Aipedia: Charities and trustees

AI-written grant and funding applications

Aipedia, by the Apex broking team · Last reviewed 2026-10-30

A charity can use generative AI to draft grant bids, but the trustees remain responsible for everything the charity tells a funder, including outcomes, capacity and costs. Inaccurate or borrowed content can lead to clawback, funder complaints and lost relationships.

Part of: AI in Charities and trustees

In short

Bid writers use generative AI to draft applications to grant-making trusts, lottery distributors and councils. The Charity Commission warns that AI output can be inaccurate, plagiarised, copyright-infringing or biased, and that trustees remain responsible for decisions made with it. An AI bid that overstates delivery capacity or invents outcomes can lead a funder to withhold or reclaim money. D&O may respond to a claim alleging the trustees or charity misrepresented the position, depending on the wording, but repaying a grant is commonly treated as outside cover. PI is usually not the relevant policy for a charity's own bids.

How charities use AI for bids

Funding applications are repetitive and deadline-driven, which makes them an obvious task for AI. Fundraising staff and freelance bid writers use a generative AI chatbot to:

draft need statements and project descriptions from past bids;
tailor a core bid to each funder's criteria and word limits;
generate outcome frameworks, targets and evaluation plans;
draft budget narratives and sustainability sections.

The bid is a representation by the charity. Funders often make awards, and set grant conditions, on the strength of what it says.

The duties that apply

The Commission's AI blog says generative AI can produce inaccurate, plagiarised, copyright-infringing or biased content, and that trustees remain responsible for decisions.
CC3 s.5.3: copyright law applies to all charities, so text lifted by AI from another organisation's published material is the charity's problem.
CC3 s.7: manage resources responsibly, including not committing the charity to deliver what it cannot.
CC3 s.9: ensure accountability, which includes honest reporting to funders.
Data: case studies in bids often draw on beneficiary information. The Commission urges extra care with vulnerable beneficiaries' data in AI tools.

See CC3 for the full duties.

What can go wrong

Illustrative scenario: a small charity uses AI to turn a strong bid from last year into a new application for a larger programme. The draft keeps an outcome target that matched the old, bigger staff team and adds evidence statements nobody can trace. The funder awards the grant. Midway through, monitoring shows the charity cannot hit the targets, and the funder questions where the evidence came from. It suspends payments and asks for part of the grant back.

Other problems include passages that closely match another charity's published bid, invented statistics on local need, and promised partnerships that were never agreed. A funder may also simply stop funding the charity, which no policy will cover.

Does D&O or PI respond to a funder?

It depends on what the funder asks for. Repaying a grant the charity was not entitled to keep is commonly treated as a return of money rather than an insured loss. If the funder or another party brings a claim alleging the charity or its trustees misrepresented the position, charity D&O or trustee indemnity may respond to defence costs and damages, subject to the wording. Policies commonly exclude deliberate or dishonest acts, and contractual liability can be limited. Some D&O wordings protect the charity as well as trustees; others protect trustees only.

PI responds to negligence in professional services the charity provides to others, so it is not usually engaged by the charity's own bids. A freelance bid writer who used AI carelessly may have their own PI. See PI versus trustee indemnity for charities and whether PI covers AI mistakes.

Practical controls

Have a named person check every figure, target and claim against a source before submission.
Run a plagiarism check on AI-drafted narrative.
Do not paste beneficiary personal data into public AI tools.
Get sign-off from whoever will deliver the project on capacity and targets.
Keep the evidence file for each bid.
Cover bid writing in your charity AI policy, including freelancers.

The same discipline applies later, when you report impact to funders.

How Apex helps

Apex arranges D&O, trustee indemnity and PI for charities, and a broker can check whether your D&O protects the charity as well as trustees and how it treats misrepresentation allegations. See the AI in charities hub and how trustee indemnity treats AI claims.

Sources

Frequently asked

Can we use AI to write grant applications?

Yes. Nothing published by the Charity Commission or Fundraising Regulator prohibits it, though individual funders may set their own terms. The Charity Commission expects trustees to check AI output, and the charity is responsible for every statement in the bid, so figures, targets and evidence should be verified before submission.

Will insurance pay back a grant we have to return?

Usually not. Repaying money the charity was not entitled to keep is commonly treated as outside D&O and trustee indemnity. A policy may respond to defence costs or damages if a funder brings a misrepresentation claim, subject to the wording and any dishonesty exclusion.

Is AI-copied text in a bid a copyright problem?

It can be. CC3 s.5.3 says copyright law applies to all charities, and the Commission's AI blog warns that generative AI output may be plagiarised or copyright-infringing. Checking drafts for close matches with published material reduces the risk.

Should we tell funders we used AI?

Check each funder's own terms first, as some set rules on AI use. The Charity Commission's AI blog does not set a disclosure rule for grant bids, but being open about how a bid was prepared, and confirming a person checked it, helps if a funder later questions the content.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.