Federal Tax Changes Might Cost Nonprofits $5.69B
From the Nonprofit Times:
Future charitable giving in the United States might be reduced by $5.69 billion or roughly 1% of all U.S. giving under tax provisions included in last year’s One Big Beautiful Bill (OBBB) law when compared to previous tax law.
Authors of a new study from the Indiana University Lilly Family School of Philanthropy and presented by CCS Fundraising, estimate that despite the reduced giving more households will donate to charity, reversing the decade-long decline.
The report, Philanthropy Outlook: Estimating Effects on Charitable Giving from the One Big Beautiful Bill, estimates how specific tax policy changes in the new law (H.R. 1 and Public Law 119-21) will affect both household and corporate giving, as well as the combined effects on giving. The research provides estimates of the anticipated shift in giving behavior resulting from each of the policy changes while holding everything else constant (e.g., income, wealth, gross domestic product, the stock market, and other factors).
Four important areas for impact are: Adding the Universal Charitable Deduction; the 0.5% floor on itemized deductions; a 35% cap on value of deductions for top-bracket filers; and, a 1% floor on corporate charitable deductions.
Jon Bergdoll, MA., interim director, Data and Research Partnerships at the Lilly Family School, stressed that the report is not predictive of a decline in giving but rather a comparison to what giving would have been had tax policy not changed.
The researchers estimated the law’s impact might increase the number of U.S. households where members give by about 8.7 million. However, they estimated that total corporate giving would be approximately $1.55 billion less, or a negative 3.5% of total corporate giving.
The impacts might not be fully seen in the first year the law is in effect, as it might take some time for taxpayers to become aware of and adapt to the new tax policies. “We don’t necessarily think that this is all going to happen in 2026 because what we’ve learned is that people are not necessarily super keyed into tax policy like this,” Bergdoll told The NonProfit Times. “While there will probably be a spike in awareness of people for this new deduction, the amount of time to really fully become common knowledge is probably a longer time horizon,” he said.