary for digital innovation such as AI."