Regulated AI: What Nonprofits Need to Know About AI Rules and Compliance

When you use regulated AI, artificial intelligence systems that must follow legal rules to protect people and data. Also known as compliant AI, it’s not just about avoiding fines—it’s about doing right by the communities you serve. If your nonprofit uses AI for fundraising, client services, or internal operations, you’re already in the scope of laws like the EU AI Act, California’s AI Transparency Act, and GDPR. These aren’t suggestions. They’re requirements—and they’re getting stricter every year.

Regulated AI isn’t just about big tech companies. It’s about you. If you collect donor data, use chatbots to answer questions, or run AI tools to predict grant outcomes, you’re handling personal information. That means you need to know how GDPR, a strict European data protection law that applies whenever you handle data from EU residents affects your workflows. It’s not optional. If someone in Germany donates to your U.S.-based charity, GDPR kicks in. Same goes for California’s AI Transparency Act, a law that forces platforms to label AI-generated content and give users free tools to detect it. Even if you don’t build AI, you might be using it—and if you are, you’re responsible for what it does.

What does this look like in practice? It means you can’t just plug in any AI tool and hope for the best. You need to ask: Does this tool explain how it makes decisions? Can you delete a donor’s data if they ask? Are you using synthetic data to avoid exposing real people’s information? These aren’t tech questions—they’re ethical ones. And the good news is, you don’t need a legal team to start. Many of the tools your team already uses—like AI-powered donation platforms or chatbots—can be made compliant with simple changes: clear privacy notices, opt-out options, and avoiding AI that learns from live donor data.

Regulated AI also means avoiding bias. If your AI picks out who gets help based on past data, it might accidentally leave out marginalized groups. That’s why AI ethics, the practice of building and using AI fairly, transparently, and with human oversight isn’t a buzzword—it’s a survival skill. Diverse teams catch blind spots. Clear documentation prevents mistakes. And audits—not just vendor promises—keep you safe.

You’re not alone in this. Nonprofits across the country are figuring out how to use AI without breaking the law or betraying trust. Below, you’ll find real guides on how to run AI tools without touching PHI, how to build budgets that don’t overspend, and how to spot when your AI is crossing legal lines. No jargon. No fluff. Just what you need to stay compliant, protect your donors, and keep doing the work that matters.