A Silver Lining for Charitable Giving Under the OBBBA

While the One Big Beautiful Bill Act (OBBBA) introduces several changes to the charitable giving landscape, including a new 0.5% adjusted gross income (AGI) floor for itemized charitable deductions, there is a notable silver lining for not-for-profit organizations. Beginning in the 2026 tax year, the Act expands charitable deduction opportunities for non-itemizers, potentially reshaping donor behavior in a meaningful way.

Under the new rules, individual taxpayers who do not itemize deductions may deduct charitable contributions of up to $1,000 for single filers and $2,000 for joint filers directly on their Form 1040. Previously, charitable contributions were deductible only for taxpayers who itemized, leaving standard-deduction filers with no direct tax incentive for giving.

Considering that approximately 91% of taxpayers currently take the standard deduction, this seemingly modest change could have a substantial impact on the donor base of many charitable organizations.

This change creates an important opportunity for not-for-profits to educate, re-engage, and potentially grow their donor base.

Take, for example, an individual with $65,000 of taxable income who historically donated $500 annually and claimed the standard deduction. Under the new law, that same individual could increase their donation to approximately $640 with the same after-tax cash impact, resulting in a 28% increase in charitable giving without additional financial strain. For individuals in the highest tax brackets, the effective increase in giving capacity could reach as much as 59%, subject to the statutory dollar limits.

Conversely, donors who may be considering scaling back their annual contributions could find reassurance in knowing that their giving may now carry a direct tax benefit, potentially reducing the perceived cost of maintaining prior donation levels.

Beyond the financial mechanics, this change underscores the importance of proactive donor communication. Not-for-profits that clearly explain how the new deduction works, and who benefits, can position themselves as trusted advisors rather than passive recipients.

Organizations may want to consider:

Clear, compliant education, not tax advice, can help donors feel empowered and confident in their giving decisions.

Although the OBBBA introduces complexity for some itemizers, the expanded deduction for non-itemizers represents a meaningful shift that could broaden charitable participation. For not-for-profits, success will depend on how effectively they translate this legislative change into donor awareness and engagement.

CSH works closely with not-for-profit organizations to navigate evolving tax legislation, assess donor-impact strategies, and align financial planning with mission-driven goals. If you’d like help understanding how the One Big Beautiful Bill Act may affect your organization, or how to communicate these changes to your donors, please reach out to your CSH advisor or contact us to start the conversation.