96: How to AI-Proof Your Nonprofit Consulting Business (Fractional to Scalable Series #10)

You've been quietly worried for months. The pipeline fills thinner. Discovery calls are landing different. Prospects are asking sharper questions than they used to, and a few of them have pushed back on your rate in a way that caught you off guard. You keep telling yourself it's just a slow season. It's not a slow season. The market has changed, and AI has changed it, and if you're still positioning yourself the way you did two years ago, you're not in a slum. You're in the early stages of being commoditized. Hey there, my friend. Welcome back to the biz of nonprofit consultants. I'm your host Natalie Eckdahl, and I've spent over a decade helping consultants grow profitable firms through my training, coaching, masterminds, and live events. This is episode 10 in our fractional to scalable series. Today we're talking about how to AI proof your consulting business, specifically your nonprofit consulting business because here's the truth. AI is already reshaping how buyers buy, how general lists compete, and which consulting firms are going to be standing five years from now. Spoiler alert, a lot of them are going to go out of business, and you are not going to be one of them. This episode was sparked by a recent session in my impact collective mastermind program, which is a year-long group program for nonprofit consultants growing from 200,000 to a million, which includes two in-person retreats. I'm so excited for our next one in October. The group I'm speaking about was where I asked each member of the collective to come to the call with trends they were seeing in their corner of nonprofit consulting. In my mastermind program, people have different specialties. They have various revenue levels and different client types. What I love about that group is when you put a dozen or more smart business owners into a room and ask them what they're noticing, patterns emerge, and when pattern surfaced repeatedly, buyers have changed. They are arriving at calls more educated, more researched, and asking sharper questions. They know what good looks like, and they are not hiring a generalist to figure it out with them. That's what I want to unpack today. And if you're new here, a little context about me, I'm actually an outsider to the nonprofit world. I've never been an employee inside a nonprofit. I have served in a volunteer part-time consultant role, and about 20 years ago, I was part of a mentorship program supporting small nonprofits in my area. But my background is marketing and management consulting, and I have an MBA, which means I bring a MBA lens to analyzing businesses. I look at your consulting firm, the way I look at any other business. I look at the economics, the positioning, the margins, the leverage points. That outside business first view is what I've been bringing to nonprofit consultants since I started my coaching practice in 2014. Now, before I go further, I want to say something important. Nothing about this is new. Free, maturing expertise-based market eventually bifurcates. And by that, I mean the top end specializes in commands premium pricing, and the bottom end gets commoditized. Cheaper, faster, more templated, and the generalists in the middle get squeezed out. This has happened over and over with marketing agencies, web designers, bookkeepers, virtual assistants, copywriters, every one of these started as a generalist gold rush and matured into a bifurcated market. Let me give you a concrete example from my own life. Back in 2010, my husband and I had a SaaS company. We met with a social media consultant who was going to help us grow our followers and start videos on YouTube. And I asked her a straightforward question, how are you going to demonstrate return on investment? How will we know that this is working? And she had no answer. And honestly, she didn't seem to think it was necessary to have one to get clients. Fast forward today. If you hire a YouTube consultant in 2026, they will provide you with data. They will quantify the return on your investment. It's expected. Here's the other part of that story. Back in 2010, that social media person did everything. They were a generalist. They did Facebook, YouTube, Twitter, all of it. One person, all the platforms, they were a generalist. As the social media market matured, something happened. Generalists became specialists. Today, if you want to run ads on TikTok, you'll find a TikTok expert. If you want to master content on LinkedIn, you'll find a LinkedIn specialist. If you want to grow YouTube, you will find someone who does only YouTube. The market didn't just mature. It bifurcated. And that bifurcation is exactly what's happening in nonprofit consulting right now, and frankly all consulting and extra-teas-based businesses. The pattern is the same. The timeline is just compressed because of AI. So what's happening now would have happened anyway. It's just happening sooner than it would have otherwise. So if you take one thing from this episode, this is not a threat you need to you. It's a market dynamic that has played out dozens of times in adjacent industries. The consultants who recognize the pattern early and position accordingly are the ones who come out on the other side stronger. Let's talk about what is actually different in 2026. Now I'm recording this at the end of May 2026. Buyers are not the same buyers we had in 2022. Four years ago, an executive director hiring a fractional development director or a consultant might have done a Google search, asked a peer-for-referral, looked at three or four LinkedIn profiles, and gotten on a call mostly to learn what was possible. Now that same ED is sitting down with ChatGPT or their friend Claude before they ever fill out your contact form. They're asking AI to explain what a major gifts program should look like at their revenue level. They're asking it to outline what a development audit covers. They're asking it to draft questions to ask you and the consultant they're interviewing. By the time they get on a call with you, they have done more research than the average client used to do in the entire engagement. And here's the part that should get your attention. You are doing this as well when you are the buyer. I have a story from my own life involving hiring a plumber. So we had a water pressure issue in our home and I got in touch with a plumber. And before I did, I asked AI, like I told it what the problem was. I asked what solutions I should expect, what it thought the cost range would be in my area. I asked it what there could have been a range of issues going on. And then once I got information from the plumber, once the plumber came out and did a visit and shared, you know, I asked my questions on the spot, but then they gave us a proposal. Well, I put that into AI and I asked what it thought and it did suggest some changes. And which is crazy because in the past, I never would have had without consulting someone else who knew more about plumbing and my knowledge is very limited. Without that, I would have had to talk to someone, a friend or a family member that understood plumbing. And that was a necessary. In fact, I think I got better information than from AI than, you know, unless I was talking to another plumber. So I came into that conversation, very educated and I was able to ask for a solution that was slightly different than what the plumber was suggesting and ask very intelligent questions. And I'm sure that traits people are starting to notice this in their world and we know doctors are as well. So it just should be something that we start to expect and anticipate and welcome. So the calls you're going to have are going to be at an elevated level and be ready for that and be excited for that. Because this is the new baseline. Now there are five things that happen in a market that is maturing and commoditizing. I'd like you to think about each one as I go and see which ones you are already noticing or feeling and then keep your eye out for the others. The first is price becomes the entire conversation. By our stop asking, are you the right fit for us and start asking, what's your hourly rate or what's your day rate? When everyone sounds the same, price is the only lever left to pull and profit margins start to compress and the race to the bottom begins. That's why I never want your business to play the price game. [BLANK_AUDIO] to play at that level and that's why we will need to differentiate ourselves in the marketplace, which I will be talking about. Okay, second, sales cycles get longer. When everyone looks the same, why wouldn't a buyer get five proposals instead of two? Why wouldn't they take three months instead of three weeks to decide? The work it takes to close one client triples. Another thing I think is happening right now is there's a lot of uncertainty with the current administration and also there's a lot of uncertainty around AI and so organizations are pausing things that do not seem urgent. Third, scope creep gets brutal. When a client sees you as interchangeable with five other consultants, they push harder. They expect more, more deliverables, tighter timelines, let's have some a few more revisions. You are not a partner anymore, you're a vendor and vendors get squeezed. Fourth, referrals shift in quantity. A generalist gets referred for anything which sounds good, but it isn't. You end up with wrong fit leads, price shoppers, people who don't value the work. A specialist gets referred for the thing they do and that they're known for and those leads arrive pre-sold ready to hire you. And fifth, the middle gets squeezed out and this is the big one, the market bifurcates. At the top, specialist who own a lane and command pre-wean pricing. At the bottom are the low cost providers and now our friend AI doing templated work fast and cheap. And the generalist sitting in the middle, they have no story to expense it for the bottom of the market and not differentiated enough for the top and that's the people that go out of business. And that is where frankly, a lot of fractional nonprofit consultants are sitting right now and just don't realize it. I just had a conversation with one of my clients who has resisted choosing a niche. This client is focused on their, on serving their local metropolitan area but that is really the only niche they have. So they have a specialty and they're serving their local market but they are starting to feel all the five things I just mentioned in their business this year and especially right now. And the truth is that they are going to have to niche further. There's no choice. They need to differentiate themselves in this marketplace and as they do that become very visible about how they are unique. I know that many of us are just amazed at the speed of adoption of AI and it is incredible how fast things are changing and moving and I know you are feeling it in many areas of your business and your life and it has many positives as well. There's many things it is helping. So I'm not covering the ways to leverage AI in this conversation. I'm talking about how to AI proof your business and to not become those businesses that are going to be stuck in the middle and get pushed out of the marketplace completely. So we have those five things I just mentioned that are happening and then we're layering AI on top of all five of those which is making the speed of all of that happen faster than it normally would in a maturing market. AI is not coming for the fractional generalist work. AI is already doing it. Boiler plate grant prospect research. AI does that in minutes for free. A generic case for support. AI drafts it while a staff member is at lunch. A templated development audit framework. AI can produce one that's 80% of what a generalist could deliver and it's only going to get better at these things over time. I'm not saying that AI is replacing all nonprofit consultants. I am saying that if your work could be described in a single sentence that an executive director could type into chat GPT and get a usable answer to you are being commoditized right now whether you realize it or not. So what's not being commoditized? Specialization, pattern recognition across dozens of organizations like theirs. Methodology you've built and tested. Relationships you have with funders and with other organizations and with stakeholders. Judgment. The ability to walk into a $4 million nonprofit with a development director and no major gifts program and say I have done this exact same thing 11 times. Here's what works, here's what doesn't, here's our plan, let's go. That is not commoditizable. That is what clients will pay a premium for. So my friend, I'm going to be very direct. It's kind of my style. I'd like to be nice and direct. If you are a generalist nonprofit consultant in 2026, you cannot stay that way. I'm not saying this to scare you. I'm saying it because what I worry about most is you sitting at your kitchen table a year from now wondering why the pipeline kept thinning, why the conversations kept getting harder and why your rates kept getting pushed back on and wondering if maybe it was you because it's not you. The ground has shifted. Here's what AI proofing actually looks like. There's three moves and my highest recommendation where I want you to start is the first one. Move number one is specialized by the work you do. This is the single biggest lever you have, not fractional consultant, not fundraising consultant, not nonprofit strategists, those are categories and categories are commodities. I want you to specialize by the work you do. The work you do better than almost anyone else. For example, Fiona, the fictional consultant we've been talking about in this series, started out as a fractional development director for housing nonprofits. She was already semi-neished. That's good, but her work was as a generalist, a generalist who was niche. As she moves through her own fractional to scalable transition or generalist to scalable transition, she's specializing by the work. She's becoming a major gifts expert. That's the work, not fundraising, major gifts. The specific discipline within fundraising where she has the most experience, the most pattern recognition and the most leverage. The second move is to niche by who you do it for. An fantastic example of this is my client, Robin Engel, who's the founder of abundance catalyst and who I had on the podcast back in episode 93. Robin specializes in major gifts for movement organizations. Notice how specific that is, not fundraising, not just major gifts, major gifts for movement organizations. That is vulnerable, recognizable and not commoditizable. Here's the test I want you to take right now. Because I think this is a great way to decide if you are narrow enough. If you have positioned yourself narrowly enough in the marketplace. If you cannot name the specific conference where your ideal client gathers together because there are too many possibilities, you are too broad. I'm not talking about going to a generalist nonprofit leadership conference. I am talking about a conference where your exact ideal client is in the room. One of my clients has a scalable offer for school boards. So she went to the school board conference. Another client of mine does capital campaigns for museums. She went to the museum conference. That's where her people are. So I'll say it again because I want this one to stick. If you can name the conference, you've niche. If you can't, if there are still too many different possibilities, you are still too broad. And being too broad in a commoditizing market is the most dangerous position you can hold. I say this as someone who has experienced this myself before AI started to even be on was barely on the horizon. So in 2022 and 2023, I started noticing that the coaching space was maturing. And there's I could go into a whole episode into why that was and what happened. But I really noticed a shift. I especially noticed that the number of people I used to attract to me organically was significantly decreasing. And all of the things that I had created to attract clients and move them into my programs, it was decreasing. The success rate of my efforts was dwindling. And so I really had to examine my own market space and figure out what was happening. And I realized that the market was maturing and that I needed to position my business way more narrowly than I had. So I had gone through several iterations of initially I worked with all consultants and specifically women consultants. And I narrowed this over time. And in 2023, I realized I. need to focus even further down to a more specific niche. And so I made a very strategic and also impact oriented decision to focus on only serving nonprofit consultants. Now I have worked with nonprofit consultants since day one in my coaching practice. I've always attracted them to me, but I've also worked with marketers and bookkeepers and therapists and chiropractors and financial planners and accountants. And I mean, you name it. I have worked with that type of provider or that type of business. But over time, I narrowed it, but I made a very, very big, a big change in my business in I made the decision in 2023 and then implemented in 2024 and it involved closing down a podcast. I had hosted for 10 years and starting this one. And by the way, this podcast is two years old. So I hope you'll celebrate with me on LinkedIn. I'm going to do a post for it. But I'm so excited to have been serving nonprofit consultants for the last two years. It has been such a joy. I am so enthralled with the work that each of you do and the impact that you're having. And it is my goal to help you not only survive and I proof your business, but to thrive because you can. And so I have made this shift. I know how hard it is. It is terrifying. And if you're in the middle of it, it's if you're thinking about it, it's scary. If you're in the middle of it, it's scary. And if you're on the other side of it, there's moments that are scary as well. But in truth, running a business and owning a business is not for the faint of heart. So you have to be pretty weathered and resilient to stay in business in any market, regardless. Okay, finally, the third move is to hackage your work into a scalable offer. And let me define this carefully because it does get misunderstood. A scalable offer is not a course. It's not a pure product and it's not stop consulting and become a coach or create a one to many offer like a membership site or a course that's actually moving you down market. And that's going to get commoditized. A scalable offer is a version of your consulting work that is specialized by what you do and niche by who you do it for. It's defined and repeatable and recognizable as yours because of your intellectual property. It's still consulting, but the methodology, the framework, the deliverables, the outcomes, they're recognizably your firms. And that's how you A I proof your business a scalable offer is the opposite of a commodity. A commodity is interchangeable. A scalable offer is ownable. And a commodity competes on price whereas a scalable offer competes on the outcome. It's what you are how you are fitting into the client and the outcome you're creating for them. A scalable offer is what AI cannot touch because it's your own pattern recognition, your judgment and your specific methodology with a specific kind of client. It is your intellectual property. So here's what I want you to take from this episode. All markets eventually mature and all markets bifurcate. And now it's happening in consulting and non-profit consulting in really every expertise based business. AI didn't start the market maturation, but it is accelerating it at lightning speed. Your potential clients are smarter than they may have been in the past. And I don't mean that they're smarter intellectually, but they have information and data that they didn't have access to before. And they have a thought partner that has limitless information that they can ask questions up. And AI is going to eat the bottom of the market space. And so we don't want to be there. We need to not be at the bottom and not be at the middle because the middle is going to be squeezed out. We want to have a premium consulting business. And the ones who survive in this marketplace are those who decide to specialize by what they do, niche by who they do it for and package their work into a scalable offer that's ownable, recognizable, and uncommodetizable. That is the work and that is the past that I teach. There is no time to waste. And that's why I have opened up a few new slots this summer for my 90 minute intensive, which is a deep dive into your business where we map out how to approve your business by determining your specialization, your niche, and the architecture of a scalable offer that fits you. You can book this directly on my website right now. You can go there to Natalie MBA dot com and click with the work with me tab and find the intensive and book that so you can book a time and pay for it. That's what asked me recently. We were on a call and they said, I'm interested in the intensive, but I'm really wondering how much can we actually get done in 90 minutes. And I'm going to be very frank. I am really good at what I do and I am fast. And also I have systematized part of the process. So I collect a lot of data from you up front and we hit the ground running. So things that used to I used to collect in the first call, the information I would get the data I would collect. I have systematized that. So in a sense, it's like getting two calls in one. If we've never worked with me before, I want you to feel safe working together for the first time and making this investment. And so I offer a money back guarantee. If you're not completely satisfied, let me know. And I will refund you. Has that happened? Maybe once in 10 years, I am not joking. It's because I deliver and I feel very confident in that. I also have another option. If you know you want to have a coach by your side for more than just 90 minutes, I offer what I want coaching in a six month engagement that you can renew. That also is my website at Natalie MBA dot com. By the way, all the links to this will be in the show notes below two. And if you have any questions, you can always DM me on LinkedIn as well. I love chatting there. Please tell me your podcast listener and feel free to ask me whatever you're wondering about. And finally, if you heard me mention the impact collective mastermind and you were thinking, man, I would love to be part of a group like that. We have spots that open in September and January. If you are interested, get in touch with me. Fill out an application. It is for it is for those that have 200 K or more in revenue in their business. People that are growing and want to hire team members and build a consulting firm. If you want to stay a soloist, that is not the right container for you. But if you are growing and scaling a consulting firm, which honestly is rare, I am bringing you together in the impact collective to being community, get coaching, share best practices and learn and grow together on in our in person retreat. So there's many parts and facets of that program. I designed it to be exactly what you need at the stage of business. So let me know and it would be an honor to support you. Okay, my friends, let's continue this conversation on LinkedIn. I will have a post for this episode and I'd love to hear if you are noticing similar trends, if other things are coming up, is there something else you're seeing that I'm not seeing? And if you disagree with me, you can tell me that too. I'm fine with that. I love having conversations about business that you could tell. Now, before I leave, I want you to know that being a small business owner, being a consultant, being an entrepreneur takes great courage. You are doing things you have never done before. You are stretching your leadership muscle and just conquering things that most people never attempt. And so I hope you're incredibly proud of yourself. And I want you to know that I believe in you. Now go, make some impact.