Not-for-profit leaders are operating in an environment defined by rapid policy shifts, heightened compliance expectations, constrained resources, and increasing reliance on digital tools. During CohnReznick’s Not-for-Profit Roundtable series, held in multiple locations across the country, not-for-profit and higher education leaders gathered to discuss how organizations can strengthen operations, leverage data and artificial intelligence (AI), and stay ahead of regulatory change – without losing sight of mission delivery.

This article highlights the key themes and practical takeaways most relevant to not-for-profit executives and boards, with a brief overview of tax and regulatory updates.

A new operating reality for not-for-profits

Over the past year, not-for-profits have experienced a meaningful shift in operations. Evolving executive orders, funding changes, and new regulations have added layers of complexity. Many organizations respond quickly, often through manual workarounds, to keep programs moving. While effective in the moment, in some cases these stopgaps have become embedded as “temporary” processes that now carry structural risk.

Leaders across the sector are asking similar questions:

• Where have manual workarounds quietly become mission-critical processes?
• How have increased administrative burdens taken away from serving stakeholders?
• Which areas feel more fragile today than they did just a few years ago?

The consensus: today’s challenge is distinguishing what disruption was situational versus what is now structural – and stabilizing operations without slowing impact.

Why controls and best practices matter more than ever

As not-for-profits increase reliance on digital payments, remote workflows, and third-party vendors, operational gaps have become risk exposure. Fraud incidents are increasingly driven not by technology failures, but by weaknesses in process design, unclear ownership, or inconsistent controls.

Strong operational discipline – clear roles, documented processes, and consistent approvals – is foundational to:

• Protecting donor trust
• Safeguarding organizational reputation
• Supporting cybersecurity and vendor risk management
• Enabling leadership and boards to make informed decisions

Organizations that invest in governance and controls are better positioned to adapt to uncertainty while maintaining confidence among stakeholders.

Business transformation and process efficiency

Roundtable discussions emphasized that transforming operations, technology, and other business processes does not have to mean disruption. Not-for-profits are finding value by modernizing core finance and operational processes, including:

• Standardizing core finance processes by documenting and enforcing consistent finance processes to reduce institutional knowledge and tribal processes
• Automating high-volume manual tasks such as cash application, bank reconciliations, and accounts payable invoices to reduce data entry time
• Improving system integration and data flow by integrating operating systems with the finance ERP to reduce reconciliations and enable more reliable financial reporting
• Streamlining the month-end closing process by integrating close calendars within project management tools and financial ERP systems
• Modernizing reporting to routine dashboards and leveraging AI for analytics and insights

Across the sector, these efforts have led to better measurement of outcomes: greater transparency, leveraging AI and other emerging technologies, reduced risk, expanded capacity for mission-focused work, and meaningful cost savings through streamlined operating models.

Leveraging data and AI for mission impact

Data and AI were a central focus of the roundtable, with an emphasis on practical, responsible adoption rather than hype. In practice, AI is used to surface trends that staff would otherwise review manually, while leaving strategic decisions to leadership and program teams. Over the past year, not-for-profits reported increased use of commercially available AI tools, reducing the need for custom development. Instead of questioning whether AI is worthwhile, many NFPs are asking, “How do we get started?”

Common use cases emerging in the sector

Not-for-profits are increasingly using analytics and AI to:

• Forecast donor churn and prioritize stewardship
• Automate grant summaries, reports, and routine communications
• Identify trends in program outcomes and service demand
• Produce consistent, timely dashboards and board KPIs

These capabilities depend on a strong data foundation. Organizations are still navigating “data chaos,” where information lives across spreadsheets, inboxes, and disconnected systems, making reporting inefficient. A practical first step is agreeing on shared definitions, documenting who owns key datasets, and standardizing how information is entered and approved.

Lessons from the field

Industry examples shared during the roundtable demonstrated how AI can drive measurable results. When paired with quality data, clear goals, and thoughtful oversight, AI tools can improve donor engagement, enhance education and service delivery, and streamline back-office workflows. At the same time, staff judgment remains essential, particularly in donor and client communications where tone, context, and relationship history matter.

Best practices for responsible AI adoption

Successful organizations tend to follow a repeatable approach rather than ad hoc experimentation:

• Prioritize answering business questions, automating routine tasks, and enabling staff to focus on mission-oriented work.
• Audit and prepare data for more consistent, reliable outputs.
• Begin with a single use case, such as automating internal reports, then scale to other functions.
• Establish governance with policies for data use, security, and oversight.
• Invest in skill-building and address change management proactively.
• Leverage trusted advisors to support roadmap development, pilots, and capability building.

Governance is particularly important as adoption grows. Without it, organizations face legal, privacy, bias, and reputational risks, many of which are already making headlines across industries. A right-sized governance framework mitigates these risks without burdening teams with unnecessary administrative work. An AI policy should cover how the organization and its employees use AI, including aspects such as roles and responsibilities, approved products and use cases, data privacy rules, quality control, and required training.

With best practices and governance in place, the next step is building from pilot projects to wider adoption. Realizing a return on AI investments remains a challenge. However, a structured AI adoption program can help NFPs maintain momentum and determine which efforts offer the most value. 

Brief regulatory and tax update

While operational and technology topics dominated the discussion, leaders also reviewed key regulatory developments affecting not-for-profits and higher education brought on by the changes through the One Big Beautiful Bill Act.

Highlights included:

• New rules impacting charitable giving incentives
• Changes to the higher education endowment excise tax
• Increased scrutiny around executive compensation and excise taxes
• Establish governance with policies for data use, security, and oversight.
• Adjustments to clean energy credits and employee retention credit enforcement
• Ongoing IRS focus on governance, transparency, and compliance for exempt organizations

The overarching message: regulatory complexity is increasing, and proactive planning, documentation, and governance will be essential in 2026 and beyond.

Looking ahead

Not-for-profits that succeed in today’s environment are those that prioritize efficient operations, leverage technology, responsibly govern data, and utilize AI in their workstreams. By strengthening foundational processes, adopting data governance policies and AI thoughtfully, and staying ahead of regulatory change, organizations can build resilience, protect trust, and position themselves for long-term impact.

For not-for-profit leaders and boards, the question is no longer whether change is coming, but how prepared the organization is to adapt.