Abstract
On July 4, 2025, P.L. 119-21 (popularly called the One Big Beautiful Bill Act, or OBBBA) was enacted, with provisions affecting charitable giving going into effect, starting in 2026. My colleagues at the Indiana University Lilly Family School of Philanthropy and I recently published “Philanthropy Outlook: Estimating Effects on Charitable Giving from the One Big Beautiful Bill,” a research study looking at the effects in aggregate of four of the most significant policies regarding charitable giving in the OBBBA, including both individual/household giving and corporate giving.
Our estimates indicate that future U.S. charitable giving is expected to be lower under the new tax provisions than it otherwise would have been under previous law. More households will give to charity than before.
Jon Bergdoll
The research provides estimates of the anticipated shift in giving behavior resulting from each of these policy changes. It thus represents long-run annual effects of the policy changes, rather than predictions for any particular year.
In net, we expect the bill to reduce giving by $5.69 billion compared to what it otherwise would have been under previous law. However, it’s a less clear-cut story than the effect from the 2017 Tax Cuts and Jobs Act, in which the changes were dominated by a single large, negative effect on charitable giving: the significant expansion of the standard deduction. In the OBBBA, different provisions are pushing different types of giving in different directions.
For individuals, the most widereaching of the provisions is the introduction of a permanent universal charitable deduction (UCD) of up to $1,000 for single filers, or $2,000 for joint filers, who take the standard deduction.
A portion of the impact of this provision will come from extant donors who will now have an incentive to give more. Interestingly, however, we found that a large percentage of nonitemized individual giving comes from households already giving in excess of the $1,000/$2,000 limit in the new universal charitable deduction. Those donors, while eligible for this new tax deduction, would not receive any tax benefit from any additional giving beyond their current contributions. So, the policy is unlikely to stimulate much new giving from them. We anticipate about $3.05 billion more dollars to come from extant nonitemizer donors.
An additional amount of giving, about $1.34 billion, should arise from new donors entering (or re-entering) the donor pool. Adding that to the expected amount of additional giving from extant nonitemizer donors leads us to an estimated $4.39 billion overall in new giving coming from the universal charitable deduction.
Notably, our research estimates that around 8 million more donors will now give as a result of this universal charitable deduction. While we don’t anticipate that these will be large-dollar donors, we view this increase in the number of donors to be one of the more consequential elements of the OBBBA related to philanthropy.
We do caution, however, that the effect of the universal deduction, though in effect for 2026, may not be fully felt immediately. People’s awareness of this policy may be fairly low to begin with, and they won’t react to this policy until they know about it.
We also looked at two other provisions affecting individual donors: a 0.5 percent floor and a 35 percent cap. The 0.5 percent floor means that taxpayers can only deduct the portion of their giving that exceeds 0.5 percent of a filer’s adjusted gross income (AGI). Our research found that a relatively small portion of itemized giving appears to come from households giving less than 0.5 percent of their income, so instituting the floor is estimated to result in about $2.43 billion in reduced annual giving.
The 35 percent cap is a provision in which filers in the highest (37 percent) tax bracket can deduct no more than 35 percent of all their deductions (including their charitable deduction). While the number of households this affects is fairly small, likely less than 1.5 million households, these households are responsible for roughly half of itemized individual giving. Additionally, prior research has found that high-income households tend to react more to tax incentives than households in general. With this combination, we estimate that the 35 percent cap will result in a decrease in annual individual giving of around $6.10 billion.
Corporate giving also is affected by the new law, with a new 1 percent floor of pretax profits being applied to corporate charitable deductions. In other words, corporations can only deduct the portion of their giving that exceeds 1 percent of their pretax profits for the year. For example, if a corporation reports $100 million in pretax profits and donates $3 million charitably, its charitable deduction would be $2 million.
Given that corporations in aggregate only give around 1 percent of pretax profits, according to our research for the annual Giving USA report, in partnership with the Giving USA Foundation, there were fears this provision might have a severe negative impact on corporate giving.
Data from Chief Executives for Corporate Purpose (CECP) that we analyzed for our report, however, suggests that corporate giving is quite top-heavy, with most of the giving coming from those corporations that are already giving well in excess of 1 percent of their pretax profits.
Corporate giving also may be a likely target for “bunching,” in which instead of donating annually, a corporation might give two or more years’ worth of donations at once in order to maximize its tax incentive.
These two elements together likely will lessen the new provision’s impact: We estimate they would reduce annual corporate giving by about $1.5 billion, as compared to earlier estimates of a potential decline around three times that amount.
In total, then, we estimate that the above four provisions will reduce annual giving by about $5.69 billion. Different nonprofit organizations will likely feel these changes differently, depending on the composition of their donor base. Organizations that are more heavily reliant on corporate or major donors may be more negatively affected than organizations that rely more on smalldollar donations.
While our report focuses on these four provisions, the OBBBA includes other provisions affecting giving. For instance, the OBBBA increased the estate tax exclusion limit to $15 million, though this was a marginal increase over the $13.99 million limit for 2025.
However, changes from the OBBBA may be felt even in areas of giving where the law did not change. For example, potentially important for planned giving are the downstream effects of the changes to individual giving. By reducing the value of the individual deduction, the value of other means of tax-advantaged giving, whether that’s qualified charitable distributions, annuities, estates, or other forms, becomes relatively higher without itself having changed.
In other words, if previously taking a donation as an individual deduction vs. donating through another taxadvantaged option held about the same value to a donor, now with the value of their individual deduction having been reduced, the alternative becomes the better option.
Overall, the four provisions examined in the study combined amount to about an estimated 1 percent decline in total U.S. charitable giving compared to what it would have been under previous law. Nonprofits may experience the changes differently and may see changes in giving behavior, as well as in the timing and structure of some gifts.
Organizations that educate their donors about the opportunities and changes in the new law and adjust their strategies accordingly will be more likely to find success in this new environment.
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