What's Happening?
The nonprofit sector is grappling with governance issues related to the implementation of artificial intelligence (AI). As AI becomes more prevalent, nonprofits are faced with the challenge of whether they will have a say in how AI is governed, funded,
and constrained, or if these decisions will be made by vendors, markets, and states. The sector is largely unprepared for this shift, with many organizations lacking formal policies on AI use. This governance gap is exacerbated by the divergence in federal and state approaches to AI regulation, creating operational risks for nonprofits operating across jurisdictions. Larger organizations are developing internal AI principles, but smaller nonprofits often lack the capacity to do so, despite being required to interact with AI-enabled funders and government agencies.
Why It's Important?
The governance of AI in the nonprofit sector is crucial as it could either redistribute or further concentrate analytic and administrative capacity. The lack of formal AI policies and the divergence in regulatory approaches pose significant risks, particularly for smaller nonprofits. These organizations may face challenges in compliance, procurement, and liability exposure. The potential for AI to become a tool of surveillance and control, rather than empowerment, is a significant concern. The sector's ability to influence AI governance will determine whether AI serves as a transformative tool or an unfunded mandate imposed from outside.
What's Next?
Nonprofits have a narrowing window to shape AI governance. They can develop clear AI use policies, establish shared principles for engaging with AI-enabled systems, and build internal capacity to identify and document patterns of harm. These steps can help ensure that AI is treated as a governance responsibility rather than a mere technical upgrade. The sector must also recognize the choice not to adopt AI tools that undermine mission alignment and client trust as a form of institutional agency.
Beyond the Headlines
The deeper implications of AI governance in the nonprofit sector include ethical considerations and the potential for AI to reinforce existing power hierarchies. The sector's engagement in public and policy debates will be crucial in ensuring that nonprofit values such as equity and community accountability are incorporated into AI governance frameworks.
