How new charitable deduction rules will cut giving by $5.69 billion a year

How will the new tax provisions included in H.R.1—”the One Big Beautiful Bill” enacted in 2025—affect charitable giving? A report from the Indiana University Lilly Family School of Philanthropy and CCS Fundraising estimates the new rules on charitable deductions will reduce total U.S. giving by about $5.69 billion annually. That’s just under 1% of the estimated $592.5 billion given in 2024, but some nonprofits could be hard hit.

The Philanthropy Outlook: Estimating Effects on Charitable Giving from the One Big Beautiful Bill examines the impact of the provisions affecting household giving and one affecting corporate giving. The authors note, however, that the full impact may not appear in the first year, as it may take time for the change to sink in and affect giving patterns.

We asked Jon Bergdoll, interim director of data research and partnerships at the Lilly Family School of Philanthropy, for further insights into the findings.

35% cap on itemized deductions could reduce household giving by $6.1 billion

First, total itemized deductions, including charitable contributions, will be limited to 35% of income for taxpayers whose pre-deduction income puts them in the top marginal tax bracket. While this affects only a small percentage of taxpayers, those households account for a large share of household giving. Based on an analysis of IRS data, more than half of itemized charitable giving likely comes from households potentially affected by the cap.

0.5% floor on itemized deductions could lower giving by $2.43 billion

Second, the 0.5% floor on itemized deductions allowing households to deduct only charitable contributions above 0.5% of their income could decrease giving by $2.43 billion. Given that an estimated 1.68% of itemized charitable giving comes from households giving 0.5% or less, the impact of the floor is expected to be “relatively modest.”

Universal charitable deduction could boost giving by $4.39 billion

Third, the universal charitable deduction allows households that don’t itemize deductions to deduct up to $1,000 (single filers) or $2,000 (married filers) in charitable contributions, even if they take the standard deduction. This change could increase total household giving by $4.39 billion annually—$3.05 billion from current donors and $1.34 billion from as many as 8.7 million additional donors.

This won’t necessarily reverse the downward trend in donor numbers and flat retention rates, however. “We aren’t forecasting a reversal of the long-running trend in which the share of Americans who give has been declining,” said Bergdoll. “[T] here’s nothing directly in these policies we would anticipate causing an ongoing growth in new donors.”

The net impact of these three rules is $4.14 billion less in household giving per year. Could the expected increases in giving and donor households from the universal charitable deduction eventually make up for the losses from the other policies? Bergdoll doesn’t think so.

“In dollar terms, the downward push from the other policies is greater than what we’re projecting from increases due to the universal charitable deduction,” he explained. “That said, there could always be potential indirect effects that would be outside the scope of the model which could have more long-term effects, like new donors shifting the culture of giving in some significant way, inspiring more donations.”

1% floor for deductions could lower corporate giving by $1.55 billion

As for corporate giving, corporations will only be allowed to deduct charitable contributions exceeding 1% of pre-tax profits. According to Chief Executives for Corporate Purpose (CECP), only 28.2% of surveyed corporations gave at least 1% in 2025, which means more than 70% of corporations no longer have any tax incentive to give.

That said, corporate giving is concentrated among companies giving at least 1%, which account for 89.2% of total dollars. What will no longer be tax deductible—contributions from corporations giving up to 1% and the first 1% from those giving more—will amount to about 26% of total corporate giving.

Nonprofits reliant on wealthy households or corporations could be hard hit

According to the report, these changes may further concentrate giving among major donors, even as the number of smaller donors grows. At the same time, nonprofits that rely heavily on donors in the top tax bracket or corporations could take a hit.

“We know, historically, that certain subsectors tend to be more favored by the wealthy,” such as higher education, said Bergdoll. But he cautioned nonprofits to look internally at their donor base to better project how these policies may affect them specifically. And the overall effect may not be all negative.

“For many years, we’ve heard calls for the donor base to be less top-heavy, less purely reliant on the wealthiest households. These policies, in aggregate, go in that direction—we’ll see about $10 billion less from the wealthy and corporations, and about $5 billion more from small and midsize donors per year,” he said. “I’m greatly interested to see how nonprofits react to this, and which nonprofits benefit versus struggle.”

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