The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, reshapes the charitable giving landscape, presenting challenges and opportunities that demand immediate strategic focus. Nonprofits that proactively adapt their fundraising approaches can better sustain and grow their funding support base.
Changes to Individual Charitable Giving (Effective 2026)
New Universal Charitable Deduction
Taxpayers claiming the standard deduction will be able to claim a separate charitable deduction of up to $1,000 for single taxpayers and $2,000 for married couples filing jointly. Currently, there is no universal charitable deduction for taxpayers who take the standard deduction. The charitable deduction has only been available to those who itemize deductions.
Impact on Nonprofits: This change creates a significant fundraising opportunity for nonprofits looking to expand their donor base. A new group of potential donors who claim the standard tax deduction – currently about 90 percent of all taxpayers – will enjoy federal tax benefits for charitable donations for the first time since 2017.
New Charitable Deduction Floor for Itemizers
For donors who itemize their deductions, charitable contributions exceeding 0.5 percent of their adjusted gross income will be tax-deductible. Under current law, there is no percentage floor for itemized charitable deductions. Subject to certain limits, all charitable contributions by itemizers are currently deductible. Under OBBBA, a donor with a $500,000 adjusted gross income must donate more than $25,000 to qualify for a tax deduction.
Impact on Nonprofits: While smaller donations from itemizing taxpayers may decrease, donors seeking to exceed the charitable deduction floor may contribute larger gifts.
Reduced Tax Benefits for High-Income Donors
High-income taxpayers in the top 37 percent tax bracket will see their tax benefits reduced. Instead of receiving a 37-cent tax benefit for every dollar donated, these taxpayers will only receive a 35-cent benefit. Currently, high-income taxpayers receive the full 37-cent benefit for every dollar of their charitable donations. Most taxpayers can deduct cash contributions up to 60 percent of their adjusted gross income. The OBBBA also brings back the “Pease limitation,” which further reduces the value of itemized deductions for wealthy taxpayers by cutting them by 3 percent when income exceeds certain levels.
Impact on Nonprofits: While major donors will receive reduced tax benefits, these patrons seldom contribute only for tax incentives. Nonprofits should continue emphasizing mission impact over tax incentives among these benefactors.
Higher Estate Tax Exemption
The estate tax exemption permanently increases from $13.61 million to $15 million per person and from $27.22 million to $30 million for couples filing jointly (after adjustments for inflation).
Impact on Nonprofits: As fewer personal assets will be subject to estate taxes, planned giving strategies must be adjusted as bequests made for tax benefits could decrease. Nonprofits should focus fundraising efforts on legacy planned giving, where benefactors understand and can envision the lasting impact of their planned gift.
Changes to Corporate Charitable Giving (Effective 2026)
Under the OBBBA, corporations can only deduct charitable contributions that are between 1 percent and 10 percent of their taxable income. Currently, corporations can deduct charitable contributions up to 10 percent of taxable income with no minimum floor, meaning even small contributions are deductible. Here’s how this new provision will work:
- 1 Percent Floor: Only contributions exceeding 1 percent of taxable income can be deductible.
- 10 Percent Ceiling: Total deductible contributions still cannot exceed 10 percent of taxable income.
- Carryforward Rules: Contributions that surpass the 10 percent limit may be carried forward for five years, unchanged from the current tax provisions. However, contributions below the 1 percent minimum can be carried forward only in years when the company’s total contributions exceed the 10 percent limit.
For example, a corporation with $1 million in taxable income can deduct contributions between $10,000 (the 1 percent floor) and $100,000 (the 10 percent ceiling). Corporate contributions below 1 percent of taxable income (or the $10,000 floor) receive no immediate deduction and can only be carried forward if the company gives more than $100,000 (more than 10 percent) in a future year within the five-year carryforward period.
Impact on Nonprofits: Corporate donors are expected to adopt a more strategic approach to charitable giving to maintain competitive advantages as vendors and strengthen relationships with key nonprofits. However, businesses may consolidate their donations to fewer organizations to maximize tax benefits. As a result, corporations may forgo some gifts entirely, while others may significantly increase their contributions to reach the 1 percent threshold.
Seven Strategies Nonprofit Organizations Can Implement Now
As the OBBBA significantly changes the charitable giving landscape, nonprofits must adapt accordingly. Nonprofit organizations need to adjust their usual operations immediately in anticipation of both the planned and unintended effects of these new provisions. Nonprofit leaders can move forward by quickly implementing the following strategies.
1. Diversify Your Donor Base
- Develop targeted donor campaigns that help maximize the $1,000/$2,000 universal deduction (i.e., “$1,000 Impact Circle” campaigns).
- Partner with local employers to promote workplace giving campaigns.
- Partner with established donors to develop peer-to-peer fundraising efforts.
2. Redesign Corporate Relationships
- Audit your current corporate donor relationships and contribution levels to identify businesses that may need to increase giving to reach the 1 percent threshold.
- Create comprehensive partnership packages that provide meaningful community impact.
- Provide multi-year pledge agreements to assist corporations in strategically planning their philanthropic contributions.
3. Adapt Major Gift Plans
- Develop impact measurement and reporting capacities to shift conversations with major donors from tax benefits to impact storytelling.
- Create easy-to-use giving strategies or tools to help donors exceed the 0.5 percent threshold.
- Design new strategies to help major donors maximize tax benefits by giving larger gifts less frequently.
4. Enhance Planned Giving Programs
- Review and update planned giving materials to reflect new estate tax thresholds and ongoing benefits of charitable bequests.
- Focus on non-tax motivations for planned giving (i.e., legacy, values, family traditions)
- Explore charitable remainder trusts and other estate planning vehicles that may be more attractive to donors.
- Strengthen and expand relationships with estate planning professionals.
- Educate donors about the impact of establishing a donor-advised fund.
5. Modify Donor Messaging and Communications Tactics
- For Major Donors: Acknowledge that tax benefits may be reduced; emphasize the increased impact of their continued giving; provide detailed impact reports and compelling stories; and design multi-year pledge options to help with tax planning.
- For Mid-Level Donors: Emphasize the new 0.5 percent threshold and strategic giving options; suggest timing larger gifts to maximize tax benefits; offer monthly giving programs to reach annual thresholds; provide giving calculators and other planning tools; and produce pledge opportunities where timed giving can be implemented over the calendar year.
- For New Donor Prospects: Highlight the new universal deduction opportunity; focus on community impact and mission alignment; create entry-level giving opportunities with clear impact messaging; and develop peer-to-peer fundraising campaigns.
6. Bolster Organization-Wide Operational Foundations
- Implement robust donor database systems to track giving patterns and thresholds.
- Develop clear documentation and transparency protocols.
- Enhance board governance and financial oversight mechanisms.
- Educate staff about the OBBBA’s new tax law provisions and the potential implications for donors.
- Assess whether it is the right time to establish an endowment.
7. Build Coalition Partnerships
- Collaborate with other nonprofits to host shared fundraising events that help donors reach thresholds.
- Collaborate with community foundations on giving initiatives.
- Work with local chambers of commerce to educate businesses about new requirements and tax benefits.
- Expand engagement with professional advisors (i.e., Certified Public Accountants, financial planners, probate attorneys) who counsel donors.
Timeline for Implementation
The timeline below outlines an implementation plan:
- 2025 Q4: Complete donor education, update planned giving materials, begin corporate partner conversations.
- 2026 Q1: Launch universal deduction campaigns, implement new donor tracking systems.
- 2026 Q2: Evaluate early results and adjust strategies.
- 2026 Q3: Refine approaches based on donor response and tax season experiences.
Your Community’s Continued Need
The families and communities you serve depend on your organization’s ability to navigate these transitions successfully. Despite a shifting tax law landscape, the fundamental health and human service needs your organization provides remain constant. While your mission remains as critical as ever, federal policy changes require innovative approaches to fund your vital work.
Organizations that adapt quickly will find new, strategic pathways to sustainable financial support to expand community impact. Thriving nonprofits will consider the OBBBA’s modifications as opportunities to cultivate more diverse, engaged, and committed donors.