Charitable Giving Incentives & Federal Policy Impact

Charitable Giving Incentives: What Federal Policy Means for Fundraisers

Recent federal tax legislation has brought the most significant changes to charitable giving policy in decades. Through sustained advocacy, AFP helped secure meaningful improvements to the tax code that expand incentives for charitable giving, while also preventing harmful proposals that would have undermined philanthropy.

Most notably, the enactment of H.R. 1 included the bipartisan Charitable Act, restoring a charitable deduction for non-itemizers and creating new opportunities to engage everyday donors. At the same time, the law introduced new limitations affecting itemized and corporate giving that fundraisers should understand as they plan for the years ahead.

AFP continues to lead at the federal level to:

  • Protect and expand charitable giving incentives
  • Prevent policies that discourage generosity
  • Ensure nonprofit voices are represented as tax and budget decisions are made

To learn more, visit the following resources: 

AFP Advocacy Wins in H.R. 1

✔ What AFP Helped Secure

Restoration of the Charitable Deduction for Non-Itemizers: AFP strongly supported inclusion of the Charitable Act in H.R. 1, restoring an above-the-line charitable deduction for taxpayers who do not itemize.

  • Up to $1,000 for individuals and $2,000 for couples
  • Permanent beginning in tax year 2026
  • Available to roughly 90% of taxpayers
  • Expands incentives for everyday and first-time donors

This change represents one of the most significant charitable giving victories in decades and reflects years of bipartisan advocacy by AFP and its partners.

✔ Harmful Proposals Prevented Through Advocacy

AFP and its coalition partners successfully blocked several proposals that would have negatively affected nonprofits and donors, including:

  • A proposed 10% tax on Combined Federal Campaign contributions
  • An increase to the private foundation excise tax
  • Expansion of Unrelated Business Income Tax (UBIT) to routine nonprofit activities
  • Proposals granting the Executive Branch authority to revoke nonprofit tax-exempt status

These outcomes protected nonprofit independence and preserved vital funding streams.

Tax Benefits

New Limits That Could Affect Giving

While H.R. 1 expanded access to charitable deductions, it also introduced new constraints that may affect donor behavior:

Itemized Giving

  • 0.5% AGI floor before charitable deductions apply
  • 35% cap on total itemized deductions

Corporate Giving

  • New 1% floor on corporate charitable deductions
  • Gifts must exceed 1% of taxable income to qualify
  • Expected to affect small and mid-sized business giving

What this means for fundraisers: These changes may shift the timing, structure, and size of gifts—making donor education and strategic planning more important than ever.
 

Fundraiser talking to donors

Why This Matters for Fundraisers

Federal tax policy directly affects how and when donors give. These changes reinforce several key trends:

  • Increased importance of small- and mid-level donors
  • Greater need for donor education and messaging clarity
  • Stronger role for fundraisers as trusted guides in charitable planning
  • Heightened importance of planned giving, QCDs, and multi-year strategies

AFP is working to ensure fundraisers have the tools and guidance needed to adapt to this evolving environment.
 

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AFP’s Ongoing Advocacy Priorities

AFP continues to advocate for:

  • Strong charitable giving incentives
  • Protection of nonprofit independence
  • Sensible data privacy policies that preserve donor trust
  • A stable federal–nonprofit partnership
  • Predictable and transparent federal funding processes

As federal policy continues to evolve, AFP remains committed to ensuring that fundraisers’ voices are heard and that charitable giving remains strong, accessible, and protected.

PAC

Donate to the AFP PAC

Your gifts to the AFP PAC have helped us secure key policy wins, such as the inclusion of the non-itemizer deduction in H.R. 1, that strengthen philanthropy nationwide. Your continued support ensures AFP can keep advancing critical federal priorities that protect charitable giving, empower fundraisers, and sustain the nonprofit sector for the future.

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