Are we being oversold on the impact of AI?  

"Are we being oversold on the impact of AI in funding?"

This was a question posed by an attendee at a recent webinar we hosted for our 'Funders Collaboration Group' on the impact of Artificial Intelligence (AI) in the sector.  
My name is Jacqui, I'm a Senior Service Designer at Hyphen8 and I assure you, I am not a robot (unlike the "people" in the image above*).

We were privileged to facilitate another group discussion with a panel of representatives from Wellcome Trust, Esmee Fairbairn Foundation, and Community Foundation serving Tyne & Wear and Northumberland. This time they shared how their organisations are considering and using AI and machine learning.

An AI generated image of an AI person in the clouds

State of Play

The group discussion that followed made one thing clear; most organisations are still exploring the opportunities and challenges of using AI, and grappling with the extent of the impact. There was apprehension and enthusiasm at the possibilities of using the technology in their operation and funding services.  

Application Writing

The efficiencies that generative AI tools can offer funding applicants is a hot topic of conversation in the sector, and to this group of funders.  

We know that the nonprofit sector historically has spent a huge amount of resource writing funding applications, and these tools allow you to draft a response in a matter of seconds. What we don’t know is the extent to which AI is already being used, and the impact this is having on the quality of applications, applicant’s workload, and application numbers.  

There was mixed opinion in the group about whether funders should ask applicants to declare if they have used an AI tool, or if they should actually care about it at all?  

After all, some organisations already seek external paid support to write applications, so the group debated if AI offered the opportunity to level the playing field for those organisations who do not have the financial resources available or the skills in-house, and are therefore currently disadvantaged.

Other potential consequences are also being widely speculated on. Will it drive an increase in other application formats, such as video? Will it necessitate more conversational assessment methods?  

Decision-making and Grant Management

Although sometimes hailed as a potential game-changer in funding, using the technology to make funding decisions raised some ethical concerns among the funders.  

One of the greatest of these was: "will systematic bias be amplified, if decisions are left in the hands of an algorithm?" 

While AI could potentially assist in certain aspects (such as synthesising application data), most agreed that final decisions should remain in human hands, and there was a real concern of losing the human touch across the whole grant life cycle.  

If the reality is that funders are adamant on the need for humans to understand the nuances of social contexts, and to build strong relationships, is the potential impact on decision-making and grant management being overstated?

Data Management and Analysis

Some funders are already leveraging AI and machine learning for tagging data sets, gaining impact insights, identifying potential risk, and handling day-to-day tasks. Concerns surfaced about the sharing of confidential data on AI tools, prompting a discussion on guidelines for responsible use.  

This area was felt to be one of the most likely examples of how funders will adopt the technology in the future. With this in mind, could AI and machine learning do the heavy lifting in data management and analysis, and free up funder resources to focus on other critical work?  

Oversold or Understated?

The American researcher Roy Amara’s ‘Law’ is frequently quoted when considering the impact of AI across all sectors of society:     

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” 

As we navigate the potential impact of AI in funding, our discussions highlighted the importance of a balanced perspective, at least in the short term. If we responsibly mitigate the risks, could AI become a force for good in the sector in the future?  

Imagine a world where applicants and grantees can concentrate on the delivery of services to their communities, while funders can focus on building real-life relationships, something only humans can truly accomplish.  

Dan Probert, Chief Technical Officer at Hyphen8, said:

AI is an exciting technology advancement, and I can see many opportunities for grantmakers and nonprofits to begin using it. From automating administrative processes that free up staff time to focus on more strategic initiatives, to predicative analytics that will help to forecast trends in fundraising. We are already starting to see the potential uses and benefits of AI on Salesforce, and while we will continue to consider the ethics and longer-term impact, we are excited about that this technology’s impact on helping the nonprofit sector achieve their mission more effectively and efficiently.” 

In Summary

  • To what extent is AI already being used by funders, and by applicants?
  • Could AI level the playing field for applicants?
  • Should funders ask applicants to declare if AI has been used?
  • Could the use of AI increase alternative application formats among funders?
  • Concerns over confidentiality remain high, could guidelines be created?
  • Can you imagine the possibilities for greater impact in nonprofits thanks to AI? 

The 'Funders Collaboration Group' consists of Hyphen8 clients who come together to learn and share knowledge; if you are a client and would like to join the group or hear more, please contact us and follow us on LinkedIn for updates.

*All images in this post have been AI generated.