AI Governance for Nonprofit Boards

Artificial intelligence (AI) is reshaping how nonprofit boards operate. As the technology advances, boards face considerations that go beyond IT guidance and oversight, touching fiduciary duty and ethical governance.

Leading sector publications, including Nonprofit Quarterly (NPQ), emphasize that AI governance is now a core board responsibility. These sources ascertain that a board’s role should expand to help AI technology serve the mission and avoid potentially undermining it. This new responsibility broadens the focus beyond operational efficiency to include mission alignment, ethical leadership, and systemic equity.

It should be noted that the expectation is less about board members being involved with day-to-day technology initiatives and more about their role as advisors in creating policies and procedures to help the organization’s leaders in their work. The board’s guidance can empower leaders to implement and manage AI effectively.

To achieve this, board members should avoid the “efficiency trap,” a tendency to prioritize cost-cutting over mission impact, and support management in identifying ways to guard against algorithmic blind spots, where hidden biases in automated systems can quietly shape outcomes for beneficiaries.1 This article explores practical steps boards can take to provide clear governance direction while enabling leaders to manage AI responsibly.

AI Governance Now a Core Responsibility

A board’s traditional duties of Care, Loyalty, and Obedience should now include technological oversight.2 Drawing on guidance from leading nonprofit governance discussions, the following offers practical steps for boards to help strengthen oversight and equip the leadership team with ways to reduce risk and align AI adoption with the organization’s mission and values.

Put mission before efficiency.

Boards can help align technology with organizational values and help leadership:

Resist the efficiency trap by avoiding the adoption of AI solely for speed or cost savings. NPQ warns that efficiency-driven adoption can erode trust and human connection.3
Address algorithmic blind spots by requesting bias audits and fairness stress tests to help prevent the exclusion of marginalized communities.
Codify responsibility using a responsible AI framework, such as the NIST AI Risk Management Framework (AI RMF), to help identify guardrails for privacy, consent, and fairness.

Close any AI knowledge gaps.

AI should not be managed from the sidelines. To help build knowledge, trust, and alignment, organizations can:

Upskill the boardroom by recruiting members with technology or data governance experience and investing in AI literacy for key team members.
Make vendor accountability a requirement. Ask clear questions of your vendors about which models are used and how the models are trained to help provide transparency and safeguard organizational integrity.

Include AI risk into governance and strategy.

AI-related risks, including data breaches, hallucinations, and bias, should be incorporated into enterprise risk management processes. Organizations are encouraged to establish clear escalation protocols for ethical breaches and confirm that cyber insurance policies address AI-related incidents.

From Policy to Practice With Sage Intacct

In real-world nonprofit risk assessments, a commonly overlooked area of risk includes business software, as well as some accounting and relationship management tools. With a responsible AI framework and governance in place, the next step is aligning technology to operate within these parameters.

Sage Intacct is a leading accounting and enterprise resource planning (ERP) platform for many nonprofits. Sage has been in the AI development space for more than a decade, and building transparency and trust with this technology has remained one of the organization’s hallmarks. Sage Intacct combines AI-powered automation with built-in governance features. This can help boards manage risk and maintain compliance without sacrificing innovation.

Built-In Trust With Explainable AI

Sage’s AI Trust Label acts as a “transparency report” that addresses specific risk categories often identified in nonprofit risk assessments, including an AI audit trail. For instance, a risk of using software that can automate entries (like GL Outlier Detection) is the explanation (or lack of explanation) why. The AI Trust Label provides transparent, accessible information about how AI functions across Sage’s products.4

Ethical AI use and adherence to regulatory requirements are essential. Sage Intacct can help organizations address these and provides AI-powered automation with governance features that can help boards manage oversight with:

Built-in transparency: Explainable AI and compliance transparency through the AI Trust Label.
Automated vigilance: Continuous anomaly detection and predictive insights for financial workflows.
Data-driven foresight: Mission-focused dashboards and scenario planning to aid strategic decisions.

Sage Intacct provides a governance-by-design platform that addresses specific high-risk areas of nonprofit management.

AI Governance Checklist for Nonprofit Boards

Are AI initiatives aligned with mission, goals, and measurable outcomes?
Has management translated the board’s AI policies into clear procedures, playbooks, and staff guidance?
Does the organization have a responsible AI framework, vendor standards, and an AI acceptable‑use policy?
Are regular audits for bias, reliability, and overall model performance being conducted?
Does the organization have business software that supports transparency, compliance, and responsible AI governance, e.g., explainable AI or audit trails?
Is AI use being communicated openly with donors, beneficiaries, and partners?
Do staff have defined roles, responsibilities, and escalation paths for AI‑related decisions or incidents?
Is training available to staff as AI tools evolve?
Does management check that AI‑enabled workflows align with board‑approved governance frameworks?

Key Takeaways

AI governance is now a core responsibility and fiduciary imperative. Boards that ask strategic questions and champion ethical frameworks and tools can help nonprofit leaders position AI as a driver of mission impact rather than a source of unchecked challenges.

Boards that embrace ethical AI governance today can help shape the nonprofit sector’s trust tomorrow.

How Forvis Mazars Can Help

Ready to strengthen your nonprofit’s AI governance? Contact professionals at Forvis Mazars to learn more about the services we provide to nonprofit organizations, and how Sage Intacct can help your organization foster responsible AI practices and enhance financial management.

Forvis Mazars is a certified Sage Partner and Sage Intacct software value-added reseller, offering a full suite of consulting services.