OBBBA: Tax deductibility and you

You've probably heard a lot about how the One Big Beautiful Bill Act will impact charitable giving.

Of course, the thing is obviously Big (leaving "Beautiful" for separate debate) — so big that all of its effects may be very hard to predict.

But a couple of things seem pretty clear:

• For small donors: The charitable giving deduction for non-itemizing taxpayers is an incentive for individual giving.
  
  It's not that people haven't been giving to support things they care about. GoFundMe and other providers of small-scale fundraising have been very popular, regardless of any consideration of tax deduction. This change in deductibility doesn't make folks more likely to give, but it may make them more likely to give to recognized charities.

• For large donors: The 35% cap on charitable deductions for those in the top tax bracket reduces the incentive for some of the end-of-year giving you might be used to.

  Large end-of-year donations are often made not merely because deep personal alignment with the cause, but because a financial advisor suggested, "You might want to off-load $500,000 to charity this year." Of course you thank the donor sincerely, but did you assume too much about their love for your cause? If so, you might be surprised by how this change impacts their giving next year.

What this probably means for you:

1. It's time to re-engage small donors.

Do they know about this rule change? It's not huge, but it's a genuine benefit to them. Why not work this into your year-end appeal or annual campaign? A $1000 gift is now a "tax-smart giving level," which will be enough to encourage some donors to stretch above their previous giving.

2. Donors should be told their gift is now tax-deductible.

It's worth mentioning specifically — in your receipts, email confirmations, and other follow-up messaging — that even their small gift is now tax-deductible whether they itemize or not. Why not give them another reason to be glad they helped you?

3. End-of-year giving summaries have more value now.

An end-of-year giving summary, sent by email from your CRM, has always been a great opportunity to say "Thank you" once again, and remind donors how much their gifts have helped a cause they care about. With this change in non-itemizing deductibility, the end-of-year summary is also a genuine convenience for your donors. A reminder of your work, that's also helpful to the donor? It's a win-win.

4. Major gift cultivation is critical.

The 35% cap means fewer large donations will be made merely for tax-incentive reasons. That means if you still want to capture these donors' attention, it's all about relationship-building and shared motivations. Last year's list of large donors needs to feel strongly assured that your work matters to them, and that their support matters to you.

Here's the thing:

The landscape is always changing. Sometimes you might wish it wouldn't, because every time it changes, you have to keep up — or fall behind.

But then again, you're not the only one trying to keep up. So are your donors and prospective donors.

When things change, they'll be thinking again about where to give. Which means they may be ready consider you, where they would not have before.

You can be ready to help them act on that. And that's where the change in landscape becomes an opportunity, not merely a challenge.

All the best,
A.