Shifts in tax legislation often spark concern about the future of charitable giving. But recent analysis from the Indiana University Lilly Family School of Philanthropy suggests a more nuanced reality defined by adjustment rather than decline. While donor behavior may shift in response to the One Big Beautiful Bill Act (OBBBA), the motivations that drive giving—values, impact, and vision—remain unchanged.
The March report, Philanthropy Outlook: Estimating Effects on Charitable Giving from the One Big Beautiful Bill, predicts three key shifts in giving behavior—participation, timing, and structure—that could impact donor engagement and philanthropic strategies. For your organization, this is not a moment to brace for impact, but an opportunity to respond strategically to an evolving tax landscape.
Big picture findings
The study examines how several new OBBBA provisions—including the new deduction for nonitemizers, the new giving floor, and the lower tax benefit of charitable deductions for donors in the top 37% tax bracket—may shape future giving patterns. Key findings include the following:
• Total charitable giving may decline modestly. The study projects a net reduction of about $5.69 billion per year (roughly 1% of all U.S. giving), reflecting the offsetting increases and decreases expected as a result of various OBBBA provisions.
• Total number of donors may increase. U.S. households that give are estimated to increase by about 8 million.
• The impact may not be immediate. It may take time for taxpayers to become aware of and adapt to the new policies, with the full effect not being felt for a year or more.
These shifts point to three areas where your team can adjust its strategy.
Participation shifts
Roughly 90% of taxpayers do not itemize deductions. The OBBBA’s new deduction for nonitemizers (available for gifts of cash to qualified charities) significantly expands the number of donors who can receive a tangible benefit for giving. The study anticipates a significant increase in giving among nonitemizers, including gifts from households that did not previously donate. In fact, the study estimates an increase in total charitable giving among nonitemizers of approximately $4.39 billion annually (even as giving is expected to decline among some other donor segments).
Takeaways for your team
A broader, more engaged donor base creates a natural pathway to planned giving. These emerging donors may be well suited for future legacy commitments—particularly charitable bequests, which remain a natural entry point for this group.
Keep the message simple, focused, and consistent:
• Position bequests as an easy way to extend impact.
• Emphasize flexibility, including revocability and percentage or contingent options.
• Reinforce bequest messaging across all donor communications.
Timing shifts
The new giving floor means donors can only deduct total annual gift amounts over 0.5% of their adjusted gross income. This may reshape giving patterns for some donors—particularly itemizers near the threshold. In fact, the study estimates a 0.6% reduction in total household giving as a result of this provision.
Donors impacted by the giving floor may become more intentional about when they give, not just how much. They may choose to bunch their contributions, consolidating multiple years of giving into a single year to maximize tax benefits while maintaining their overall generosity. Donor-advised funds (DAFs) can allow donors to realize the tax advantage upfront while distributing gifts to organizations steadily over time.
Takeaways for your team
To support donors in this approach, consider talking more about DAFs:
• Highlight their potential role within a broad, flexible giving plan.
• Encourage annual grants to your organization.
• Consistently note that naming your organization as the beneficiary of a DAF is a simple way to ensure the continuation of the donor’s impact beyond their lifetime.
Structural shifts
The OBBBA caps the value of deductions at 35% for those in the 37% bracket. This affects a small percentage of households—but a disproportionate share of charitable giving. This change is likely to have the greatest impact on organizations whose contributions come largely from high-net-worth (HNW) donors.
Takeaways for your team
HNW donors may become more strategic about giving, looking for options that optimize both tax efficiency and impact. Your team can help.
• Identify donors most likely to be impacted by the cap.
• Highlight tax-efficient gift options.
• Explain how these gifts can help donors manage tax exposure as an integral part of their overall financial plan.
Motivations remain the same
The OBBBA may alter the mechanics of giving, but not the motivation behind it. Donors continue to give because they want to make a meaningful, lasting impact that brings their values to life. When conversations start there, it becomes easier to navigate the changing rules and identify the strategies that best support their goals.
