The One Big Beautiful Bill rewrites the rules of charitable giving incentives. Here’s what’s changing and where fundraisers should focus right now.
A new study from the Indiana University Lilly Family School of Philanthropy landed this week with a finding that should stop every nonprofit fundraiser mid-scroll: the tax provisions in the One Big Beautiful Bill Act are expected to bring between 6 and 8.7 million new households into the giving pool.
That’s a meaningful reversal of a years-long decline in donor participation — and for fundraisers who’ve been watching the base erode, it’s genuinely worth pausing on.
However, the same study projects that provisions could reduce total charitable giving by roughly $5.7 billion a year.
That’s not a contradiction — it’s a reflection of how top-heavy charitable giving is in the U.S. The wealthiest donors and largest corporations drive the bulk of the total, and several OBBB provisions squeeze incentives at that end. Meanwhile, the law opens a new door for the roughly 90% of taxpayers who’ve had zero charitable tax benefit since 2017.
For fundraisers, this is a time to pivot rather than panic.
What Changed
The universal charitable deduction is the highlight here. Starting in 2026, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) in cash gifts to qualified 501(c)(3) organizations. This is huge for grassroots fundraising. During the pandemic, a similar (smaller) CARES Act provision drove roughly $30 billion in giving from approximately 90 million taxpayers. The OBBB version is larger and permanent. One critical detail: gifts to donor-advised funds are excluded from this deduction. Only direct gifts to public charities qualify.
For itemizers, a new 0.5% AGI floor means donors must give above that threshold before any deduction kicks in. For example, a donor earning $500,000 gets no deduction on their first $2,500 of giving. This will accelerate bunching, where donors consolidate multiple years of gifts into a single tax year to clear the floor. Multi-year pledges become a more valuable tool for anchoring commitment through the quiet years.
The SALT deduction cap jumps from $10,000 to $40,400, which will pull more upper-middle-income households in high-tax states back onto the itemization path. If you have lapsed mid-level donors in New York, California, New Jersey, or Connecticut zip codes, this is your reactivation signal.
Top-bracket donors see their deduction value capped at 35 cents on the dollar (down from 37), and corporations now face a 1% AGI floor on charitable deductions. The Lilly School estimates the corporate provision alone could reduce corporate giving by about $1.55 billion annually.
A Word on DAFs (and the Words You Use About Them)
Donor-Advised Fund (DAF) contributions remain deductible for itemizers under the new rules. They’re growing across income levels, with strong retention rates and increasing gift sizes. They’re not going anywhere.
But the language nonprofits use around DAFs needs to be precise. The tax deduction for a DAF contribution happens when funds go into the fund, not when a grant comes out. Phrases like “Make a tax-efficient gift from your DAF today” are misleading. Better: “Recommending a grant from your DAF is an effective way to direct the funds you’ve already set aside for good.” Accurate language builds trust. And trust is the most valuable currency in fundraising.
Where to Focus
Educate your donors on the new universal deduction. Revisit your mid-level strategy in high-tax states. Prepare for bunching with multi-year pledge options and DAF-friendly giving pages. Audit your DAF language for accuracy. Talk to corporate partners about the 1% threshold. And through all of it, lead with impact, not tax savings. Position the benefit as a bonus, not the reason to give.
The giving landscape just got more complicated. But the organizations that show up as informed, trustworthy guides through this shift will be the ones donors turn to when they’re deciding where their charitable dollars go.
This article is for informational purposes only and does not constitute tax or legal advice. Donors should consult a qualified tax advisor regarding their individual circumstances.
