Breaking the Bottleneck: How Generative AI is Unlocking Underutilized Donor Funds

Higher education is under pressure. Public funding is shrinking, unrestricted resources are tightening and every dollar is being stretched to its limit. And yet, millions in donor funds are sitting idle.

The issue isn’t a lack of generosity. Donors continue to show up, give back and believe in the mission. The problem lies in how those gifts are being interpreted, categorized and ultimately restricted. Somewhere between donor intent and operational execution, things get lost in translation. Narrative gift agreements are condensed into data systems. Descriptions are interpreted and re-coded. Over time, restrictions harden—sometimes more narrowly than the donor intended. And the result? Scholarships unawarded. Program dollars untouched. Strategic needs unmet.

It’s not mismanagement. It’s misalignment.

Are You Over-Restricting Your Greatest Assets?

Most foundations and advancement offices don’t realize this is happening. Fund management teams operate with caution, sometimes defaulting to a more conservative interpretation of a donor’s wishes to ensure compliance. But over time, that caution has a cost.

What if your institution is:

• Over-restricting active donor funds beyond the original intent?
• Missing opportunities to apply restricted dollars to actual, mission-aligned expenses?
• Spending unrestricted funds on programs that already have eligible restricted support?
• Missing conversations with donors who would gladly adjust their gift terms if asked?

These questions aren’t theoretical; they’re happening now. And the institutions that find answers will unlock new financial flexibility — without raising another dollar.

Foundation leaders are caught in a constant push-pull: the pressure to spend every available dollar to meet urgent institutional needs, and the obligation to prove that every expenditure aligns with donor intent. This tension often leads to overly cautious fund management and untapped resources.

Now is the Time to Act

This problem has been quietly compounding for years. But a convergence of pressures is forcing it into the spotlight:

• Tighter budgets and rising costs demand smarter fund stewardship.
• Increased scrutiny from boards and auditors means institutions must ensure gift compliance while maximizing use.
• Shifts in donor expectations favor transparency and impact — two things that become harder to deliver if gifts sit unused.

At the same time, new technologies are emerging that make it possible to tackle this complexity at scale. Artificial intelligence (specifically generative AI) is beginning to open doors that were previously closed due to time, staffing or data constraints.

The Opportunity Ahead

We’re on the brink of a new approach. One where institutions don’t just manage restricted gifts; they optimize them.

Generative AI (GenAI) is being piloted to analyze fund narratives, compare them to coded restrictions and flag discrepancies. It’s not meant to replace human oversight, but rather to amplify it. This kind of intelligent review can identify where gift terms are too tight, where spending could shift and where near-miss expenses might be reallocated (if donor conversations happen).

Think of it as a financial X-ray, revealing what’s beneath the surface of your restricted accounts and helping leaders make more informed, donor-aligned decisions.

While GenAI offers powerful analysis capabilities, it’s not foolproof. AI can occasionally “hallucinate” or misinterpret context. That’s why we’ve built a risk-based, human-in-the-loop approach that ensures every recommendation is validated — keeping donor intent front and center.

What Could You Unlock?

Every institution has a different mix of challenges. But the potential upside is universal:

• Reduced reliance on unrestricted dollars
• More agile spending during budget constraints
• Improved donor stewardship and transparency
• A stronger foundation for long-term strategic planning.

Whether your institution is navigating massive growth or doing more with less, the question is the same: Are you using every gift to its full potential?

This isn’t a product pitch. It’s an invitation. If you’re in advancement, finance or foundation leadership, take a closer look at your restricted gifts. Ask the hard questions. Challenge assumptions. And consider whether it’s time for a new set of tools (and a new mindset) for managing donor funds.

The dollars are there. The technology is here. The next move is yours.

Ready to unlock under-utilized funds? Connect with our collegiate athletics CPAs and consultants to explore how James Moore Digital’s GenAI solutions can help you increase funds available for spending without increasing compliance risk.

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