Your Donors Just Got a Tax Break (and They Don't Even Know It Yet)

What the One Big Beautiful Bill Means for Your Fundraising and Why Small Nonprofits Should Be Doing Backflips Right Now

Oh hi! Great to see you here!

Wanna talk nerdy about all things taxes and tax breaks?

No?

Welp. Your donors might.

Which means you may need to know stuff.

What kind of stuff?

The kind of stuff big hospitals, universities and private foundations are talking to high net worth donors about…so you, as a small, scrappy, massively-impactful-and-could-use-big-money-to-do-more-good deserve!

So, Congress passed a tax bill last summer. I know. I know. Your eyes just glazed faster than day-old grocery store donuts. Stay with me.

Because buried inside a bill with a name that sounds like it was written by a toddler who just learned the word "beautiful" is a game-changer for your nonprofit fundraising.

And almost nobody is talking about it.

Here's the deal: millions of new donors are about to have a financial reason to give to your organization, and most of them don't even know it yet.

Which means the nonprofits who move first - who actually tell people about it - are going to win.

That's you. That can be you.

So, let’s take a crack at getting your organization up to speed:

What Changed? (The LEAST Boring Version You’ll Read About)

The One Big Beautiful Bill (yes, that's the actual name and the more I say it, the more fun it is) includes a new charitable deduction that lets people deduct up to $1,000 for individuals or $2,000 for married couples, even if they take the standard deduction.

Why does that matter?

Because roughly 87% of Americans take the standard deduction. And up until now, those folks got zero tax benefit from donating to charity.

Zero.

That's 87% of the country with no financial incentive to give.

And now? They've got one.

We're talking somewhere between 6 and 8.7 million more Americans who now have a reason to donate to nonprofits, according to research from the dorkiest do-gooders in academia, the Indiana University Lilly Family School of Philanthropy.

Let that number marinate in your brain.

Because the giddiness I feel when thinking about that number, and potential, is the same vibe I want injected straight into my veins.

"But Patrick, I'm a small nonprofit. This doesn't apply to me."

No. Bad nonprofit brain. Sit..

This especially applies to you.

Here's why: the big national organizations already have marketing departments and tax attorneys and people whose literal job is to figure out how to leverage tax changes.

They're fine. They're already on it.

But that $1,000 deduction? That's not a major gift play for the Red Cross. That's your sweet spot.

If you're a community food bank, a youth mentoring program, a local arts organization, a flyover-country-small-town animal rescue - that $1,000 to $2,000 range IS your major gift territory.

And there are potentially millions of people out there who just found out (or will find out, once you tell them) that their gift to your organization now comes with a tax benefit they didn't have before.

This is your Kelly Clarkson American Idol moment.

Here's What You Actually Need to Do

1. Become the Messenger

Here's the catch nobody's talking about. Straight from the brains behind the Lilly School research: this behavior change only happens when people actually learn about the new deduction.

Let me yell a little bit louder with some more words for the people in the back with 37 unread emails:

YOUR DONORS DON’T KNOW ABOUT THIS YET.

The research literally says that behavior will only change when households become aware.

And the organizations that have the most to gain by making them aware?

That's you.

That's nonprofits.

So be the one who tells them. Put it in your newsletter. Mention it at your next event. Post about it on social media. Put it in your year-end appeal. Hell, put it on a yard sign. I don't care.

The nonprofit that educates their donors about this deduction first is the one that benefits.

Period.

2. Make the Ask Simple and Specific

Ok, please don't send a 14-paragraph email explaining the tax code.

Nobody wants that. Your donors' attention spans are shorter than fruit flies at a local wine tasting.

Try something like this:

"Did you know? Thanks to new tax law changes, your gift to [Organization Name] is now tax-deductible - even if you don't itemize your taxes. A gift of $500 from a married couple means a real tax benefit for you AND a real impact for [your mission]. It's a win-win."

That's it. Clean. Simple. Actionable.

You're not their accountant.

You don't need to explain marginal tax rates.

You just need to let them know the door is open and invite them to walk through it.

3. Use This as a Major Donor Conversation Starter

Now here's where it gets really fun.

And if I even hear a whisper to yourself saying you’re too small for major donors, I’m gonna come over there and awkwardly stare at you until you say sorry.

So stop it. Stop that right now.

Every single nonprofit, and I don't care if you have a budget of $50,000 or $50 million, has people in their orbit capable of giving a meaningful gift. And this tax change just gave you one of the best conversation starters you've ever had.

Here's how this could play out for your donor conversations:

For your $100-$500 donors: "Hey, great news! Your gift is now tax-deductible in a way it probably wasn't before. What would it look like to increase your impact this year?"

For your $1,000+ donors who itemize: "I want to make sure you're aware of some changes that might affect your giving. Would love to grab coffee and talk about how to make the most of your generosity this year!"

For your business partners: "There are some new rules around corporate charitable deductions that might affect your giving strategy. Let's make sure we're maximizing this for you and your business!"

See what happened there? You're not begging. You're not groveling. You're providing value.

 You're the super knowledgeable best friend who's looking out for them.

That's not sorcery, that's just good ol’ fashioned relationship-based fundraising.

4. Don't Ignore the Others

Ok, lean in close. Gotta whisper something in your ear, ‘cause we’re gonna be empathetic to millionaires and billionaires for a second, and it’ll feel weird.

The same law that created this awesome new deduction for everyday donors also put some new limits on deductions for the wealthiest donors and for corporations.

There's now a cap on total deductions for people in the highest tax bracket, limited to 35% of income, down from 37%. Which to average Joe’s and Jill’s might not sound like much…but for folks who never have to worry about the prices on a menu when they go out to dinner? It’s a problem.

There's also a new floor for both wealthy individual donors and corporations, meaning they need to give a minimum percentage before they can claim any deduction at all.

The Lilly School projects this could reduce overall giving by around $5.6 billion annually. That sounds terrifying, but it's less than 1% of the nearly $600 billion given to charity in 2024.

So what does this mean for you? Diversify your donor base.

If your entire fundraising strategy depends on one gigantic donor or one mega corporate sponsor, this is your wake-up call.

The nonprofits that will thrive are the ones with a ton of engaged communities and supporters,  not the ones playing a high-stakes game of "please don't let our one big donor move to a different state."

I’ve written this and talked about it a thousand times before: build a community of supporters so that you don’t have a dependency on a few.

5. Have the Conversation. Even If It Feels Weird

I know that some of you are thinking that you can’t talk to donors about taxes because you’re not a CPA, or you’re worried you might say the wrong thing?"

Don’t you worry your pretty little face.

You're not giving tax advice. (Nor should you be!) You're just sharing pretty awesome news.

There's a massive difference between "I'm here to explain your marginal tax rate" and "Hey, I wanted to make sure you knew that there's a new tax benefit for people who give to nonprofits. You should talk to your accountant about how it might work for you."

See? Way easier!

You pointed to the door. Their accountant opens it! (Yes, all these big time donors have accountants, and lawyers).

And here's a bonus: financial advisors, CPAs, and estate planners? They're going to be having these conversations with their clients too. Which means this is a phenomenal time to build relationships with those professionals in your community.

Invite them to lunch. Ask them to be on your board. Send them a copy of your annual report.

When the financial advisor says to their client, "You should consider a charitable gift this year for tax purposes," you want YOUR organization to be the one that comes to mind.

This tax change is one of the most exciting things to happen for small nonprofit fundraising in years. I'm not being hyperbolic. (Ok, I'm always a little hyperbolic. But not this time.)

So. Many. Potential. New. Donors.

A real tax incentive for everyday givers. And the organizations who move first and communicate clearly are going to see the biggest impact.

Don't wait for your donors to figure this out on their own. They won't. They're busy. They've got kids and jobs and a concerning number of streaming subscriptions.

Be the one who tells them. Be the one who makes it easy. Be the one who turns this policy change into mission change.

Let's freaking get to work.

Together, we’ve got this!

-Patrick

FAQ: New Tax Law and Nonprofit Fundraising

What is the new charitable deduction in the One Big Beautiful Bill? The law created a new deduction of up to $1,000 for individuals and $2,000 for married couples who take the standard deduction - which is about 87% of Americans. Previously, only people who itemized their taxes could claim a charitable deduction.

Will this actually increase the number of donors? Research from the Indiana University Lilly Family School of Philanthropy projects that between 6 and 8.7 million more Americans will be encouraged to donate because of this change. However, donors need to actually know about it first - which is where nonprofits come in.

How does this affect corporate giving? The new law puts a floor on corporate charitable deductions at 1% of pretax profits. Companies giving less than that can no longer deduct those gifts. However, research suggests most major corporate givers are already above that threshold, so the impact may be smaller than initially feared.

Should nonprofits give tax advice to donors? No. And you don't need to. Simply share the good news that there's a new tax benefit for charitable giving and encourage donors to talk with their financial advisor or CPA about how it applies to their situation. You're the messenger, not the accountant.

What should small nonprofits do right now? Start communicating. Add a note about the new deduction to your newsletters, social media, and donor communications. Use it as a conversation starter with existing donors about increasing their impact. And build relationships with local financial advisors and CPAs who will be discussing charitable giving with their clients.

Patrick Kirby is the founder of Do Good Better Consulting, a two-time Amazon bestselling author (Fundraise Like a 5th Grader and Fundraise Awesomer), keynote speaker, podcast host of the Official Do Good Better Podcast, and creator of Do Good YOUniversity. He helps nonprofits of all sizes fundraise awesomer from his home base in West Fargo, ND. Learn more at dogoodbetterconsulting.com.