Hello from the community foundation!
We appreciate so many local charities reaching out to our team to understand what may be in store for charitable giving under the new laws passed in the One Big Beautiful Bill Act. We are always happy to be a sounding board for trends and developments in philanthropy, and we’re happy to point you in the right direction. To that end, we’re covering three topics that seem to hit home among so many of our nonprofit partners.
—By now, you’re generally aware of the changes to the charitable tax laws under the One Big Beautiful Bill Act. How big a deal are these changes? And how should you approach communicating the opportunities to your donors? The community foundation is happy to offer suggestions.
—Event season is just around the corner. This means you’ll likely see an uptick in questions from your donors about whether they can use their donor-advised funds to buy tickets. We know this is a tricky issue, and we’ve got you covered with a quick explanation.
—August is National Make-A-Will month, and we know you want to take full advantage of this opportunity to plant seeds with your donors for endowment gifts and planned gifts. We are offering tips to help you make the most of the buzz.
Thanks so much for the opportunity to work together! Whether your organization has established an endowment or reserve fund at the community foundation, or whether you’re just considering it, thank you! We look forward to a conversation. Thank you for all you do for our community.
—Your community foundation
THIS MONTH’S
TRENDING TOPICS
FAQs: What’s up under the OBBBA?
Recent changes in federal tax law under the One Big Beautiful Bill Act (OBBBA) bring both challenges and opportunities for nonprofit organizations in our community. The community foundation is here to help you prepare and consider how to update your strategies as the landscape shifts. We’re sharing answers to three frequently asked questions about how the new laws will impact giving, what you can do about it, and how the community foundation can help.
“What’s happening with the standard deduction, and how big of a deal is it?”
The nonprofit sector is no stranger to the challenges resulting from a high standard deduction. In the aftermath of the Tax Cuts and Jobs Act of 2017, which increased the standard deduction, the number of taxpayers who itemized deductions dropped significantly. This eliminated tax deductibility as a motivator for charitable giving for many Americans, which in turn, caused charitable giving to drop. Now, under the OBBBA, the standard deduction is going up again, which may continue to impact tax-motivated charitable giving, even with the uptick in itemizers thanks to the OBBBA’s new state and local tax deduction allowances (subscriptions required to the Wall Street Journal).
So how big of a deal is this? In many ways, the increase in the standard deduction means more of the same. Tax motivations to give to charity will continue to apply to the relatively small number of donors who itemize deductions. That said, keep in mind that donors don’t give to charity solely for a tax deduction. Many other motivations come into play because people truly want to make a difference. What’s more, the additional changes coming in 2026, described below, may motivate certain donors to make big gifts this year.
“Could 2025 really be a big year for charitable giving?”
The answer is yes! Coupled with an increasing standard deduction, two OBBBA provisions that take effect in 2026 may provide incentives for your donors to “front-load” charitable contributions, not only to exceed the high standard deduction to allow them to itemize, but also to avoid two limitations to charitable deductions effective starting with the 2026 tax year. First, beginning in 2026, the deductibility of charitable contributions will be capped at 35% of adjusted gross income (AGI), even for itemizers in the 37% tax bracket. Second, also beginning in 2026, a 0.5% floor will apply to itemized charitable deductions, meaning that only contributions exceeding 0.5% of AGI will be deductible. These two upcoming changes reduce the value of charitable deductions for high-income taxpayers and may create a strong incentive for your donors to make big gifts in 2025. Our team is happy to serve as a sounding board as you explore ways to maximize support in 2025, including motivating donors to make gifts to add to your endowment or reserve fund at the community foundation.
“How can we make the most of the new deduction for non-itemizers?”
The OBBBA introduced a new deduction for charitable contributions starting in 2026: $1,000 for individual filers and $2,000 for married couples filing jointly. This provision, similar to the temporary pandemic-era incentive, allows non-itemizers to receive a modest tax benefit for their charitable gifts. This could meaningfully encourage new donors—particularly younger donors—to start making gifts to your organization. Note that this new deduction is for cash gifts only (and it also does not apply to gifts to donor-advised funds). You’ll want to mention this limitation specifically in your donor communications next year, and you’ll also likely want to clarify that despite the rules for this particular deduction, typically gifts of appreciated assets deliver the most tax benefits.
Certainly, the OBBBA presents a mixed bag. You may discover that 2025 is a great year for large gifts, and, as the new laws take effect, 2026 will be an important time to add an additional focus on cultivating smaller gifts and broad-based support.
As always, the community foundation is honored to be your trusted partner and sounding board, whether or not your organization has established an endowment or reserve fund at the community foundation. We invite you to reach out to explore how our team can help navigate tax law changes and maximize opportunities in 2025 and beyond.
Donors want to know: “Can I sponsor your event through my donor-advised fund?”
It’s no secret that events can help drive fundraising revenue, build community, and foster engagement among your current donors and potential donors. One study even noted that 81% of U.S. donors attend fundraising events every year. As you plan your next gala or golf tournament, keep in mind the special rules that apply to receiving support from donor-advised funds at the community foundation or elsewhere.
Here’s how this works:
If a donor is hoping to support your event through a donor-advised fund, the donor cannot receive in return what the IRS calls “more than an incidental benefit.” This means that dollars going toward rounds of golf, meals at a gala, t-shirts, and raffle tickets are not only not tax deductible, but also that a donor-advised fund cannot pay any portion of that ticket or sponsorship–not even the tax-deductible portion. It’s important to be aware that the IRS prohibits this type of “bifurcation.”
Remember, however, that donors can still give to your organization to help celebrate your event so long as they waive all benefits that go beyond incidentals. Acknowledging and recognizing donors are considered incidental, which means you can (and should) mention the donors in your materials and thank them at the event. If a donor would like to attend the event, the donor can certainly purchase tickets using their personal funds.
The community foundation is your partner in making a difference. Please reach out anytime to learn more about how donor-advised funds work. Happy party planning!
Make-A-Will Month: Opportunities to grow your endowment
Every August, National Make-A-Will Month highlights the importance of planning for the future. For charitable organizations, it presents a unique and timely opportunity to engage donors in meaningful conversations about leaving a lasting legacy through their wills and other estate planning documents. Beyond encouraging supporters to complete or update their estate plans, National Make-A-Will Month gives you a ready-made platform to discuss how legacy gifts and contributions to your endowment can sustain mission-driven work for generations to come.
Here are a few ideas to inspire your donor communications during this month and beyond:
Remind donors that an estate plan is important.
Never assume that your donors have their estate plans in good shape. Indeed, many people know they should have a will or a trust but postpone getting it done. With estate planning already top of mind thanks to widespread Make-A-Will Month awareness campaigns, your donors may be more receptive to considering how charitable gifts, including to your organization, can become part of their legacy. Consider Make-A-Will Month as a sort of “bridge” between donors’ good intentions and taking action, benefiting both the donor and your organization.
Start a conversation about legacy giving
Even though you and your team know how important it is to at least briefly mention planned giving in nearly every donor conversation, discussions about leaving a legacy still can sometimes feel uncomfortable. Make-A-Will Month is a ready-made ice breaker, so it’s easier for you to introduce the topic without awkwardness. You can normalize the idea of including charitable gifts in a will, which in turn empowers donors to think about the impact they’d like to make long after they’re gone. The upshot here is that every single donor communication this month is an opportunity to open the door for a legacy discussion.
Shine a light on endowment gifts
Make-A-Will Month is a perfect time to educate your donors about the benefits of supporting your endowment. Indeed, endowments are often built with assets received from bequests in a donors’ wills or trusts, via beneficiary designations on retirement accounts or life insurance, or more complex gifts such as charitable remainder trusts. While estate planning is on your donors’ minds, reinforce the importance of your organization’s endowment to fund essential programs year after year. By connecting the themes of estate planning and lasting impact, you’ll be able to illustrate how a bequest to your organization can make a difference for generations to come.
As always, whether it’s Make-A-Will Month or any other time of the year, please reach out to the community foundation. We are happy to serve as a resource as you develop strategies to deepen donor relationships. We’ll help you evaluate strategies for reaching out thoughtfully during Make-A-Will Month so you can tap this opportunity to expand trust and connection with your donors, paving the way for the future of your mission.
This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.