Some Wins, Some Losses; But Many Challenges Ahead

In a policy landscape that often feels like an uphill battle, the nonprofit sector recently witnessed both hard-earned victories and sobering setbacks with the passage of the latest federal tax legislation. When the House Ways and Means Committee released its initial draft of the bill in May, it included a range of proposals that posed serious threats to the vitality and independence of nonprofit organizations. Fortunately, thanks to swift and coordinated advocacy by AFP (Association of Fundraising Professionals) and a coalition of partners, the nonprofit voice was heard.

Together, nonprofit professionals across the country mobilized—contacting legislators, submitting testimony, and raising public awareness about the potential consequences. These efforts helped strike some of the most harmful provisions from the final legislation, including a proposal that would have allowed the IRS to revoke an organization’s tax-exempt status without due process. A proposed tax on foundations and nonprofits was also successfully blocked.

One particularly meaningful win was the improvement to the universal charitable deduction. What began as a temporary and limited deduction in the House version—$150 for individuals and $300 for joint filers—was ultimately expanded and made permanent in the final bill, thanks in part to bipartisan support in the Senate. The deduction now stands at $1,000 for individuals and $2,000 for joint filers, signaling a significant step forward in incentivizing charitable giving for everyday donors.

But the road ahead is far from clear.

Despite these successes, the final bill includes provisions that could have a chilling effect on charitable giving. The new 1% floor on corporate charitable deductions is projected to reduce giving by an estimated $4.2–$4.8 billion annually. This change could discourage corporate philanthropy at a time when community needs are escalating. In addition, a new cap on the value of deductions for high-income taxpayers may cut giving by another $4.1–$6.1 billion, making major gift fundraising even more challenging for many nonprofits.

Meanwhile, parallel cuts to critical public programs like Medicaid and SNAP are expected to drive more individuals and families to seek assistance from nonprofit service providers—just as those same nonprofits may find themselves with fewer resources to meet rising demand. The combination of decreased revenue and increased need is a recipe for strain that no amount of ingenuity or resilience can fully offset.

Still, this moment offers a blueprint for the future. The collective advocacy that influenced this legislation—especially the improvements to the charitable deduction—demonstrates what’s possible when the nonprofit sector speaks with a united voice. Years of organizing, educating, and pushing for policy change helped lay the groundwork for these outcomes.

Our sector must remain vigilant, informed, and proactive. Policy change is not a one-time event; it is an ongoing process. By continuing to engage, speak up, and support one another, we can shape a legislative environment that truly reflects the values and needs of the communities we serve.