New tax law changes and nonprofits are increasingly connected as the One Big Beautiful Bill Act (OBBBA) is expected to reshape charitable giving patterns in 2026. The legislation is projected to reduce total annual charitable donations by a small but measurable amount, primarily affecting high-income donors and corporate giving while potentially increasing participation from small-dollar donors.
So what does this mean for you and your nonprofit? More importantly, what can you be doing now to adapt your fundraising strategies?
While the projected decline in giving is relatively modest overall, nonprofits may need to adjust donor engagement strategies to maintain long-term fundraising stability.
The Numbers: How Big Is the Impact?
Let’s start by looking at what the research tells us:
- Overall, the OBBBA is estimated to lower charitable giving by about $5.69 billion per year, which is approximately 1% of all U.S. giving.
- The number of U.S. households that give is projected to increase by about 8 million.
- Total corporate giving is estimated to be $1.55 billion lower, or -3.5% of total corporate giving.
In short, the impact is real, but it is modest and it is not uniform. Nonprofits that rely heavily on major gifts or corporate giving will feel a greater impact than those with a broad and diversified donor base.
The Impact and How to Respond
For Small and New Donors
The OBBBA introduces a universal charitable deduction (UCD) for non-itemizers, allowing individuals to deduct up to $1,000 and couples up to $2,000. This is expected to bring approximately 8 million new donor households into the giving pipeline, a real opportunity for nonprofits willing to invest in engaging them. Promote this new deduction actively in your communications with everyday donors and prospects. Make it easy for them to understand how giving now benefits them.
For Mid-Level and Major Donors
For mid-level and major donors, there may be a shift in the timing and structure of gifts as they look for the best tax advantage. Major donors may choose to “bunch” their giving in alternating years. For mid-level and major donors, focus outreach on tax-beneficial giving strategies such as appreciated assets (instead of cash), qualified charitable distributions directly from retirement accounts, and donor advised funds. Talk with your donors about how and when they give. It can benefit both their tax picture and your mission. And always reinforce impact and storytelling in your messaging, because relationships are what keep these donors loyal.
For Corporate Donors
Most corporations will no longer have a direct tax incentive to donate under the OBBBA. For smaller and mid-sized businesses especially, this may lead to scaled-back or discontinued giving. For this segment, charities will need to make their case on philanthropic and community-based values. Focus conversations on the tangible impact of their support, brand and image opportunities, and how their investment builds awareness and goodwill among their customer base. The ask shifts from tax benefit to mission alignment.
RELATED: Learn how Google Ad Grants support nonprofit marketing.
New Tax Law Changes and Nonprofits: A Strategic Opportunity
The most important thing nonprofits can do to prepare for the potential impact of this tax legislation is to build a broader, more resilient donor base. For many years, the sector has focused heavily on major donors, leading to a steady decline in the number of donors even as giving totals have risen. As tax law tightens the benefits around one-time large gifts, the opportunity now lies with smaller and mid-sized donors.
It’s not just about how you’re soliciting these donors, but also how you’re educating them, communicating impact, and working to retain their support year after year. Improving donor retention is one of the most effective ways to negate the impact of any potential decrease in giving, and it’s an investment that pays dividends regardless of the tax environment.
Where to Find These Donors: Start Closer Than You Think
Wondering where to find these new small donors? Start within your existing community. Think about recipients of service and their families, former staff and board members, and your volunteers. These are people who already care about your organization and your cause. Now is the time to pay more attention to them. Leverage your database and the technology in your CRM to treat your everyday donors like major donors with personalized outreach, thoughtful stewardship, and genuine relationship-building.
What Nonprofits Should Consider Next
New tax law changes will reshape the charitable giving landscape, but it will not diminish the generosity of people who believe in your mission. The organizations best positioned to weather this change are those that have already been doing the fundamental work: telling compelling stories, building authentic relationships, and making every donor feel that their gift matters.
Now is a good time to revisit those practices with fresh urgency. Tax incentives may shift, but people’s connection to causes they care about does not. Lean into that.
For more information: The Association of Fundraising Professionals (AFP) also recently shared insights on how nonprofits can respond strategically to new tax law changes and evolving donor behavior. AFP members can access the article here: AFP Trendwatch: Seizing the Tax Law Moment
Interested in learning how your organization can prepare for the potential impact of the new tax law changes? Connect with Maureen Mahoney Hill, CFRE, at maureen@advancementadvisorsgroup.com to learn how Advancement Advisors can help your nonprofit strengthen donor relationships, build long-term fundraising resilience, and achieve meaningful results.
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Maureen Mahoney Hill, CFRE, is the founder and principal of Advancement Advisors, a consulting firm dedicated to helping nonprofits strengthen their fundraising efforts.