What the “Big Beautiful Bill” Means for Charitable Giving in 2026 — And What Nonprofits Should Do Now
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On July 4, 2025, Congress passed the One Big Beautiful Bill, a sweeping piece of tax legislation that introduces major changes to how charitable giving is treated under federal law. While the headlines focus on tax brackets and entitlement reform, there are two key provisions in this bill that every nonprofit—and every donor—should understand.
The Two Big Changes (Effective for Tax Year 2026)
A Universal Deduction for Non-Itemizers
For the first time since 2021, donors who take the standard deduction will be able to deduct charitable gifts—up to $1,000 for individuals or $2,000 for married couples filing jointly. This creates a long-awaited incentive for small and mid-sized donors who don’t itemize to support the causes they care about.
What it means for you:
Nonprofits can now confidently appeal to a broader base of donors with a clear message: “Your gift is tax-deductible—even if you don’t itemize.”
A New Floor for Itemizers
For those who do itemize, a new limit reduces the deductibility of charitable gifts. Starting in 2026, the first 0.5% of a donor’s Modified Adjusted Gross Income (MAGI) will not be deductible.
Example: A donor with $300,000 in MAGI will lose the deduction for the first $1,500 of charitable donations made on Schedule A.
What it means for you:
High-income donors may re-evaluate their giving strategy. Some may accelerate gifts into 2025 to avoid this limitation, while others may adjust the size or structure of their contributions in future years.
What About Donor-Advised Funds?
Donations to donor-advised funds (DAFs) still qualify for the same AGI-based deduction limits—60% for cash, 30% for appreciated assets. The new 0.5% AGI floor does apply to DAF contributions as well. However, the bill does not introduce any new restrictions on DAFs—such as payout timelines or deduction caps.
What Nonprofits Should Do Now
Encourage Accelerated Giving in 2025
High-income donors may want to front-load gifts in 2025 to maximize their deductions under current rules. Prepare materials, host giving conversations, and ensure year-end campaigns reference this opportunity.
Update Messaging to Include Universal Deduction
In 2026, your donor outreach should clearly state:
“Even if you don’t itemize, your gift may still be tax-deductible up to $1,000 or $2,000.”
This simple line could be the nudge a non-itemizer needs to give—and give again.
Prepare Your Board and Major Gift Officers
Ensure your development team understands the new rules and can speak knowledgeably with donors about timing, DAF strategies, and the potential shift in how charitable dollars are distributed.
The Big Picture
The Big Beautiful Bill gives nonprofits a new tool to expand their donor base and engage middle-income Americans in philanthropic giving. But it also challenges us to rethink how we steward high-level donors in a slightly less favorable tax environment.
At GiveProsperly, we’re helping clients navigate these shifts with customized messaging, calendar planning, and donor segmentation strategies to meet the moment.
Need help updating your development strategy in light of the new law? Let’s talk. Reach out to us at letspartner@giveprosperly.com.
