Nonprofit
The One Big Beautiful Bill: What Nonprofits Should Know
The recently introduced One Big Beautiful Bill (OBBB) brings a variety of tax changes, but for nonprofits, the most relevant legislation focuses on charitable contributions.
While the bill’s direct impact on tax-exempt organizations is minimal, it may influence donor behavior—and that’s worth paying attention to.
Higher AGI Limit for Charitable Contributions
Under the OBBB, the current 60% adjusted gross income (AGI) limit for cash contributions to public charities—which was set to expire after 2025—is now permanent. Donors that itemize will be able to continue deducting charitable contributions of up to 60% AGI.
For nonprofits, this could make it easier for major donors to give more in a single year, especially when paired with year-end campaigns. While not every donor will be affected, those with the capacity to give at higher levels may be more motivated to make larger gifts within a single tax year.
Charitable Contribution Deduction for Non-Itemizers
Individuals who make cash contributions to public charities, but do not itemize, will be eligible for a deduction of up to $1,000 (single), or $2,000 (married filing jointly).
Key AGI Floors That May Affect Giving
The bill makes two notable changes that could indirectly affect charitable giving. First, it introduces a 0.5% adjusted gross income (AGI) floor for charitable deductions—meaning itemizers can only deduct the portion of contributions that exceeds 0.5% of their AGI. While many donors give regardless of tax benefits, those who carefully plan their charitable budgets may adjust the size or timing of gifts to meet this threshold, potentially delaying donations.
Second, the bill makes permanent the 7.5% AGI floor for medical expense deductions. While unrelated to charitable contributions directly, this change could influence overall tax planning and the funds donors have available for giving.
For nonprofits, these adjustments are worth noting when planning campaigns and understanding donor behavior in the years ahead.
Why It Matters for Fundraising Strategy
The OBBB’s changes can create new opportunities to engage with donors—particularly high-capacity givers—about the tax benefits of charitable giving. It’s a timely reason to review your donor communications and make sure your supporters understand how current tax laws can affect their giving.
Even though the OBBB’s impact on nonprofits is not sweeping, understanding its donor-focused points will help your organization respond proactively and be positioned for success.
Moving Forward with the New Rules
With OBBB signed into law, nonprofits have an opportunity to review its key points and plan for any adjustments ahead. Staying informed and helping donors understand these changes can position your organization to adapt and continue meeting your mission effectively.
To get a full D+L overview of the OBBB and its broader implications for individuals and businesses, check out our other recent blog post.