Leaning Into the 2025 Tax Law: Why Fundraisers Must Step Up as Guides for Donors

Donors don’t support their favorite nonprofits because of the tax benefits, but it certainly is a nice sweetener, so when tax laws change, the ripple effects on donor behavior can be profound. The 2025 tax law’s impact on the tax deductibility of charitable gifts is so significant that the changes demand our attention, our preparation, and, most importantly, our willingness to talk openly with donors about how to give in the most tax-efficient way possible.

I know what you might be thinking: “I’m not a tax advisor—I don’t want to wade into this.” But here’s the truth: we don’t need to give tax advice. We do need to understand the basic concepts well enough to point donors toward the giving tools and strategies that will help them continue supporting the causes they love while maximizing their tax benefits. 

And right now, the 2025 tax law changes are a perfect opportunity to do just that. Otherwise, donors may learn just enough about these changes to pause their giving altogether when you could be helping them to lean in. 

Why This Matters Now

Starting in 2026, donors who itemize will lose the deductibility of the first 0.5% of their Adjusted Gross Income (AGI) for charitable contributions. For a household earning $200,000, that’s the first $1,000 of giving. For someone earning $800,000, it’s the first $4,000. That shift will feel like a penalty to many—especially those accustomed to deducting every dollar they give.

For C-Corps, also known as corporations, the floor will be even higher: the first 1% of Adjusted Taxable Income won’t be deductible, and the overall cap on deductions remains at 10%. Smaller corporate gifts—often the bread and butter of local sponsorships—just became less tax-efficient.

On the flip side, there’s good news:

• The SALT deduction cap has been raised to $40,000 for those with AGI under $500,000, which may prompt more donors to itemize again—especially in high-tax states.
• Qualified Charitable Distributions (QCDs) from IRAs remain one of the most tax-efficient giving tools available, allowing donors 70½ or older to donate directly from their IRA, up to $100,000 per person in 2025, and $108,000 in 2026 without it counting as taxable income.
• Donor-Advised Funds (DAFs) will help high-AGI donors sidestep the new 0.5% deductibility loss every year if they bundle multiple years of giving into one tax year. And if you encourage them to do this in 2025, that eliminates the impact of the 0.5% floor altogether…at least for the next several years.
• The vast majority of taxpayers do not itemize their taxes. This tax law brings back and expands upon the universal charitable deduction, which was included in the 2020 CARES Act, allowing those taking the standard deduction to deduct $1,000 for individuals ($2,000 for couples), creating a renewed incentive for broader charitable giving.
• This higher standard deduction is now permanent, unlike the CARES provision, which was allowed to expire in 2021. This certainty may now motivate some donors sitting on the fence to finally open a Donor-Advised Fund and reap the rewards.

The Opportunity Hidden in the Pain Point

The new AGI floors will cause discomfort—even frustration—for many donors. But I believe this “pain point” is actually a gift for the nonprofit sector. Why? Because it will nudge donors to shift from giving out of their monthly cash flow (via checks or credit cards) to giving out of their wealth—particularly from DAFs and retirement accounts.

For decades, we have been content to simply and gratefully process the gifts donors initiate by credit card or check. The 2025 tax law changes give us the perfect reason—and the urgency—to start proactive, one-to-one conversations about tax-smart giving strategies. When donors understand that giving from wealth can be both more tax-efficient and more impactful, they are far more likely to make larger, more intentional gifts. They will also be surprised at how easy it is to give from these sources, once they have that initial conversation with their financial advisor that gets the ball rolling. And the easier it is to give in these ways, all the better for nonprofits.

Our Role as Fundraisers

We are not here to file tax returns for donors. But we are here to ensure they understand the giving tools available to them—and to help them see how these tools can keep their charitable impact strong even as the rules change. That means:

• Knowing the terminology. Every member of your development team should be fluent in concepts like Donor-Advised Fund, Qualified Charitable Distribution, Required Minimum Distribution, and the difference between standard deduction and itemizing. If you don’t know them, you can’t confidently discuss them.
• Understanding donor psychology. Some donors see tax benefits as a secondary motivator. For others, the tax efficiency of a gift is part of what makes it possible in the first place. In either case, being able to articulate the advantages of giving through DAFs, IRAs, or appreciated stock is a service to them.
• Role-playing the conversation. These topics can feel intimidating, both for fundraisers and donors. Practice how to bring them up naturally:
  • Beginning version: “You might already know that the tax law changes taking effect in 2026 will impact how to maximize the tax benefits of your donation. Have you had a chance to talk with your advisor about giving from your IRA if you qualify? That’s going to be the most tax-efficient move you can make.”
  • Intermediate version: "I don’t know if you are taking the standard deduction like most taxpayers next year, but did you know the new tax law allows you to take up to $1,000 single /$2,000 married right off the top starting in 2026? So, keep your donation receipts!
  • Advanced version: “We are so grateful for your support of our mission and want to help you donate as smartly as possible. Have you considered opening a DAF yet? With the new tax laws going into effect in 2026, now is the best time to open one up to maximize your tax benefits by bundling your charitable giving into one taxable year. Would you like me to explain how this works?"

Partnering Across Your Organization

Your fundraising team shouldn’t be the only ones prepared for these conversations. This is a moment to bring marketing and communications into the strategy. Articles in your newsletter, and social media posts timed for year-end giving, can educate donors about tax-smart giving options.

Work with your marketing/communications team to create:

• A one-page donor tip sheet on giving through IRAs, DAFs, or appreciated stock.
• Short, clear stories featuring donors who have used these methods to increase their impact.
• Timely reminders in donor publications about the benefits of consolidating giving from your DAF or making QCDs before year-end.

Turning Law Changes Into Donor Action

Here’s what I recommend you do before the end of this year:

1. Get your team trained. Invest in a briefing so every fundraiser understands the 2025 tax law changes and can speak confidently about the basics. They take effect 2026 but you want to influence donor behavior now.
2. Update your prospecting strategy. Identify donors most likely to benefit from giving through DAFs, IRAs, or appreciated stock, and create tailored outreach for them.
3. Gear up on having QCD conversations. For nonprofits with an aging donor base, you are in luck. This is the most tax advantageous way to give and it is the most underutilized play out there. This is your growth opportunity!
4. Prepare major donor conversations now. These changes don’t take effect until 2026, but year-end 2025 is when many donors can move funds now that help them avoid taxes next year.
5. Engage corporate partners early. For C-Corps, the 1% floor may push them toward larger, consolidated gifts or multi-year sponsorship agreements. Present them with this opportunity – with a multi-year benefits plan, a commitment to spend their funds over time, and paid for up front.
6. Communicate broadly. Use every channel to reinforce that your organization can help donors navigate the road ahead.

The Bottom Line

The 2025 tax law changes are not a reason to panic—they are a reason to prepare. Yes, the complexity can feel daunting. But the real danger is in ignoring the conversation altogether. If we stay silent, donors will get their information elsewhere—or, worse, they’ll reduce their giving simply because they don’t know their options.

Our job is to make this simple. To say, “Here are the changes, here’s what they mean for your giving, and here are the tools that can help you keep supporting the missions you care about.”

The nonprofits that lean in now—that train their teams, update their strategies, and talk openly with donors about tax-smart giving—will not only weather the changes ahead, but thrive in them.

Because when donors see that you can help them navigate both their philanthropic goals and their financial reality, you become more than a cause they care about. You become a partner they trust.