It is essential when exploring how AI can be used in fundraising, to remember, people give to people. And grant-seeking and major gift fundraising rely on demonstrating capability and impact, and on building relationships and trust.
This truth hasn’t changed. What has changed is the pace at which AI is accelerating and the pressure and complexity facing for-purpose organisations, potentially growing the temptation to use AI as a shortcut.
Used well, AI can create extraordinary efficiencies. Used poorly, it can quietly erode trust, authenticity and credibility — the very foundations of successful fundraising.
So the real question isn’t whether we should use AI in grant-seeking. It’s how we do so without compromising best practice.
Trust always comes first
Before we talk about tools, prompts or productivity gains, we need to ground ourselves in what is effective fundraising.
Fundraising is built on relationships, evidence and trust. AI does not replace that, and it never will.
Across the sector, we’re seeing a wide spectrum of responses from funders. Some are rejecting AI generated applications outright, describing them as “too generic and obvious”. Others are accepting them but flagging what they call a “sameness” – a homogenised quality that lacks the personality and specificity that makes a project truly compelling. A few are more pragmatic, acknowledging that AI levels the playing field for smaller, under resourced organisations who couldn’t otherwise compete. And some are accepting AI use but explicitly require applicants to declare how AI has been used.
Use this feedback as a cautionary signal, not a reason to disengage from AI altogether and remember, how we use AI matters enormously.
The hallucination problem is real and costly
Our research team has documented hundreds of examples of misinformation generated by AI searches on grant round information.
The principle we return to, always: AI works best when applied across existing, verified, accurate data sets. It should not be used to create the data sets themselves. When it is, you don’t save time; you lose it, and you introduce risks that can damage your own knowledge base, strategic thinking, credibility and trust.
AI in grant-seeking best practice
When applied thoughtfully, and with secure safety frameworks in place, AI can add immense support to your fundraising and grant-seeking, enhancing workflows though never replacing human judgement.
To map your approach to effective use of AI, let’s look at our seven key success criteria for best-practice grant-seeking, examining where value is added and where we urge caution.
1. Strategy & Leadership
In line with the first of our success criteria, AI strategy is leadership work. Governance isn’t optional; it’s foundational.
Boards and executives must set the direction for how AI is used across the organisation’s operations, inclusive of course in marketing, communications and fundraising, with clear accountability, policies and guardrails in place. If your organisation doesn’t yet have an AI policy, that’s the starting point. Real risks exist when sensitive data is uploaded to non-secure tools, and governance frameworks need to reflect this.
In Australia, the National Voluntary AI Safety Standard provides a strong framework, and many of its principles are already becoming de facto expectations in funding processes.
2. Funding priorities
AI can genuinely help create efficiency once your team has applied the strategic thinking.
For example:
- Synthesising planning notes into themes
- Structuring program ideas developed by teams in robust project plans using templates
- Collating background research (with careful verification)
What it cannot do is replace the strategic thinking that comes from getting your smartest people in a room to define organisational priorities, which is energising and mission-critical work. Don’t risk “brain rot” by bypassing leveraging the expertise and experience of your team.
3. Internal project planning
AI tools like Microsoft Copilot can turn existing documents into a structured grant-ready proposal template if you’ve done the foundational program planning work.
AI can assist by:
- Summarising long documents
- Drafting internal templates
- Reordering content into “grant ready” formats
But every output must be reviewed, refined, and owned by people who understand the work deeply. Do not use it for tasks requiring deep domain expertise without oversight, or for sensitive content you cannot verify yourself.
4. Identification and project matching
This is where I urge the greatest caution. We’ve seen hundreds of examples where AI generated funding information that is outdated, inaccurate and entirely fabricated.
Strategic Grants also strongly advises against using any prospect research tool that requires you to upload your organisational information to an external platform. When you do, your information and data effectively train the platform’s AI.
Invest in your own AI tools and train your staff in how to use it effectively over your own verified, internal data and information or use prospect research systems with known, reputable, verified data, like GEMS.
And remember; identifying the funder is only step one. A relationship needs to be developed wherever possible before applying and that starts with direct communication by a phone call or email.
5. Donor communications and funding applications
No doubt a lot of organisations are using AI to assist with their communications and it is where the training of your own tools makes the biggest difference. AI can help:
- Save time on early drafts
- Rephrase content
- Improve clarity
- Reduce repetition
At Strategic Grants, we’ve developed a customisable AI agent framework for our team that sets the role, language style, operating expectations, and hallucination guardrails. It flags bias, identifies where it’s drawing on external rather than internal sources, and ends every complex task with a human review checklist.
What it should never do is replace your organisation’s voice, lived experience or credibility. Always ensure you have real qualitative evidence from the people you help, woven into your proposals.
6. Funding success and reporting outcomes
Reporting back to funders is not just financial compliance but more an opportunity to truly engage with your donors in a meaningful way.
AI can help refine and structure reporting documents in the same way you can use it for proposal development. But ensure caution when drawing on internal evidence and data to ensure it is appropriately de-identified. It (hopefully) goes without saying that if video reporting is permissible or requested, it should never be AI-generated!
7. Funder engagement and stewardship
Here, the answer to AI use is simply no (unless for the related back-end administration tasks). The face-to-face meetings, the site visits, the introductions to program beneficiaries — none of that can be replicated or enhanced by AI. The evidence is clear; long-term, multi-year grants and gifts and untied funding arrangements come from deep funder relationships. AI cannot build trusted partnerships.
The real opportunity ahead
The organisations that will use AI most effectively are the ones who treat it as a powerful assistant, not a replacement for expertise, voice, or human connection. They will have clear policies, train their tools on validated data, keep humans in the loop, and be transparent with funders about AI use. That transparency is increasingly both a legal and ethical expectation.
AI can save hundreds of hours and reduce administrative burden. But it will never replace strategic thinking, ethical judgement and relationships at the heart of effective fundraising and grant-seeking.
Strategic Grants helps for-purpose organisations move from reactive grant seeking to a planned, relationship-led approach grounded in best practice.
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About the author
Jo Garner is the CEO & Founder of Strategic Grants. Jo established Strategic Grants in 2009 and in 2012 she launched what is now GEMS – Grants Expertise Management System – New Zealand and Australia’s largest online grant-seeking management system. Jo leads a passionate team of 35, who are all dedicated to working collaboratively with for-purpose organisations to build their capacity and secure grant funding to deliver vital projects to achieve their mission.
With a background in Business, Marketing, IT and Fundraising, Jo’s strong communication skills and ability to apply strategic thinking and solutions to challenges faced by NFPs, has seen Strategic Grants help hundreds of organisations raise funds to deliver their mission through effective funding and engagement strategies.
Jo is a regular presenter at philanthropy and fundraising conferences and is known for her engaging training techniques and facilitation of strategic planning workshops.