The Big Beautiful Bill of Headaches

Hey friends!

Let’s talk taxes! No, wait! Don’t click away!

Because the latest version of the Big Beautiful Bill, has big implications for those of us trying to do good in a world that feels increasingly squirrely.

Earlier this week, the Senate Finance Committee dropped their version of the massive reconciliation tax package, and while some of it feels like a cautious sigh of relief, other parts still pack a punch for nonprofits already teetering on the edge.

Let’s nerdily break it down. (See? I knew that Politics degree would pay off! Thanks Loras College!)

First, some good news:

Expanded Universal Deduction is Back, Baby!

Non-itemizers (aka most people) would finally get a charitable deduction again—up to $1,000 for individuals, $2,000 for couples. About freaking time.

And while there’s debate on whether this will increase total dollars given, it could widen the circle of donors. And seriously, we’ve been losing them for 2 decades.

More givers in the game? Hell yes.

Private Foundations Dodge a Bullet

The Senate version does not raise the excise tax on private foundation investment income, unlike the House version’s proposal that would’ve soaked the biggest foundations for millions.

That means big foundations can still give big without getting dinged bigger.

Now, while I regularly decry these giant institutions for hoarding millions and millions of dollars that could go to basically solving a boatload of community issues if they just unleash their cash (and I don’t need to go on another diatribe of how much I loathe endowments and how eerily similar these groups are to Smaug from The Hobbit – nerds will get it) this does give our nonprofit friends some breathing room to distribute more money to those that need it most.

So, hey. Foundations. Do more better.

Speaking of Endowments.

A Mixed Bag

Endowments still face an excise tax—1.4% for those holding $500K–$750K per student. But the Senate plan softens the House’s harsher blow for even wealthier endowments, maxing the rate at 8% for the ultra-endowed (get your head out of the gutter…I meant Ivy League. LOL).

Ok, here’s the Not-So-Good Stuff:

Safety Net Cuts Still Suck

The bill still slashes key programs like Medicaid and SNAP. Diane Yentel from the National Council of Nonprofits nailed it: gutting these lifelines will only increase the burden on nonprofits—right when so many are gasping for air.

And speaking of stress...

Nonprofits Are Already Strained to the Max

A recent survey from the Nonprofit Finance Fund shows what we’re all feeling: it’s hard out here. A third of nonprofits ended last year in the red. Rising costs. Delayed payments. A surge in need. Good times, huh?

But one bright spot? The California Endowment just decided to double its payout rate to 10% for the next three years. Why? Because as their president said: “If you’re going to achieve your mission, it requires you to spend money—and in this moment, it requires you to spend more.”

Holy crap. THIS. Like, ALL of this.

If you’re a funder reading this? Take a page out of this playbook. Immediately.

This tax bill is shaping the financial playing field for the sector.

Some of it’s helpful.

Some of it’s harmful.

All of it demands we stay loud, stay engaged, and keep reminding the world:

Nonprofits aren’t just "nice to have.” We're essential.

If you ever needed a reason to push for unrestricted funding, policy advocacy, or a bigger release of rainy-day funds, this is it.

You got this!

-Patrick

PS: Let me know what you’re hearing on the ground! Good? Bad? Ugly? I’m always on the lookout for great up-to-date anecdotal stories that help our nonprofits! Reply and chat with me!