How the One Big Beautiful Bill Can Affect Your Nonprofit

When Congress passes sweeping legislation, the details often get lost in the noise of political headlines. But if you run or serve a nonprofit, you can’t afford to miss the fine print. The recently enacted One Big Beautiful Bill Act (OBBBA) carries direct consequences for donors, foundations, corporations, and most importantly the communities your nonprofit exists to serve.

While some changes look like opportunities, others will increase pressure on already stretched organizations. The real question is not whether this bill is good or bad. It is how it will affect you.

In this article, we’ll break down the main provisions of OBBBA and explain how they might impact your nonprofit’s funding, strategy, and day-to-day operations.

OBBBA creates a new universal deduction: even if donors don’t itemize, they can deduct up to $1,000 ($2,000 for joint filers) in charitable contributions.

For nonprofits, this is welcome news. It gives fundraisers a clear talking point when engaging everyday supporters: “Even if you take the standard deduction, you can still deduct your gift.” Expect more households to test small-dollar giving, especially around year-end appeals.

But there’s another side. The law also adds a 0.5% of adjusted gross income (AGI) floor for itemizers. High-income donors now need to give more before their contributions become deductible. While the ultra-wealthy likely won’t flinch, mid-level philanthropists, those making gifts in the $5,000–$25,000 range, may reconsider their giving patterns.

Impact for nonprofits: Grassroots giving could grow, but some mid-tier donors may hesitate. Your fundraising team should reinforce impact and storytelling over tax benefits for this audience.

Under OBBBA, corporations must now contribute at least 1% of taxable income before their charitable gifts qualify for deductions.

For large corporations, this may be little more than an accounting adjustment. But for smaller and mid-sized businesses, it’s a significant barrier. Many local companies that donate modest amounts each year may scale back or stop if they no longer see tax advantages.

One bright spot: excess contributions can now be carried forward for up to five years. That flexibility creates opportunities for nonprofits to cultivate multi-year partnerships with corporate donors.

Impact for nonprofits: Expect fewer small corporate checks, but greater potential in long-term, strategic partnerships with larger companies.

Early drafts of OBBBA included a dramatic 10% excise tax on foundations with assets over $5 billion. That provision was stripped from the final version, which means large foundations remain powerful allies in the funding landscape.

However, new taxes still apply to foundation endowments and greater scrutiny now falls on executive compensation. Compliance costs may rise, and some foundations could tighten their grantmaking.

Impact for nonprofits: Major grants remain possible, but don’t assume the status quo. Foundations may shift priorities or reduce payouts in response to new compliance burdens. Build strong relationships and stay in dialogue about their evolving strategies.

Perhaps the most consequential impact for nonprofits comes not from charitable giving provisions, but from cuts in the rate of growth of Medicaid and SNAP (food assistance). OBBBA may reduce federal support over time for both programs while adding work requirements and other restrictions.

For nonprofits serving vulnerable populations, this means demand will likely rise. Food banks, free clinics, housing ministries, and other human service providers may see more people at their doors as government benefits shrink.

Impact for nonprofits: Increased demand without increased funding. Organizations will need to brace for heavier caseloads, strengthen volunteer networks, and diversify income sources.

OBBBA introduces a dollar-for-dollar tax credit for donations to Scholarship Granting Organizations (SGOs), which fund private school vouchers, religious education, and even homeschooling programs.

This provision is generous, uncapped, and designed to pull donor attention toward education. For nonprofits outside that space, there is the possibility that donors may redirect dollars that once went to general charitable work.

Impact for nonprofits: If you work in education, this may be a funding opportunity. If not, you’ll need to sharpen your case for support to compete with this strong tax incentive.

The OBBBA landscape is complex, but nonprofits are no strangers to complexity. Here are practical steps to take now:

1. Educate your donors. Use the universal deduction as a fundraising hook: “Even if you don’t itemize, your gift is deductible.”
2. Reinforce value for mid-level donors. Don’t rely on tax benefits alone. Tell impact stories that make giving meaningful.
3. Cultivate long-term corporate partnerships. Show businesses how they can maximize carryforward provisions by planning multi-year gifts.
4. Stay close to foundations. Ask how the new rules affect their priorities. Position your nonprofit as a reliable, aligned partner.
5. Plan for higher demand. If you serve health or hunger needs, start preparing now for more clients with fewer government supports.
6. Sharpen your message. Stand out against education-focused incentives by clearly articulating why your mission matters right now.

The One Big Beautiful Bill Act is neither an outright win nor a devastating loss for the nonprofit sector. It is a mixed package that opens some doors while closing others.

What is clear is that the stakes are high. From shifting donor behaviors to rising community needs, your nonprofit will feel these changes sooner rather than later.