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.
“I’m always careful to stress that it is based on all of those donors becoming aware of this deduction. Along with part of that awareness is a paired awareness of nonprofit. I don’t think they need to know the ins and outs of the nonprofit sector to donate money,” he said.
That thinking might take a while. The school released data in 2023 that showed while between 10% and 12% of the U.S. workforce was employed at a tax-exempt entity just 5% believe they or their families have been touched by a nonprofit.
“I think plenty of people donate money without necessarily thinking through all of the implications,” said Bergdoll. “I broadly think a larger awareness of what the nonprofit sector does would be good,” he said. People need to think past nonprofits being entirely about food, shelter and disaster relief to include theater and higher education, he said.
Researchers wrote that this matters because:
* Different nonprofits might experience the decrease differently. The overall estimated decrease in giving is slight relative to total U.S. giving. Some nonprofits might feel it more acutely. Organizations where giving comes disproportionately from households in the top 37% tax bracket or that rely heavily on corporate giving could see a larger impact.
* Nonprofits where leaders alert their potential donor base to new opportunities might see more giving in the short term. An increase in giving tied to new the Universal Charitable Deduction (UCD) for people who don’t itemize on their income taxes will come from households where people realize that they now have this opportunity.
* Nonprofits might experience shifts in the timing and structure of some gifts. Decision-makers in households and especially corporations who are close to the deduction floor on their taxes annually might “bunch” their gifts and instead give and deduct biennially. This might affect how nonprofits solicit and receive gifts.
* More smaller-dollar donors are likely to contribute to nonprofits. Due to the introduction of a UCD, some types of charitable organizations, such as those providing basic human services, rely more heavily on smaller contributions.
* Most corporations no longer have a tax incentive to donate. Fundraisers will need to make their case based on philanthropic and community-based values, as well as enhancing the brand and image of the corporations to consumers, employees and shareholders.
“Tax policy changes shape charitable giving, and their effects vary across different policies, types of donors and ways of giving,” Patrick M. Rooney, Ph.D., professor emeritus of philanthropic studies and economics at the Lilly Family School, said via a statement. “Changes that affect high-income households and large corporate donors have the greatest influence on total giving levels. Policies that broaden incentives to give, such as the newly enacted universal charitable deduction, are likely to increase the number of people who give.”
The analysis draws on multiple data sources commonly used in research on charitable giving, including the Philanthropy Panel Study (PPS), the Survey of Consumer Finances (SCF), Internal Revenue Service (IRS) Statistics of Income tabulations, and corporate giving data from Chief Executives for Corporate Purpose (CECP). These data provide information on giving behavior, income, and tax filing status for both households and corporations. The estimated plausible ranges and the full methodology are in the final report which can be found here.
Bergdoll was a primary analyst for the project. Rooney was a primary analyst and primary author. Jacqueline Ackerman, MPA,d, director, Women’s Philanthropy Institute at the Lilly Family School, was a primary author.
“Changes to tax policy can introduce new complexities for charitable giving, and they can also create opportunities for more donors to engage meaningfully in philanthropy,” Greg Hagin, managing partner at CCS Fundraising, said via a statement. “This is a moment for nonprofits to adapt with clarity by educating supporters and refining strategies that welcome both major contributions and the cumulative strength of smaller gifts.”
