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Donor confidence is a moving target that could be affected by an overwhelming volume of new accessible information driven by artificial intelligence (AI), corresponding alternative choices, and possibly — too much information. This accessibility of information creates hesitancy, impacting how donors choose which organizations to support and how they monitor mission delivery.
The fallout is that revenue can fluctuate unexpectedly, which is why future-based scenario planning is vital to the financial health of nonprofits, according to A. Michael Gellman, CPA, CGMA, and co-founding principal partner for Sustainability Education 4 Nonprofits (SE4N).
Nonprofit executives often spend too much time analyzing past data and need to focus more on looking forward to be more effective. Gellman noted that while some revenue growth occurred during the pandemic, some of it was driven by unique, non-sustainable circumstances such as temporary grants and larger, unusual gifts. His comments are a response from The NonProfit Times for an independent examination of data in recent study by Momentive Software “Rebuilding the Trust Economy: The 2026 Nonprofit Trends Report.”
The study was conducted by Wakefield Research for Momentive Software. The firm quizzed 500 nonprofit executives online across five mission categories: Arts, Culture and Humanities; Education; Human Services; Health/Healthcare; and, Environment and Animals, none of whom are clients of Momentive Software.
Three key trends emerged from the data: Donor trust is the sector’s defining priority and its hardest challenge; AI usage is nearly universal, but board support determines who benefits in practice; and, revenue is growing, yet the operational infrastructure to sustain it isn’t.
Gellman recommended reversing the standard 70/30 planning approach, suggesting that leaders should spend only 30% of their effort analyzing what already has happened and 70% planning for the future and the expected impact on their funding pipeline.
“We’re so used to looking back as a focus. We’re not as comfortable looking forward. We have to look forward based on this information,” said Gellman. “There’s been revenue growth in the sector, donor grants, but there’s also been a lot of ‘one-offs’ that have driven that. We’ve had some unusual giving out there.”
Gellman defines planning horizons as near-term (the current budget year), short-term (the next budget year), and intermediate-term (two to three years out), emphasizing that leaders should utilize scenario planning to learn and adapt based on key funding and labor assumptions.
Leaders should focus on the outside parameters of best-case and worst-case scenarios rather than aiming for a “likely case” middle ground, which, he said, is rarely achieved. This approach helps leadership assess organizational sustainability at lower funding levels and ensures the organization can manage operational capacity during peak funding levels. This approach also aids in proactively addressing potential funding gaps, such as when a multi-year grant is nearing its conclusion.
“I don’t know where we’re going to be two to three weeks from now, let alone two to three years. The point is you’re learning from scenario planning and by narrowing planning based on two or three key over-arching assumptions. And for nonprofits, assumption number one and two is almost always funding. We usually reserve the third key assumption for labor (staffing) and capacity to handle growth, but it’s always funding first to me,” said Gellman.
What stands out in the data for Momentive Vice President Tirrah Switzer is “the consistency of the pressure across mission categories, organization sizes, and revenue levels.” When compared to 2025, “one of the things, I think, aligned with the last two years, was we’ve gone through some massive changes in the landscape politically, economically,” she said. Last year was all about recovery from lost revenue and this year is diversified income, she explained.
Building donor and stakeholder trust ranked as the single most-cited organizational priority for the year ahead – more than technology upgrades, AI adoption, and donor acquisition. Nearly nine in 10 leaders (89%) said it’s harder to earn today than three years ago. The gap is not awareness; it is execution. Trust erodes through operational failures such as cash flow challenges that delay program delivery, compliance issues that disrupt operations, and donor relationships that end without clear explanation.
When given 10 priorities for the next 12 months, increasing revenue came in seventh at 46% with building trust topping the list at 66%. New revenue streams was dead last at just 34%.
The data also show:
* 36% of organizations experienced cash flow challenges or liquidity constraints during the past two years; and, 33% lost a major donor or funder relationship;
* 34% faced increased scrutiny or compliance requirements from auditors, funders, or regulators; and,
* 51% rely on impact reports and outcome data as part of their trust-building strategy, while 45% proactively communicate how funds are used.
Board involvement with AI adoption policies and placing restrictive policies on its use might hurt fundraising. Of those responding, 91% are already using AI in some official capacity. Some 88% of respondent leaders believe organizations that don’t adapt to AI within the next two years will struggle to compete for donors.
At organizations where boards strongly support AI, 59% use it extensively and 92% of those with strong support saw revenue growth during the past 12 months. At organizations where boards support AI with restrictions — the position held by 57% of respondents’ boards — just 14% use it extensively and revenue growth drops to 81%. Board support is the primary variable separating organizations that benefit from AI from those that do not, the data shows.
Only 29% of respondent nonprofits use AI extensively. Most common uses for AI are communications tasks such as drafting emails, newsletters, and social media content. AI is used for collecting and analyzing donor data at 36% of respondents’ organizations with 20% using it to predict donor behavior.
Staff anxiety regarding AI came in last (22%) when discussing barriers to use. Security/privacy concerns topped the list at 49%, followed by cost, lack of trust, lack of training and ethical concerns.
Conventional wisdom is that young staff members would be AI evangelists. That might or might not be the case. There was a five point differential between the two and Gellman classified that as being in the margin of error as almost equal.
The complete report can be found here … https://momentivesoftware.com/research-study/nonprofit-trends/
