Artificial Intelligence is continuing to change the nonprofit sector landscape, and it is doing so at a rapid pace. The 2025 State of AI in Nonprofits: Benchmark Report on Adoption, Impact, and Trends from TechSoup and Tapp Network reveals a sector in transition—where early adopters of AI are seeing real benefits while others remain on the sidelines, unsure how to take the first step or deciding not to even use it. Here's what we found in the report along with my take on it.

Where Things Stand

The numbers from the report show that nonprofits have not been early adopters. Most nonprofits haven't developed formal AI strategies yet—76% operate without one, and 80% lack clear policies around AI use. Our sector has seen a similar pattern regarding strategy and policy before with other new technologies over the last 25 years. At times the sector has recognized a need to step into something new but often was unsure of what step to take. This is not necessarily a bad thing in my opinion, as it provides the opportunity for conversation and considerations as tools evolve before formal policies are developed.

Hesitation in strategy and policy does not fully limit genuine exploration. Nearly a quarter of nonprofits have started using AI for grant writing, while a third have incorporated it into their marketing efforts. These early adoption areas of AI make sense—they are specific, immediate, and directly address pain points that every nonprofit knows well.

What's more telling is what's not happening yet. Complex applications like data analysis and fundraising optimization remain largely untapped, with over half of organizations still exploring how AI might transform these areas.

AI All Day Every Day

Generative AI has captured nonprofit attention in a big way. Tools like ChatGPT and DALL-E are being explored by an impressive 85% of organizations, an adoption rate that rivals many for-profit sectors. We also now see and use Generative AI in everyday business applications from Google to Microsoft and from Zoom to our cell phones. These tools don't require extensive technical knowledge and give users a chance to see how AI can be used in everyday work functions.

Predictive analytics, however, tells a different story. Only about 13% of nonprofits are working with these more sophisticated tools, suggesting that while the interest is there, the technical complexity or resource requirements may be holding the sector back.

Cautious Optimism Prevails

When asked about AI's potential, nonprofit leaders express measured enthusiasm. Nearly half rate AI's ability to improve operations as highly valuable, with another 40% giving it strong marks. This suggests the sector recognizes AI's potential even if they're not sure how to harness it.

This optimism comes with clear-eyed awareness of the challenges ahead. Financial constraints top the list of concerns, with 30% of organizations citing costs as a major barrier. It's not just about buying software, it's about training staff, changing workflows, and potentially hiring new talent.

The Trail Ahead

The organizations that succeed with AI will be those that start small, learn quickly, and remain focused on how it can advance their core mission rather than simply automating existing processes. With the right support and strategic thinking, AI has the potential to significantly amplify the nonprofit sector's ability to create positive change in new ways.

The journey is just beginning, but the destination—more effective, efficient, and impactful nonprofit organizations—makes the challenges worth navigating. I will certainly be on this trail and look forward to seeing you on it too.

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Nevin Daryani is the Director of Operations for Armstrong McGuire. Learn more about Nevin and check out his other musings in his bio.