The Role of AI in Fund Accounting: How Blackbaud is Driving Innovation and Efficiency

The future of nonprofit accounting is analysis. Not bookkeeping.

A Director of Finance at a nonprofit shared this sentiment with us during our research on the value of AI in fund accounting. At Blackbaud, we've seen the shift from manual data entry to deeper analysis first-hand. We've launched tools like automated payments and Insight Designer to help our clients get answers to their questions faster.

Now, AI-powered accounting functionality is to the point of being more than a shiny object. It can create real value-when you've taken precautions on how the tool is trained.

AI in fund accounting has the power to drive deeper analysis and increased efficiency across your nonprofit accounting team, with the right safeguards for accuracy and privacy.

Here is how Blackbaud is thinking about AI-enhanced functionality for nonprofit accounting.

What Do Nonprofit Finance Professionals Want from AI?

You manage complex and diverse financial data. You have to ensure compliance with various standards and regulations. And you need to be able to show your organization financial progress toward its strategic goals.

These finance functions require a high level of accuracy, attention to detail, and analytical skills. And they are often rife with time-intensive manual tasks.

Based on our research and discussions with nonprofit finance professionals, nonprofit organizations see the value of AI to help them move away from manual tasks and time-consuming report generation so they can focus on analysis and data-driven decision-making.

They want AI-enhanced tools to automate repetitive and tedious tasks, such as data entry, invoice processing, and reconciliation. They want it to provide faster and smarter insights, such as budget analysis, cash flow forecasting, and anomaly detection. They want to get important information faster, using AI to surface information that might otherwise go unnoticed, or prioritize what they need to know.

It Has to Be Accurate and Secure

"Almost" or "maybe" doesn't work in nonprofit finance. For any AI-assisted processes to be valuable for the finance team, it must be accurate, understand the constraints of a nonprofit, and the data it uses must be secure.

Before adopting any AI-enhanced tool, finance professionals should ask some critical questions, such as:

• Is it providing a holistic picture? Is it considering everything I need to answer this question?
• Is it a closed model and only looking at my data? How are you making sure it's not pulling from other sources?
• Is it aware of GAAP and compliance standards, so it won't make suggestions that don't align with nonprofit accounting best practices?
• How is the AI model being trained, and how can I make sure it is not being trained on confidential data?
• Is this a shiny object or will it provide actual value for my organization in terms of improved efficiency or accuracy?
• What is the confidence level of the model for the data it's understanding? Is it providing notifications for data it doesn't completely understand, such as the total amount paid on a crumpled receipt submitted by a program manager?

These questions can help finance professionals assess the quality, reliability, and security of AI tools, and avoid potential pitfalls, such as inaccurate or misleading results, data breaches, or compliance violations. Finance professionals should also look for AI tools that have a human-in-the-loop approach, meaning that humans can always review, override, or turn off the AI functionality if needed.

How Blackbaud Is Approaching AI in Nonprofit Accounting

At Blackbaud, we have a long history and deep expertise in the nonprofit sector. We understand the unique needs and challenges of nonprofit finance professionals, and we are committed to providing them with the best solutions possible.

That's why we are not in the business of creating AI models from scratch. We are being very selective and strategic about the AI models we incorporate into our system, and we are partnering with leading AI providers to ensure the highest quality and performance.

We are also leveraging AI to create efficiency across Blackbaud products, so that finance professionals can access and integrate data from various sources, such as fundraising, marketing, and partners. We are working on ways for AI to enhance our existing functionality, such as automating invoice creation, simplifying journal entry reclassification, and running continuous reconciliation with the system notifying you of issues.

These features are designed to help finance professionals save time, improve accuracy, and gain insights, while also maintaining control and visibility over their data and processes.

Using Your Intelligence for Good

AI is doing more than making your finance team faster and more strategic. There is a larger implication across all nonprofits, the communities you serve, and the larger world. By using AI, you can enhance your mission and impact, and contribute to the greater good.

At Blackbaud, we are passionate about using intelligence for good. We are not only providing AI-enhanced tools for fund accounting, but also for other areas of nonprofit management, such as fundraising, marketing, and analytics. We are proud to be part of a community of changemakers who are using AI to make the world a better place.

AI in fund accounting is not a distant future. It is a present reality. And it is an opportunity for nonprofit finance professionals to elevate their role and impact. At Blackbaud, we are here to help you navigate the AI landscape and provide you with the best tools and resources to succeed.

If you are interested in learning more about how Blackbaud is approaching AI in fund accounting, and how you can benefit from it, check out our most recent Financial Edge NXT Product Update Briefing, where we share more details and examples of our AI-enhanced features.

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