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Reaction to passage by Congress of the Big Beautiful Bill (H.R. 1) was swift from nonprofit leaders at the state and national level. There was a near unanimous loud sigh, expressions of anger and then pledges to continue fighting for the people who need their services.
The House of Representatives voted 218-214 to pass the reconciliation package of tax cuts and program services funding reductions.
According to the Committee For a Responsible Federal Budget, the bill is the most expensive reconciliation package in history, adding $4.1 trillion to the national debt through 2034. If its temporary provisions are extended permanently, that total would rise to $5.5 trillion, according to data from the Committee For A Responsible Federal Budget.
The bill cuts $920 billion to Medicaid funding, which is projected by various sources to push between 11 million and 15 million people off Medicaid or price them out of the healthcare exchanges.
“The Big Beautiful Bill was never about efficiency. It was about exclusion. Cutting Medicaid means the healthcare safety net will be inundated,” said Nicole Lamoureux, president and CEO of the National Association of Free and Charitable Clinics.
“The health care need won’t disappear. It will just shift to us. The impacts of this bill will ripple through ERs, pharmacies, funders, and frontline workers,” said Lamoureux said. “Medication access will shrink. Wait times will explode. Providers will burn out. Some will pay in premiums; Others will pay with their lives.”
Demand is going to stress the charitable system. “With the passage of this bill, we’re bracing for deeper demand and fewer resources,” said Victoria Vrana, CEO, of GlobalGiving. “These cuts will reverberate across communities, and once again, nonprofits will be called to fill the gaps. What comes next must be bold action to support the sector’s resilience — because the health of our nonprofits is inseparable from the health of our nation.”
Jan Fisher, executive director of Nonprofit Westchester in Briarcliff Manor, New York, warns that the bill might be just the opening salvo in stressing the nonprofit sector. “We understand that the BBB legislation may only be the beginning of broader and dangerous structural changes. That is why we plan to continue helping our members prepare, act boldly and advocate effectively in this evolving policy environment,” said Fisher.
“In Westchester, nonprofit organizations comprise nearly 18% of the workforce, making the sector a cornerstone of both our regional economy and our social infrastructure,” said Fisher. Nonprofit Westchester is expanding efforts to support its 370 members. “This includes bolstering technical assistance, launching new advocacy tools, convening peer and sub-sector learning, strategy and capacity-building forums, and facilitating conversations about adapting programs, reimagining sustainable service delivery, and cross-sector partnerships,” said Fisher. “We are advancing community education and factual content to help preserve mission-critical services wherever possible.”
The reduced funding will impact organizations across the nation. “These cuts are impacting multiple types of nonprofits at the same time, arts, education, health, and youth services at levels not seen before,” said Anne Hindery, chief executive officer of the Nonprofit Association of the Midlands in Omaha, Nebraska. “Nonprofits, including foundations, corporations, and individual donations, do not have the ability to fill the gaps created by this legislation. All nonprofits and the communities they serve will feel the impact of these cuts, whether or not they receive government grants,” she said.
Foundations and endowments were targeted in the legislation. The final reconciliation bill “represents a clear improvement” compared to earlier versions “in the areas affecting charitable giving and philanthropy, reflecting meaningful changes that respond to concerns raised by our sector,” said observed Kathleen Enright, president and CEO of the Council on Foundations. “At the same time, we remain deeply concerned that several provisions in the bill — even in its improved Senate form — risk discouraging charitable giving and weakening the charitable sector at a time when communities need it most.”
The improvement for charities includes incentives for charitable giving for non-itemizing taxpayers. The bill makes permanent a partial tax deduction of $1,000 for a single filer and $2,000 for joint filers who are non-itemizers. It is a renewal of a tax break that expired at the end of 2021.
Removed from the bill under heavy lobbying from nonprofit leaders was language that would have allowed the U.S. Secretary of the Treasury to pull the tax-exempt status of a nonprofit without due process after designating an organization a terrorism supporting organization. Organizations would have needed to litigate to get the status reinstated.
“H.R. 1 will ultimately harm the millions of people in America who rely on their local nonprofit organizations for essential services,” according to Diane Yentel, president and CEO of the National Council of Nonprofits. “While there are some bright spots, including a universal tax deduction for charitable giving, the tax bill falls far short of meeting the growing needs of the nonprofit sector to fill gaps unmet by government and the private sector.”
The tax bill overall reduces resources available to nonprofits, negatively impacting their ability to provide essential services to their local communities, according to Yentel. The new universal charitable deduction is estimated to generate $74 billion over 10 years for nonprofits. “However, the bill includes several provisions that disincentivize charitable giving by individuals and corporations, which are estimated to reduce resources for nonprofit organizations and their communities by at least $81 billion over 10 years. The bill also harms millions of people by taking away their access to healthcare and food assistance, putting greater pressure on nonprofit organizations to help meet these needs,” she said.
“Nonprofits show up in times of crisis, providing disaster relief, crisis support, and safety from danger, and they meet every day needs from providing childcare and eldercare, job training, or essential food and shelter,” said Yentel, which a sentiment echoed by Fisher at Nonprofit Westchester.
“We remain steadfast in our mission,” said Fisher, “to support nonprofit organizations as they transform lives, empower communities, and drive lasting, positive change.”
