Latest / The Nonprofit Podcast / Ep 171| The Big Beautiful Bill: Key Tax Changes for Nonprofits

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Ep 171| The Big Beautiful Bill: Key Tax Changes for Nonprofits · The Nonprofit Podcast

• 0:01
  SPEAKER_01: What if I told you that the rules for charitable giving just changed and that some of your biggest donors could lose their tax incentive to give?
• 0:13
  SPEAKER_01: Or that corporations they might completely pull back their support because small gifts they no longer qualify for a deduction.
• 0:22
  SPEAKER_01: Well, the one big beautiful bill is now law and it could rewrite how millions of dollars flow to nonprofits like yours.
• 0:32
  SPEAKER_01: But here's good news.
• 0:34
  SPEAKER_01: If you understand these changes and you act strategically, you can turn this moment into a powerful opportunity to grow stronger, more resilient fundraising for the long term.
• 0:47
  SPEAKER_01: The Nonprofit Podcast, powered by DonorBucks.
• 0:51
  SPEAKER_01: The one big beautiful bill has been signed into law, and fundraisers everywhere are wondering: are we about to lose donors or is this an opportunity in disguise?
• 1:04
  SPEAKER_01: Welcome to the Nonprofit Podcast.
• 1:06
  SPEAKER_01: I'm Britt Stockert, fundraising coach at DonorBox.
• 1:09
  SPEAKER_01: Each week we share practical insights and strategies to help you raise more money, reach further, and build lasting impact.
• 1:17
  SPEAKER_01: Today we're unpacking the one big beautiful bill that became law on July 25.
• 1:23
  SPEAKER_01: What's in it?
• 1:25
  SPEAKER_01: How is it going to affect charitable giving?
• 1:28
  SPEAKER_01: And most importantly, what you can actually do about it.
• 1:32
  SPEAKER_01: Joining me today is Lindsay Baker Bauer.
• 1:35
  SPEAKER_01: She is content marketing manager here at Donorbox.
• 1:38
  SPEAKER_01: And gosh, my steadfast sounding board and contributing editor on the blog we just wrote about this very topic.
• 1:45
  SPEAKER_01: Lindsay, hey, welcome to the show.
• 1:48
  SPEAKER_02: Hey, thanks, Brent.
• 1:49
  SPEAKER_02: I'm happy to be here.
• 1:50
  SPEAKER_02: And I'm really glad we're getting to dig into this a little bit more together.
• 1:54
  SPEAKER_02: This bill has been following us both around.
• 1:58
  SPEAKER_01: Yes, yes.
• 1:58
  SPEAKER_01: And I know, my goodness, and coaching sessions, LinkedIn messages, you know, everywhere I'm scene, everyone wants to know how is it going to impact fundraising from best practice, from bottom line.
• 2:11
  SPEAKER_01: And I think that's why we kind of came together, right?
• 2:14
  SPEAKER_01: And we wrote this blog, which we're gonna link in the show notes for easy reference.
• 2:18
  SPEAKER_01: There's so much confusion out there.
• 2:20
  SPEAKER_01: And while there are definitely some risk, there are also some opportunities if you know where to focus.
• 2:26
  SPEAKER_01: So let's talk about the basics.
• 2:29
  SPEAKER_01: This legislation, it's massive.
• 2:32
  SPEAKER_01: And I mean hundreds of pages.
• 2:34
  SPEAKER_01: But the key impact for nonprofits is that it extends parts of the 2017 Tax Cuts and Jobs Act.
• 2:41
  SPEAKER_01: And what we know is it makes several big changes to tax policy that's going to affect charitable giving.
• 2:48
  SPEAKER_01: Exactly.
• 2:49
  SPEAKER_02: Yeah.
• 2:49
  SPEAKER_02: And we don't need to take some time to wrap our heads around these new parameters and what will have the biggest impact on our sector.
• 2:57
  SPEAKER_02: We're going to dig into those four major areas of impact that include changes to the standard deduction, new rules for itemized charitable deductions, assessments to corporate giving requirements, and even increases in endowment taxes for some larger and wealthier universities.
• 3:17
  SPEAKER_01: And I think it's important here to stress that this isn't just speculation.
• 3:23
  SPEAKER_01: These are hard changes.
• 3:25
  SPEAKER_01: They're written into law.
• 3:27
  SPEAKER_01: So as fundraisers, you're talking to them right here on the show, we truly need to understand the specifics as they're going to impact the way that people are giving.
• 3:36
  SPEAKER_02: Right.
• 3:37
  SPEAKER_02: And while these changes will affect donor behavior, they could affect donor behavior, right?
• 3:42
  SPEAKER_02: Especially for major donors and corporations, they do also open up new opportunities for everyday donor engagement.
• 3:50
  SPEAKER_02: But, you know, fundraisers need to know how to communicate that effectively to leverage those potential advantages.
• 3:57
  SPEAKER_01: Yeah.
• 3:57
  SPEAKER_01: And I think let's talk about the first change here, which is the standard tax deduction that's going to be raised.
• 4:04
  SPEAKER_01: One of the biggest changes is the increase to the standard deduction.
• 4:08
  SPEAKER_01: That's 15,750 for individuals and five hundred for couples filing jointly.
• 4:15
  SPEAKER_01: The part I think here, Lindsay, that really stood out to both of us was there's an increase to the standard charitable giving deduction.
• 4:23
  SPEAKER_01: And that's set to impact the majority of taxpayers.
• 4:26
  SPEAKER_01: Am I hearing that right, Lindsay?
• 4:29
  SPEAKER_02: Yeah, exactly.
• 4:30
  SPEAKER_02: So people who don't itemize and choose to instead take the standard deduction, which is actually 90% of taxpayers.
• 4:38
  SPEAKER_02: So nine out of 10 of your donors, they can now deduct$1,000 in charitable giving or$2,000 for married couples filing jointly.
• 4:48
  SPEAKER_01: Right.
• 4:48
  SPEAKER_01: And before, wasn't the limit only$300?
• 4:52
  SPEAKER_01: So that basically everyday donors may have more incentive to give larger gifts.
• 4:57
  SPEAKER_02: Exactly.
• 4:58
  SPEAKER_02: And, you know, to be honest, it's not a huge deduction, but it's a meaningful incentive, especially when combined with strong messaging, you know, putting your impact first, putting your mission first to really incentivize giving.
• 5:10
  unknown: Right.
• 5:11
  SPEAKER_01: And I think this is where there's an opportunity for many of the listeners out there to make it clear in all of their communications, whether it's on their donation page or even in those automated receipts, just kind of what are these new tax changes?
• 5:28
  SPEAKER_02: Exactly.
• 5:29
  SPEAKER_02: And it can be something really simple, even just hey, new for 2025, up to$1,000 in charitable giving, maybe deductible, even if you don't itemize.
• 5:39
  SPEAKER_02: And then you can link to the IRS website for more information.
• 5:43
  SPEAKER_01: Love it.
• 5:44
  SPEAKER_01: All right.
• 5:45
  SPEAKER_01: So let's get to change two: new floor and ceiling for itemizers.
• 5:50
  SPEAKER_01: So the second big change is really this introduction of both a floor and a ceiling for charitable deductions, if you do itemize.
• 5:58
  SPEAKER_02: So what that looks like is a 0.5% of adjusted gross income or AGI is the floor.
• 6:06
  SPEAKER_02: So if your giving doesn't reach that threshold, you can't deduct it.
• 6:10
  SPEAKER_02: There's also a 35% ceiling, meaning you can't deduct anything beyond 35% of your AGI.
• 6:18
  SPEAKER_01: Okay, so Lindsay, let's make sure that I'm getting it straight and the listeners have some clear clarity as well.
• 6:24
  SPEAKER_01: For someone earning, let's just say a million dollars a year, they wouldn't get a tax benefit for like a$2,000 gift, right?
• 6:31
  SPEAKER_01: Because it's below the floor.
• 6:34
  SPEAKER_02: Yeah, exactly.
• 6:35
  SPEAKER_02: So if their income is a million dollars a year, they would have to give over$5,000 to start seeing any tax benefits.
• 6:42
  SPEAKER_02: And that could really affect those mid-sized gifts from your wealthier donors.
• 6:47
  SPEAKER_02: And it could also, you know, the ceiling could limit extremely generous donors once they hit that point.
• 6:54
  SPEAKER_01: Yes.
• 6:55
  SPEAKER_01: And I think this is why both of us in the blog reading this relationship-building drum, why nurturing these relationships, these connections, becomes even more important right now.
• 7:07
  SPEAKER_02: Yeah, fundraisers need to help donors reconnect with the why they give beyond just the tax break, but also, you know, broaden your base with community-centered strategies.
• 7:18
  SPEAKER_02: We love a good monthly giving program, right?
• 7:21
  SPEAKER_02: Connecting with those donors on a more familiar level.
• 7:24
  SPEAKER_02: So you're not over-relying on a few big gifts in the way that you may have been before.
• 7:30
  SPEAKER_01: All right.
• 7:31
  SPEAKER_01: So let's talk about change three, which is corporate charitable deductions.
• 7:35
  SPEAKER_01: And I think this is a biggie because from what I know about corporate giving, the rules have always shifted.
• 7:43
  SPEAKER_01: Lindsay, can you lay the groundwork on this one?
• 7:45
  SPEAKER_02: So corporations must now donate at least 1% of their taxable earnings to qualify for any charitable deduction.
• 7:53
  SPEAKER_02: The 10% cap hasn't changed.
• 7:55
  SPEAKER_02: That's still in place.
• 7:56
  SPEAKER_02: But this new floor means that those small corporate gifts won't get tax benefits anymore.
• 8:02
  SPEAKER_01: I think this means that nonprofits might see fewer of those one-off checks from companies, companies that are just looking for a quick tax break.
• 8:11
  SPEAKER_01: Exactly.
• 8:12
  SPEAKER_02: But, you know, don't run and hide just yet.
• 8:14
  SPEAKER_02: This presents the perfect time to have more strategic conversations with your corporate partners about bigger multi-year commitments to really stretch that support out so they still see tax benefits and your organization still gets the support that you need to do your mission.
• 8:30
  SPEAKER_01: Yes, it's all about building actual partnerships.
• 8:33
  SPEAKER_01: Again, we're not looking for those transactional one-time sponsorships.
• 8:37
  SPEAKER_02: Yes, spot on.
• 8:38
  SPEAKER_02: If you can present multi-year or campaign-based giving that ties to real impact, real visibility, you'll stand a better chance of maintaining that support long-term.
• 8:48
  SPEAKER_01: All right, so let's build on that and take a look at number four, which are these changes to university endowment taxes.
• 8:56
  SPEAKER_01: And I think this is one that's going to be a bit of a challenge for so many advancement teams, institutional teams out there.
• 9:04
  SPEAKER_01: What do you think, Lindsay, here?
• 9:05
  SPEAKER_02: So wealthy universities with over$2 million in endowment per student, which is also called EPS, will now pay an 8% tax rate on net investment income, which can be pretty significant.
• 9:19
  SPEAKER_02: There are lower tiers.
• 9:21
  SPEAKER_02: So for example, a university falls between$750,000 and$2 million in endowment per student.
• 9:28
  SPEAKER_02: They'll be taxed at a rate of 4%.
• 9:30
  SPEAKER_02: And that lowest tier didn't see any changes.
• 9:33
  SPEAKER_02: So any endowment per student between$500,000 and$750,000 will be taxed at a rate of 1.5%.
• 9:42
  SPEAKER_01: Yeah, I hear all of this.
• 9:43
  SPEAKER_01: And what I'm thinking here is for advancement teams that are tuning in, you really need to know which tier your institution falls in.
• 9:51
  SPEAKER_01: And if you're close to crossing this higher tier, you're going to need to think about how you're going to manage that carefully.
• 9:57
  SPEAKER_02: Absolutely.
• 9:58
  SPEAKER_02: Plus, major gift officers will also need to be ready to explain those changes to donors clearly, without jargon.
• 10:05
  SPEAKER_02: So donors understand how their giving fits into this new reality.
• 10:08
  SPEAKER_01: So, Lindsay, what's the key message for fundraisers who are feeling they're still worried?
• 10:14
  SPEAKER_02: So I'm going to echo what you said in the blog, Britt, and just say, yes, of course, you know, these are big changes.
• 10:21
  SPEAKER_02: But it also offers a chance to reset, right?
• 10:26
  SPEAKER_02: Generosity isn't just about tax write-offs.
• 10:29
  SPEAKER_02: It's about urgency, trust, and ultimately impact.
• 10:34
  SPEAKER_01: Yeah.
• 10:34
  SPEAKER_01: And I think this is why we wanted to remind you keep telling those bold stories.
• 10:39
  SPEAKER_01: Make giving easy and always it's really just about building relationships with not just your major donors, but don't forget your everyday supporters.
• 10:49
  SPEAKER_02: Right.
• 10:50
  SPEAKER_02: And remember, you know, this is the time to strengthen your foundation, diversify your base, and create a donor experience that lasts regardless of tax incentives.
• 11:00
  SPEAKER_01: So this can seem daunting for sure, but it doesn't have to be all doom and gloom.
• 11:07
  SPEAKER_01: Yes, the rules have changed, but your mission hasn't.
• 11:11
  SPEAKER_01: The heart of fundraising, it's still all about building trust.
• 11:15
  SPEAKER_01: It's telling those powerful stories, it's inviting people into impact that matters.
• 11:20
  SPEAKER_01: And what this one big beautiful bill just reminds us is that we can't rely on tax incentives alone.
• 11:27
  SPEAKER_01: When we lead with purpose, when we lead with clarity, and we keep focused on those strong donor relationships, we're not gonna just be reacting to policy shifts.
• 11:37
  SPEAKER_01: We're building organizations that can thrive no matter what changes are gonna be thrown at us next.
• 11:43
  SPEAKER_01: Lindsay, thank you so much for helping us understand these immediate impacts that many of us are worried about.
• 11:50
  SPEAKER_01: We're gonna link the useful blog in the show notes as an easy reference for listeners, although I'm sure we're gonna be getting a lot of questions coming in.
• 11:58
  SPEAKER_01: Lindsay, thanks so much for joining today.
• 12:01
  SPEAKER_02: Thank you very much for having me.
• 12:03
  SPEAKER_02: And yeah, let's pick up the conversation, right?
• 12:05
  SPEAKER_02: Tell us your thoughts and concerns.
• 12:07
  SPEAKER_02: We'll do our best to find some answers and get through this together.
• 12:12
  SPEAKER_01: And thank you for being part of the nonprofit podcast community.
• 12:16
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• 12:19
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• 12:25
  SPEAKER_01: Until next time, take that first step and stay inspired.
• 12:29
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• 12:34
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• 12:40
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• 12:43
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• 12:44
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