December 31. For fundraisers and nonprofit executives, that date is more synonymous with “last giving day of the year” than “New Year’s Eve”—and for good reason.
Approximately 30% of all the year’s giving takes place in December, with the final days making up 10% of giving. The most effective fundraising shops spend months planning and then executing robust strategies to make sure donors are thinking of them as they make their year-end gifts.
This year, however, those strategies need to account for additional variables. When the calendar turns to 2026, it’s not simply the start of the next tax year, it’s the beginning of the first year under the tax code rewritten by the recently passed One Big Beautiful Bill Act, which will usher in sweeping reforms for charitable gift deductions, an important motivator and factor in donors’ decision-making.
Fundraising and nonprofit leaders need to understand these changes and their potential impact on donors’ decision-making. Being a true philanthropic partner means bringing your donors’ desires to change the world to life and adjusting your prospect and program strategies to maximize giving in 2025 and beyond.
Changes by Source of Giving
The Giving USA Annual Report on Philanthropy analyzes trends by source of giving, comparing giving by individuals, corporations, and foundations and through bequests. This framework is a helpful way to understand how changes in the tax code will impact your donors and how your strategies should adjust.
Individual Donors
Tax deductions for charitable giving have long been available only to individuals and families that itemize, a number that decreased markedly after 2017’s increase of the standard deduction in the Tax Cuts and Jobs Act. The increase in the standard deduction was made permanent in this most recent budget, but changes to charitable giving deductions have been put in place for itemizers and non-itemizers alike.
The Non-Itemizing Everyday Donor
Beginning with tax year 2026, a deduction will now be available to all non-itemizers. Individuals will be able to deduct $1,000 and joint filers $2,000 worth of charitable giving each year. This added incentive comes at a moment when donor counts are declining each year and the nonprofit industry looks to address concerns about the declining number of everyday donors.
Since these changes don’t go into effect until January 1, 2026, their impact on 2025’s year-end giving will likely be nominal. Fundraising teams should begin preparing strategies for how they will communicate these changes early in 2026 in hopes of renewing or reactivating donors early in the year, encouraging them to take advantage of this change by investing in your organization. Being an early mover in this area will be to your nonprofits’ advantage.
Itemizers and Savvy Philanthropists
Deductibility changes for itemizers are more complicated and will almost certainly make discussions and decision-making with high-net-worth donors and savvy givers more nuanced. These donors have driven the growth in giving in recent years even as fewer Americans were giving to charity.
A 0.5% adjusted gross income (AGI) charitable gift deduction floor has been added to the tax code for those who itemize. This change means donors do not receive a tax benefit for charitable giving unless they give away a certain amount of money, and even then they can only deduct a portion of their giving (i.e., a donor who gave away 2% of their AGI can only deduct 1.5% of their AGI if they itemized).
New limits on the overall deduction level for filers in the top tax bracket further impact donors’ decision-making, setting up situations in which donors may be making decisions about whether to make a gift in one year or another based on other deductions they plan to take in a given year.
These changes mean a gift on December 31 versus January 1 could have significant implications on donors’ taxes. Fundraisers have an opportunity to connect with major and principal gift donors to make sure they’re aware of these coming changes as they consider their philanthropy. Donors may be incentivized to make gifts this year or accelerate pledge payments to take advantage of a more generous charitable gift deduction in 2025.
Corporate Giving
Buoyed by strong earnings and a rebounding economy, corporate giving grew in 2024. While we will learn in June of 2026 how economic uncertainty shaped corporate giving in 2025, in June of 2026, questions about the impact of changes to 2026’s corporate charitable giving deductions will loom large for well into 2027.
The One Big Beautiful Bill Act introduced a charitable giving deduction of 1% on the corporate taxable income floor, a change the Joint Committee on Taxation projects will generate $16.6 billion in tax revenues over the next 10 years. This floor means corporations that do not give away at least 1% of their corporate taxable income will receive no deductions for charitable giving and those that do can only deduct the value in excess of that income.
Finance departments will be faced with decisions about whether to give and how much to give with a less certain guarantee they will see a tax benefit from those gifts, something that could reshape the size of philanthropic gift budgets and the timing of those gifts. This change may also shape how event sponsorships are considered.
Corporate relations teams should review their current donor portfolios as well as sponsorship programs and craft strategies to engage donors in conversations about how they are planning for the future and whether they may wish to accelerate gifts and payments. Organizations that rely on corporate sponsorship for programs or events should consider approaching sponsors before the end of the year and soliciting those gifts prior to the tax code changing.
Foundations
The tax code changes in the recently passed budget do not change mandatory payout levels for foundations, but cuts to federal grants and programs will change the funding landscape in ways that increase asks of foundations and may shape their decision-making. At the same time, continued stock market growth and the increase in foundation valuations are likely to increase the number of dollars given away even as mandatory distribution levels hold.
Building relationships with your key foundation funders and engaging in conversations about how shifts in federal support may impact their organization’s funding strategy will be key to sustaining or growing your foundation support.
Bequest and Estate Gifts
The primary tax code change impacting bequest giving is a permanent extension of 2017’s Tax Cuts and Jobs Act’s increased gifting exemption. Knowing this $15 million gifting exemption is permanent, donors’ tax considerations in estate planning may change, as they can leave more to family members without incurring estate taxes. Given the amount of wealth expected to be passed between generations in the coming decades, making this change permanent impacts planned giving discussions.
Fundraising teams should continue to talk about the lasting impacts of planned gifts on their ability to deliver on their mission and also recognize that bequest intention conversations may now become intergenerational. A donor with a $10 million estate could pass the entirety of it to heirs without incurring taxes, which makes it increasingly important to include multiple generations in conversations about the family’s philanthropic pursuits.
Developing Strategies to Succeed in 2025 and Beyond
With less than two months left before these changes occur, urgency exists to educate and prepare your donors and programs for the coming changes.
Evaluate and Adjust Strategies
Review each of your fundraising programs with an eye on the sources of funding that support them. Adjust your strategies and timing to have productive conversations about how 2025 and 2026 impact your supporters.
- Major and principal gift officers should review their portfolios as well as outstanding and planned asks and prioritize discussions with donors about how they’re making decisions in lieu of these coming changes.
- Base and mid-level programs should begin tailoring strategies and messaging regarding the coming changes that will inform how everyday donors make decisions.
Review Your Case
The One Big Beautiful Bill Act reshaped more than just the tax code. It included numerous federal funding cuts to programs that will be rolled out and phased in over the coming years. This creates a need to review your case for support and the language you use to ensure it accurately reflects coming changes to your organization’s funding model and sector. Nonprofits have always relied on a mix of public support and private philanthropy to deliver on their missions. As this mix evolves, it means your needs and how you discuss them will too.
Be Resilient. Philanthropy Is.
Change and uncertainty loomed large over the nonprofit sector this year. While we can predict how donors will react to the changing incentives in the revised tax code, it will be some time before we know for sure how they responded.
What we do know now is that philanthropy endures moments of uncertainty and economic headwinds. Giving USA’s data shows that even in recessions, donors give to impact organizations in whose missions they believe. 2021 continues to be the year with the highest overall giving in real, inflation adjusted dollars.
Donors give to create an impact and experience the joy of giving, both of which nonprofits can continue to deliver. Engaging them in honest, meaningful, and transparent conversations about your organization’s need will help build trusted partnerships that generate gifts. We know you can continue to engage donors in investing in your mission even as the world changes around us.
