AI Could Be a Lifeline for Nonprofits—But It Is Also Expanding an Already Underprotected Risk Environment

For an industry accustomed to doing more with less, AI could be transformative.

Nonprofits often operate with limited budgets, lean teams, and employees wearing multiple hats. AI can help automate administrative work, support fundraising and grant writing, improve communications, and give employees more time to focus on the mission.

For an underfunded and understaffed sector, AI could be an extraordinary equalizer.

But it is also introducing new risks into a sector that may already be underprotected.

Nonprofits Are Becoming a Target

The NonProfit Times, citing Okta's Nonprofits at Work 2026 report, reported that the ratio of threats to authentication attempts at nonprofits rose from 2.6% two years ago, to 18% last year, to 78% this year.

That's concerning when nonprofits may hold donor information, financial records, employee data, beneficiary information, and other sensitive information.

This isn't simply an IT problem. It's an organizational risk problem.

When AI Adoption Outpaces Governance

The issue isn't that nonprofits are embracing AI. They should explore tools that can help them operate more efficiently.

The risk emerges when AI adoption moves faster than governance.

A well-intentioned employee might upload donor information, financial data, internal documents, or meeting notes into an AI tool simply because it makes their job easier.

The employee sees productivity. The organization may unknowingly inherit risk.

Those risks can extend across:

Data & Privacy | Technology & Access | Internal Controls | Compliance & Governance | Reputation & Trust

For mission-driven organizations, trust may be one of their most valuable assets.

A cybersecurity failure doesn't just compromise systems—it can compromise the confidence of donors, beneficiaries, funders, and community partners.

Underfunded Cannot Mean Underprotected

A small nonprofit doesn't need the cybersecurity or risk infrastructure of a Fortune 500 company.

It does need to understand what it is protecting, where vulnerabilities exist, who owns the risks, and whether its controls are keeping pace with new technology.

That’s where right-sized governance becomes essential. Effective risk management isn’t about implementing every possible control—it’s about understanding your organization’s unique risk exposure and putting the right controls in place for the risks that matter most.

GraceWorks Advisory Can Help

Through a right-sized review of your governance, risk, and compliance environment, GraceWorks Advisory can help identify potential gaps, assess how emerging risks such as AI and cybersecurity affect your existing controls, and determine where attention should be prioritized.

The goal is practical: understand your risks, identify your gaps, and strengthen your organization without adding unnecessary complexity.

GraceWorks Advisory

Affordable Risk & Compliance Solutions for Right-Sized Governance

Source: The NonProfit Times — NPO Authentication Attacks Skyrocketing