OBBB and Sustainable Giving on Tax Day

With Tax Day in the U.S. approaching, I have a confession to make.

I've been preparing and paying my taxes for more than 20 years, and I still don't get it. I've started or helped run three different companies, served on nonprofit boards, reviewed returns, and read more IRS form 990s than I care to admit.

On my best day, it seems like it's starting to make sense. On my worst, I have no clue what all of the jargon means, and I'm hopelessly confused.

And yet our tax system in the United States has a demonstrable influence on charitable giving. While it's true that our nation has a convoluted tax system, various incentives have generally encouraged generosity throughout our history.

Enter the OBBB (One Big Beautiful Bill).

The "One Big Beautiful Bill" (OBBB) is a comprehensive 2025 law that introduced major tax policy changes, including several changes around charitable contributions that will likely reshape generosity in the United States for years to come.

It is estimated that the tax law changes will increase the number of Americans giving to charity by 6.0 to 8.7 million new households in the coming years.

Nonprofit leaders need to understand how the bill will affect giving from donors and corporations, both to empathize with donors and to meet them where they are and encourage generosity.

The point of this Wave Report isn't to indulge in the finer points of tax law, but with Tax Day approaching on April 15, there are two very simple things that I think nonprofits should be aware of and consider communicating to their donors.

Let's look at how the OBBB promises to increase participation in generosity, while likely reducing overall giving.

More Donors, Fewer Dollars: What the Indiana School of Philanthropy Found

The Indiana University Lilly Family School of Philanthropy just published an in-depth analysis called"The Philanthropy Outlook: Estimating Effects on Charitable Giving from the One Big Beautiful Bill." I'd encourage you to read the executive summary and download the full study if you want to dig deeper — it's well worth your time.

Nonprofit leaders should pay attention to these changes because, while they are projected to reduce overall annual charitable giving by approximately $5.69 billion, they will simultaneously reshape generosity by bringing up to 8.7 million new donor households into the philanthropic space.

The overall projected decline in charitable giving is due to limits on top earners, a new minimum "floor" that will discourage small donations from donors who do itemize, and a floor on corporate donations that will disincentivize some companies from philanthropic giving. This is discouraging for overall giving.

On the positive side, the introduction of a permanent Universal Charitable Deduction (UCD) will give a tax incentive to give for approximately 90% of U.S. households that take the standard deduction, allowing these non-itemizing households to deduct up to $1,000 for single filers and $2,000 for married filers.

By lowering the after-tax cost of giving for the vast majority of Americans, this policy is estimated to add between 6.0 and 8.7 million entirely new donor households to the philanthropic sector, increasing total giving from this group by about $4.39 billion annually.

90% of Americans now have an incentive to give $1,000 to $2,000 to charity, starting right now in 2026.

The Indiana School of Philanthropy report estimates the incentive will lead to between 6.0 and 8.7 million entirely new donor households to the philanthropic sector, increasing total giving from this group by about $4.39 billion annually.

💡 Takeaway: The OBBB is a mixed bag for philanthropy. The big-picture numbers are discouraging – an estimated $5.69 billion decline in overall giving. But for the vast majority of everyday Americans, there's a brand-new reason to give. For the first time, 90% of households can deduct charitable contributions without itemizing. That's a massive door that just opened – and nonprofit leaders who walk through it first will benefit the most.

The question is: what do we do about it?

Two Things You Can Do Right Now

Two things…

1. Launch a "Tax Day" Education Campaign to Drive Recurring Gifts.
The study states that nonprofits that alert their potential donor base to these new opportunities are likely to see more giving in the short term.

Use the buzz around Tax Day to launch campaigns to educate your donors about the new Universal Charitable Deduction.

Many donors only gradually realize how changes in tax policy affect them over several years. By proactively educating them now, nonprofits can speed up this realization.

Use language like:

"Starting right now in 2026, a new Universal Charitable Deduction makes it so 90% of Americans can benefit from giving to charity. Even if you take the standard deduction and don't itemize, you can now deduct up to $1,000 (for single filers) or $2,000 (for married couples) in charitable gifts this year.

Your generosity just became completely tax-deductible – help us continue our mission by making a gift today."

A highly effective strategy would be to break down the new $1,000 and $2,000 annual caps into accessible monthly giving targets.

For example:

• Single Filers: Pitching a recurring gift of $83 per month will max out a single filer's new $1,000 tax-deductible limit for the year.

• Married Filers: Pitching a recurring gift of $166 per month maxes out the $2,000 limit for married couples.
  

Here's example language you might consider:

"Did you know that under the new 2026 tax laws, you no longer need to itemize your taxes to get a deduction for your charitable giving? 90% of Americans can now deduct up to $1,000 ($2,000 for married couples).

The easiest way to maximize this brand-new benefit is to give monthly!

A recurring gift of just $83 a month (or $166 for married couples) ensures you claim your maximum tax advantage by the end of the year, all while providing sustainable support for our cause."

The next thing you can do is…

2. Tailor Appeals to the Surge of New, One-Time Small-Dollar Donors
The Universal Charitable Deduction is projected to bring between 6.0 and 8.7 million entirely new donor households into the philanthropic fold. These donors are expected to be primarily smaller-dollar contributors who are incentivized by the new deduction.

Because these are smaller-dollar donors, a recurring giving program is the perfect onboarding vehicle for them.

When welcoming new donors, I always recommend two things:

• AFFIRM THEM by thanking them, showing them how their gift made a difference, and closing the loop on their generosity.

• INVITE THEM to make an ongoing impact in the cause they clearly care about by becoming a recurring donor.
  

The nature of more donors choosing to give one-time small gifts should mean this approach will be even more effective moving forward. Remember, the most common window for a new donor to convert to recurring giving is within the first 30 to 60 days of their first gift. That's when interest and awareness are at their peak. Don't miss that window.

If millions of new donors are about to start giving for the first time – or returning to giving because of the new incentive – your welcome process and your recurring giving invitation matter more than ever.

💡 Takeaway: The OBBB creates both an education opportunity and an onboarding opportunity. First, use Tax Day as a springboard to educate donors – especially non-itemizers – about the new Universal Charitable Deduction, and frame monthly giving as the easiest way to maximize the benefit. Second, be ready for the wave of new, smaller-dollar donors, and have a plan to affirm them, show impact, and invite them into sustainable recurring giving within that critical first 30 to 60 days.

In the meantime, happy Tax Day!

Until next week… Surf's Up! 🌊

  - Dave