How the New Tax Bill Will Reshape Philanthropy and DAFs: Actionable Steps for Nonprofits, Donors, and Fundraisers

With major changes taking effect in 2026, 2025 is a crucial year for strategic giving—here’s what you need to know and do now.

The recently passed Opportunity for a Better Budget Bill (OBBB) has stirred considerable discussion in the nonprofit and philanthropic sectors. With a mix of expanded deductions and tighter contribution limits, the bill presents both opportunities and challenges for nonprofits, donors, and donor-advised fund (DAF) sponsors. While the bill won’t take effect until 2026, the strategic window for action is already open.

This post outlines how the OBBB impacts different donor types, fundraising strategies and long term philanthropic planning. Plus, we provide clear action steps for nonprofits and DAF providers to stay ahead of the curve.

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1. Mass Market Donors: A New Incentive Coming in 2026

What’s changing?

Starting in 2026, all taxpayers—even those who take the standard minimum deduction—will be able to deduct up to $1,000 in charitable donations ($2,000 for married couples). This is a big shift: currently, the vast majority of taxpayers (about 90%) don’t itemize and therefore receive no tax benefit for giving to charity.

Why it matters:

This provision effectively reintroduces a universal charitable deduction, albeit capped at a modest level. It could encourage millions of middle- and lower-income donors to give (or give more) once it becomes effective.

Action Items:

For Nonprofits:

• Update donor communications: Make the new deduction a central message in your 2026 campaigns, especially in email appeals and donation pages.

• Revise tax receipts: Consider including a brief note explaining the new universal deduction starting in 2026. For example: “Starting this year, your charitable contributions may be deductible even if you don’t otherwise itemize. Talk to your tax advisor to learn more.”

• Re-engage lapsed small donors: Use this policy change as a reason to reach out to past donors who may have stopped giving due to lack of tax incentives.

  
  

For DAF Providers:

• Educate fund holders: Make sure they understand that DAF contributions do not qualify for the new universal deduction—but personal cash gifts outside of their DAF do. Encourage a separate $1,000 cash gift annually to maximize tax efficiency.

  
  

Helpful Resource: National Council of Nonprofits: Universal Charitable Deduction Overview

2. Wealthy Donors: Cap on Deductions Means Act Now

What’s changing?

Beginning in 2026,the maximum tax benefit of each dollar deducted will be limited to 35% (lowered from 37%), and itemized deductions will have a floor of 0.5%. This could significantly affect ultra-high-net-worth donors who typically give large portions of their income—or even more than their annual income—each year or give substantial amounts that still fall below the floor. 

Why it matters:

For major donors, 2025 may be the last year to realize full tax benefits from larger gifts. Starting in 2026, mid-level donors giving 4–5 figure amounts may also find their deductions limited if they fall under the new floor.

Action Items:

For Nonprofits:

• Ask for transformative gifts in 2025: Have strategic conversations with key donors now. If a large gift is being considered, act before December 31, 2025.

  
  

• Launch planned giving campaigns early: Promote strategies like charitable remainder trusts and bequests to keep wealthy donors engaged long term, even if immediate deductions are smaller post-2026.

  
  

• Frame urgency thoughtfully: Use fact-based, professional messaging—not fear—to explain how donors can “lock in” tax benefits by giving this year.

  
  

For DAF Providers:

• Encourage large DAF contributions in 2025: Highlight that contributions to DAF accounts still offer full deductibility in 2025. Consider running DAF Day campaigns or webinars to educate donors on the special urgency around this yearend cycle in particular.

• Promote “bunching” in 2026 and beyond: Suggest donors group multiple years’ worth of donations into a single year to clear the 0.5% AGI floor and gain maximum tax benefit. This strategy works well with DAFs, allowing donors to smooth out distributions even after bunching contributions.

  
  

Helpful Resource: National Philanthropic Trust: Navigating Charitable Giving in the Wake of New Tax Reform

3. Corporate Giving: A Floor That Raises the Bar

What’s changing?

Starting in 2026, corporations will only be able to deduct charitable contributions that exceed 1% of their taxable income. This introduces a floor on deductions—a new concept for corporate philanthropy. For low-margin businesses (like grocery, retail, and hospitality), this could sharply curtail deductibility.

Why it matters:

Corporations may reduce giving that doesn’t meet the threshold, but they could also choose to consolidate or increase giving in certain years to clear the floor and claim the full benefit.

Action Items:

For Nonprofits:

• Encourage multi-year commitments in 2025: If a business is contemplating a multi-year gift, suggest making the entire pledge this year to secure the tax deduction before the 1% floor applies.

• In 2026, advocate for consolidated giving: Propose larger, one-time donations that can clear the 1% threshold rather than smaller, recurring contributions that may no longer be deductible.

  
  

For DAF Providers:

• Market corporate DAFs as a workaround: DAFs can help businesses pre-fund future charitable giving while potentially clearing the 1% floor. Position this as a planning tool.

• Promote DAFs as employee benefit vehicles: Encourage companies to match employee DAF contributions or seed employee-directed giving accounts. This both deepens employee engagement and may help the company exceed the 1% threshold.

  
  

Helpful Resource: Urban Institute: Charitable Giving and Tax Policy Brief

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Key Takeaways: Strategic Giving in a Transition Year

While many of the changes from the OBBB won’t hit until 2026, 2025 is a strategic pivot point for philanthropy. The year offers donors and organizations a chance to optimize giving, maximize tax benefits, and lay the groundwork for sustainable generosity under a new tax regime.

Top 5 Action Items Before 2026:

1. Major donors should finalize large gifts this year to take advantage of full deductibility.

   
   

2. Nonprofits should tailor next year’s messaging to mass-market donors, highlighting the new universal deduction.

   
   

3. Corporations should evaluate giving strategies now, especially if they may be affected by the new 1% floor.

   
   

4. DAF sponsors should launch 2025 education campaigns around the narrowing window for the current deductibility scheme.

   
   

5. Everyone should revisit their giving plans with a tax advisor to ensure alignment with the new law.

Want to stay ahead of changes in donor behavior and DAF trends? Subscribe to Chariot’s Newsletter for all the latest tools, updates, and guidance on maximizing the impact of donor-advised funds.