Over the past couple years, we have seen Artificial Intelligence (AI)-related technology innovations reminiscent of the internet-era innovations seen in the late 1990s and early 2000s. While many onlookers worry AI may replace their current work duties, many experts ascertain that AI will complement most workers by enhancing productivity. For example, a recent Gallup poll found that 25% of workers leverage AI to carry out routine tasks. This figure is expected to grow alongside the ongoing AI innovations and the widespread adoptions of AI tools. Meanwhile, nonprofits are currently facing a workforce shortage crisis.

The combination of AI productivity augmentations coupled with the current workforce shortages faced by nonprofits provides the perfect opportunity for nonprofits to ease the staffing shortages while leveraging the vast capabilities AI provides.

In this article we will explore how nonprofits can leverage AI in their finance departments to increase productivity while bringing down costs.

Organize, extract, and analyze raw data.

AI helps eliminate the need to use fancy excel functions to extract, organize, and analyze large data sets. With AI, you can input data sets and request outputs based on your desired parameters. In addition, you can take raw data and ask AI to format the data so it can be easily transferred into an excel spreadsheet. Furthermore, AI can analyze financial transactions to detect patterns indicative of fraudulent activity. Machine learning algorithms can continuously learn from new data, improving their accuracy in identifying potential fraud. This proactive approach helps protect organizations from financial losses. This use case can save an accounting team hundreds of hours while automating the fraud detection process.

Financial Planning and Analysis

Financial planning and analysis (FP&A) is critical for nonprofits to ensure they are making the most of their resources. AI can enhance FP&A by providing deeper insights and more accurate forecasts. AI algorithms can analyze historical data to identify trends and patterns that might not be evident through manual analysis. Did you know that AI can analyze your organization’s finance statements/budgets and provide insights and analysis to help with strategic planning, provide insights into trends, and highlight risk areas?

AI can analyze financial and operational data to identify opportunities for cost savings, revenue generation, and program improvement. This strategic support is invaluable for nonprofits, which must balance their mission-driven goals with financial sustainability.

Enhanced Financial Reporting

AI can generate comprehensive and customizable financial reports that include visualizations of key KPIs. These reports can be tailored to meet the needs of different stakeholders, such as board members, donors, and regulatory bodies. AI-generated reports can include:

  • Dashboards: Interactive dashboards that display real-time KPIs and allow users to drill down into specific data points.
  • Trend Analysis: Graphs and charts that show how KPIs have changed over time.
  • Comparative Analysis: Benchmarks that compare the nonprofit’s performance against industry standards or peer organizations.

By leveraging AI, nonprofits can gain a deeper understanding of their financial health, make more informed decisions, and better communicate their performance to stakeholders. Implementing AI in financial reporting not only improves efficiency but also ensures that the organization remains accountable and transparent in its operations.

Scenario Analysis

AI can conduct scenario analysis to assess the potential impact of different strategies or external factors on the nonprofit’s financial health. For example, AI can model the financial implications of a new fundraising campaign or changes in grant funding, helping nonprofits plan for various scenarios and set appropriate KPIs.

These are just a few ways your nonprofit can leverage AI to streamline and automate finance department functions. As AI continues to evolve, we will see more refined use cases that enhance productivity by utilizing these powerful tools.

Did you know that many AI tools are already integrated into financial technologies like QuickBooks Online and Bill.com? Financial technology companies are also competing to incorporate the latest AI capabilities to enhance functionality.

To learn how your nonprofit can leverage AI to enhance reporting, streamline processes, reduce costs, and embrace the future, contact the technology experts at Goldin Group CPAs for us to build a better future together!