Last year’s major tax legislation could motivate millions of individuals to become charitable givers, according to a recently released study. However, the report predicts their increased donations will not offset likely losses in dollars for the nonprofit sector at large due to the law’s new limitations on wealthy givers and businesses.  

The One Big Beautiful Bill Act (OBBBA), enacted last summer, established a permanent charitable deduction for taxpayers who don’t itemize, allowing up to $1,000 in an above-the-line benefit for donations ($2,000 for married couples filing jointly). ECFA advocated for this provision as the legislation worked its way through Congress. 

The report, published by the Lilly Family School of Philanthropy at Indiana University, suggests this new nonitemizer deduction could grow the number of donor households by roughly 8 million. It estimates these new donors would add about $4.39 billion to annual giving in the U.S. 

However, the university researchers also believe OBBBA’s new floors on corporate and individual itemized giving, as well as a 35 percent cap on total itemized deductions, will discourage other dollars. For example, the law’s 0.5-percent-of-AGI floor for individuals means a married couple with a joint AGI of $100,000 will now find their first $500 in itemized donations to be taxable. This policy alone would likely lead to $2.43 billion less in gifts, according to the report. Overall, the study projects a net decline of roughly $5.69 billion. 

The university announcement did suggest that various nonprofits may experience these changes differently. For example, “organizations whose giving comes disproportionately from households in the top 37 percent tax bracket or that rely heavily on corporate giving could see a larger impact,” it said. It also noted that gift timing and structures could change for some, and that nonprofits’ intentionality in alerting donors about new opportunities could be significant. 

Greg Hagin, Managing Partner at CCS Fundraising, the report’s sponsor, said, “This is a moment for nonprofits to adapt with clarity by educating supporters and refining strategies that welcome both major contributions and the cumulative strength of smaller gifts.”  

“At CCS, we view shifts like these as catalysts for more resilient fundraising,” he added.

While the OBBBA study findings are concerning for donation trends overall and should raise questions about the new law’s giving inhibitions, ECFA welcomes its predictions that the nonitemizer deduction will stir new donors. ECFA’s 2025 State of Giving report, which documented a 1.5 percent inflation-adjusted increase in cash giving for ECFA-accredited churches and ministries, also suggested demand for their programs continues to grow. Reinforcing a habit of giving among all taxpayers, whether they itemize or not, is imperative. 

“ECFA will continue to support efforts honoring and encouraging open-handed generosity of Americans as they donate selflessly to empower acts of charity in local communities and around the world,” said ECFA President and CEO Michael Martin.