Nonprofits And The Big Beautiful Bill: Five Things To Know

The One Big Beautiful Bill Act (OBBBA) passed a few months ago, and nonprofits should be paying close attention. Some of the changes create new opportunities. Others introduce new difficulties. Today we cover nonprofits and the Big Beautiful Bill: what they need to know and what they can do.

Below we will:

• Go over the most important effects of the Big Beautiful Bill on nonprofits and what’s changing
• Explain what we believe will be the most important effects
• Give you a list of actions that you can take at your nonprofit now to better prepare

Let’s check it out below.

Nonprofits And The Big Beautiful Bill: Five Things To Know

1) Individual Giving: More From The Bottom, Less From The Top

What’s changing: 

One of the biggest benefits of the Big Beautiful Bill is that non-itemizers can write off $1,000 (or $2,000 for couples). This is good news for low-earners that still want to give. For higher-income donors, it’s a different story. They now face a new 0.5% AGI floor before itemized deductions kick in. 

Likely effects:

One of the most likely effects of this is that small-dollar giving might get a bump. This is especially true of middle-income households, as well as during year-end appeals. Mid-level givers in the $5,000 – $25,000 range? We expect them to start questioning how much of their giving still “counts” (and to give less as a result).

2) Corporate Giving: Fewer (But More Strategic) Checks

What’s changing:

Corporations are able to deduct donations from their tax bill. How much, though, changes with the Big Beautiful Bill. The threshold for corporations is now at least 1% of their taxable income. On the flip side: companies can now carry forward excess charitable contributions for up to 5 years.

Likely effects:

This probably won’t move the needle much for giant corporations. But for local or regional businesses? Expect less giving overall. Smaller firms that used to write small checks “just because” (in the ~$1,000 – $5,000 range) might now think twice. This opens the door to strategic, multi-year giving strategies. 

3) Estate Planning: Less Charitable

What’s changing: 

When it comes to estate planning, OBBBA has made it less charitable overall. The estate tax exemption is now $15 million (which is indexed for inflation). 

Likely effects: 

The OBBBA will probably mean that fewer wealthy families need charitable bequests for tax planning. The biggest result overall? Fewer surprise gifts and planned windfalls for the rest of us. At your organization, it’s time to treat legacy giving as a mission-driven act, and not just a tool for tax efficiency. 

4) The Safety Net: Thinner For Beneficiaries, More Stressful For Organizations

What’s changing:

The Big Beautiful Bill will result in cuts to Medicaid and SNAP. This won’t happen steadily, but it is planned over the next few years. The bill also adds a variety of requirements and eligibility hurdles for programs. Unfortunately, there’s no matching increase in funding elsewhere. 

Likely effects:

If you are a nonprofit working in a sector like food access or housing, expect heavier caseloads. With less money to go around, the affected might have a harder time than normal. And with decreased funding to organizations? Now is the time to prepare to do more with less.

5) Education Charities: Tax-Backed Competition

What’s changing:

One of the big changes with OBBBA: dollar-for-dollar tax credits for donations to Scholarship Granting Org’s (SGOs). There is a limit here of up to $1,700, but it’s still good news for education organizations. 

Likely effects:

If you are a nonprofit in the K – 12 education or homeschooling space, it’s possible you see a surge in gifts. But everyone else? You need to be ready to compete harder for donor attention and total dollars. And if that is the case – you’ll need a sharper case for support (especially if you’re not in the education space). It’s time to tighten up your messaging.

What Nonprofits Should Do Now

OBBBA introduces a lot of changes. If you want to weather them as effectively as possible, here is what we suggest you do now: 

• Invest in real, genuine relationships. With all the changes in the coming years, the organizations that spend time building actual relationships will be the ones that win. What this means for you? You need to treat businesses like partners, not just check writers. 
• Prioritize communication. The OBBBA is dense and confusing. There’s no guarantee that founders know what’s going on. Check in and ask how the new rules are impacting their priorities. If you want to keep the donations coming, communication is key.
• Sharpen your storytelling skills. Storytelling has always been an effective nonprofit marketing strategy. But in the wake of OBBBA, it’s probably even more essential. When it comes to fundraisers, make sure your why is crystal clear and emotionally resonant.
• Prepare for higher demand and fewer resources. If you aren’t providing essential resources at your nonprofit, brace yourself. As we mentioned above, you may see a frustrating combination: increase in need with a simultaneous decrease in funding. Invest in volunteers now before demand spikes. Also consider strengthening your referral systems and partnerships to handle potential overflow.
• Reframe for mid-level and high-income donors. You should no longer rely on tax savings to bring in major gifts. Try to encourage donors to commit to multi-year pledges, and frame it as “legacy” (instead of focusing on tax implication alone). Lastly – it’s always a smart idea to diversify your funding streams. This will make your organization more resilient in the long term.

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