Heading into 2026, mission-driven teams supported by public or federal funding are planning carefully in response to ongoing economic shifts. Our most recent survey revealed 57% of nonprofit and public sector finance teams are already tightening budgets, and one-third list a potential recession as their top concern for next year.
However, these challenging times can be a catalyst for change. As 96% of finance teams are being asked to “do more with less”, 2026 can be the year your finance team adopts tools that support long-term stability and efficiency.
To help inform your 2026 planning, we surveyed over 100 finance professionals in the nonprofit and public sectors about their top priorities and where they’re focusing their investments. In this blog, we’re sharing key findings to show how finance teams are preparing for what’s ahead.
How are Nonprofit and Public Sector Finance Teams Leveraging AI in 2026?
Mission-driven teams are embracing modern tools like artificial intelligence (AI) to help them work smarter. When asked about their top priorities for 2026, finance teams in these sectors pointed to efficiency and technology.
Top Priorities for Nonprofit and Public Sector Finance Teams in 2026:
- 47% are improving data security, fraud prevention, and compliance tools
- 43% will focus on investing in AI and machine learning
- 39% are upping investment in technology and automation (excluding AI)
- 27% are prioritizing payment modernization
As technology investments rise, survey results show that hiring or retaining talent along with DEI and ESG initiatives are among the lowest priorities for 2026. The takeaway: organizations are leaning on digital tools like AI to help manage productivity without adding headcount.
The Benefits to Teams Who Already Use AI:
- 41% reported better workflow efficiency
- 31% saw reduced operational costs
- 29% experienced greater accuracy and fewer errors
Where Teams Want to See the Biggest AI Gains:
- 43% want to improve efficiency and productivity
- 27% are focused on using AI for better data analysis and decision-making
- 17% say they would use it to reduce costs
By embracing AI as a long-term strategy, these organizations are positioning themselves for smarter, more agile operations in the years ahead.
How Are Mission-Driven Teams Improving Security and Fraud Prevention in 2026?
Finding ways to increase operational efficiency with new tech isn’t the only priority for 2026. The other focus? Security and fraud prevention.
Top Priorities Around Stronger Security:
- 64% want improved training around phishing and fraud
- 50% aim to find better cybersecurity tools and monitoring
- 40% are looking to strengthen security and fraud prevention tools
Another step organizations are taking to strengthen security is by eliminating paper-based payments. The federal government already phased out paper checks in September 2025, in response to the rise in fraud since the pandemic.
How Nonprofits and Local Governments are Modernizing Payments:
- 58% plan on adopting alternative payment methods for their vendors and suppliers
- 27% plan on increasing investment into modernizing payments
The outcome: a clear shift toward a more secure, tech-focused strategy.
Why Compliance is Critical to Help Protect Your Operations and Reputation
For nonprofits and the public sector, strong compliance isn’t just best practice; it’s a requirement. Managing public and federal funds means every dollar needs to be accounted for, and every process must meet strict regulatory standards. That’s why these organizations are prioritizing security and compliance initiatives as they plan for 2026.
Top areas organizations have been impacted from successful cybersecurity attacks:
These findings underscore a clear trend: prevention pays off. When compliance is the center of your AP strategy, you gain more than peace of mind; you can protect your mission, your stakeholders, and your reputation.
Ready to Make AI-Enhanced AP the Foundation of Your 2026 Strategy?
Every decision matters when budgets are tight and resources are limited. For mission-driven organizations, long-term success depends on smart, sustainable investments.
AI-enhanced accounts payable (AP) automation helps mission-driven teams work more efficiently, improve accuracy, and gain real-time insights, freeing finance to focus on strategy, not busy work. With over 240 purpose-built ERP integrations, AvidXchange can help make it easy to modernize your AP process without changing the systems you already rely on.
Explore how your team can start planning smarter for 2026 by visiting www.avidxchange.com