[Jim]

I am a longtime AI leader, starting with founding for-profit machine learning companies in Silicon Valley, and then bringing technology (including AI) to multiple areas of the nonprofit sector. I just want to point out that at least 90% of the things I hear AI is going to do in the nonprofit world are going to fail over the next three years. It won’t be as bad as blockchain (0 for 1000 over the last seven years of the hype in terms of social impact at scale), but the vibe is similar.

Many of us in the tech sector make fun of generative AI, with terms like “stochastic parrots,” spicy autocomplete,” and “spell-checkers on steroids” (this last one being mine). The technology is fascinating, amazing and still dumb as a brick. It does not understand what it is saying. The amazing thing is that it is still useful. Just not miraculous. And when expectations are set unreasonably (lay off half your development team!), leaders are going to be disappointed.

One courageous leader recently shared his story of disappointment at an international meeting. His national crisis helpline had spent 50,000 (roughly dollars) on a simple chatbot (no AI). It did miracles: his team managed to deal with a several-fold increase in case loads thanks to the time savings. Over the last year, his team spent 1,000,000 (roughly dollars) on an AI-powered chatbot. And its performance was sufficiently weak they did not deploy it.

As a technologist (and former CFO for 10+ years), when someone comes to me with a jazzy technology and is trying to find out what to use it for, I suggest they push the pause button. What are their top three challenges where tech might plausibly make the humans in the system more effective? Then, what are the most affordable, supportable, trainable, sustainable tech solutions which meet the need. It might be just a simple boring piece of well-understood tech, rather than the latest blockchain/generative AI hype!

[Jim]

I always suggest founders of new nonprofits use a fiscal sponsor to handle accounting, 501c3 status and other back office work. Having the founders working on the mission and figuring out if there is a real need for the org and the programs (and findability), and not on the machinery of starting and administering of a charity is well worth the fees.

I just launched as a standalone c3 after 4 years of sponsorship, it worked for us.

[Jim]

Great questions, Joseph. There is a lot of confusion about DAFs, and they are growing in popularity with both middle-class individual donors as well as with billionaires with foundation staffs exceeding 100 people.

I whole-heartedly support changing your internal policies about DAF gifts. The existing approach sounds a lot like getting a check from an individual or organization who banks at JP Morgan Chase, and deciding you should treat those like they were gifts from the bank, not the entity with the checking account. DAFs are much more like bank accounts than they are like foundations. Fidelity Charitable or Schwab Charitable are extensions of a brokerage business, not foundations making decisions about grant proposals!

The goal of separating individual giving from foundation grants in nonprofits is because of the vastly different skill sets needed for these different types of donors. Crediting the institutional giving team with DAF gifts from individuals is disastrously misguided. As would be crediting individual giving with a foundation grant that happens to come out of a billionaire’s DAF account after a proposal iteration process of six months of hard work from the institutional giving team. I know, because we regularly get both kinds of DAF gifts at the four nonprofits where I sit on the board (two of which I founded).

The moral of the story is: look to whose name is on the check or DAF grant who is the decisionmaker, not the bank or DAF operator who provides the services to the decisionmaker.

Jim Fruchterman, founder Benetech and Tech Matters,