What the New Tax Laws Mean for Your Donors — and Your Fundraising Strategy

Tax changes can feel complicated, but understanding them is key to keeping your donors informed and confident in their giving. The One Big Beautiful Bill Act (OBBBA) introduces a significant pivot in federal charitable deduction rules, starting in 2026. This isn't just about tweaking numbers; it's about fundamentally reshaping the philanthropic landscape and requiring a more nuanced approach to fundraising.

This is not a time for panic, but for preparation. We will break down the key changes and provide clear, practical guidance for segmenting your donor communications and strengthening your fundraising approach. The shift offers a significant opportunity to engage a broader base of donors while demanding a more strategic, immediate approach for major givers.

The Core Changes: Breaking Down the OBBBA

The OBBBA creates two distinct tracks for donors, demanding that your organization communicate the tax benefit narrative differently depending on whether your donor itemizes or takes the standard deduction.

1. New Universal Charitable Deduction (Good News for the Mass Market)

Starting in 2026, non-itemizers—who represent roughly 90% of all taxpayers—can deduct a limited amount of cash contributions (up to $1,000 for single filers, $2,000 for married filing jointly).

Fundraising takeaway: This is a game-changer. For the first time since temporary COVID-era incentives expired, the majority of your broad-based donors will receive a modest tax benefit for their gifts. This allows you to refocus your general appeals on making giving tax-beneficial again for everyday donors.

2. The New Deduction “Floor” for Itemizers (The High-Net-Worth Challenge)

For the 10% of taxpayers who itemize, charitable giving becomes strategically harder. Starting in 2026, itemizers can only deduct the portion of their giving that exceeds 0.5% of their Adjusted Gross Income (AGI).

Impact: This change may significantly alter the giving patterns of high-net-worth individuals, particularly those whose annual contributions fall below this new floor. Smaller gifts from high-income donors may no longer yield a tax benefit, potentially driving shifts in the timing or size of their contributions.

3. Reduced Deduction Value for the Top Bracket

High-income donors in the top federal tax bracket (37%) face an additional limitation. The tax benefit of their itemized deductions will be capped at 35%, down from 37%. While this is a small percentage, it affects the total value of the deduction for the wealthiest donors and makes giving now, in 2025, more attractive.

2025: The Urgency of Now — Maximizing the Transition Window

Given that the new restrictions take effect on January 1, 2026, the current year presents a unique and urgent window of opportunity for both your organization and your major donors.

Strategy: Accelerate and "Bunch" Giving.

The 2025 tax year offers the last chance to capture the full, current-higher deduction value before the 0.5% floor and 35% cap take effect in 2026. This urgency should be central to your year-end appeals to high-net-worth individuals.

Action for Fundraisers: Immediately promote "Give Early" messaging to high-net-worth donors to leverage the higher deduction rate. A strong message for year-end appeals is: “Changes to charitable tax rules are coming in 2026. Make your gift before Dec 31 to lock in today's more favorable deduction rates.”

The "Bunching" Strategy is essential here: Advise donors to consolidate multiple years' worth of giving into late 2025, maximizing their deduction in that year, and potentially taking the standard deduction in 2026 when their itemized deductions are less beneficial due to the floor.

Strategic Donor Communication and Segmentation

The key to success is moving away from a one-size-fits-all tax message. Segmentation is critical to ensure your appeals resonate and provide genuine value to donors based on their tax status..

Donor Segment	Key Change Impact	Recommended Messaging & Strategy
Non-Itemizers / Everyday Donors	New $1,000 / $2,000 universal deduction (starting 2026)	Message: "Good news! Starting this year, your gift is tax-deductible, even if you don't itemize." Strategy: Launch broad-based campaigns highlighting this new, simple benefit.
Major Donors / Itemizers	The 0.5% AGI Floor and 35% Cap (starting 2026)	Message: "A small change in timing could make a big difference in your tax benefit. Let's review your 2025-2026 giving plan." Strategy: Encourage use of DAFs and appreciated assets to clear the floor.
Donor-Advised Fund (DAF) Holders	DAFs are perfect tools for "bunching" and separating the deduction timing from the grant timing.	Message: "Fund your DAF in 2025 to lock in current benefits, then recommend grants over the next few years." Strategy: Focus on tax-efficient asset transfer.

Advanced Strategies: Vehicles for Long-Term Giving

Beyond cash gifts, ensure your development team is fluent in discussing tax-advantaged giving vehicles, as these will be crucial for navigating the new AGI floors.

Donor-Advised Funds (DAFs)

Highlight DAFs as a perfect vehicle for "bunching." A donor can front-load a large contribution into their DAF in 2025, claim the large deduction against the current rules, and then recommend predictable grants to your organization over the next few years. This helps the donor maximize their tax benefit immediately while the organization receives steady, reliable funding in future years.

Qualified Charitable Distributions (QCDs) from IRAs

Rules for QCDs remain unchanged. This is still the most tax-efficient way for donors 70½ and older to give (up to $100,000 per person in 2025, indexed for inflation in 2026). QCDs satisfy required minimum distributions (RMDs) while excluding the transfer from taxable income. This is a powerful, straightforward tool that bypasses both the standard deduction threshold and the new 0.5% AGI floor.

Appreciated Stock and Planned Giving

These remain essential tools for major donors. Gifting appreciated securities, for instance, allows the donor to deduct the fair market value of the asset and avoid paying capital gains tax on the appreciation. By encouraging the use of such assets, you help donors clear the 0.5% AGI floor more easily while providing your organization with a much larger gift.

Conclusion: Mission Focus Over Tax Incentives

While tax benefits are a powerful motivator, remember that your core mission and the impact of your work are the ultimate drivers of generosity. Use these legislative changes as a reason to have honest, direct, and collaborative conversations with your donors. By positioning your organization as a proactive partner, you help donors maximize their impact and their tax strategy simultaneously, strengthening relationships for years to come.

Need help translating these complex tax rules into a clear, actionable 2026 fundraising plan? Contact Wright Collective today to schedule a strategic planning session.

Mandatory Disclaimer: Please note that the information in this article is for educational purposes only and is not intended to be a substitute for professional legal or financial advice. All donors should consult with their own tax or financial advisors regarding their personal situation.

References & Resources

• Fidelity Charitable: OBBBA Tax Reform

• Council of Nonprofits: Federal Tax Law - One Big Beautiful Bill Act