Top Impacts of the OBBBA for Nonprofits
- Kiwi Partners
- Aug 5
- 4 min read
The Tax Relief for American Families and Workers Act of 2025, also known as the One Big Beautiful Bill Act (OBBBA) was signed July 4th , 2025. In this two-part virtual conversation, Richard Hetherington, VP of Accounting Services at Kiwi Partners, shares expert insights with Alice Chin, Director of Marketing and Strategic Communications, on how the OBBBA could reshape nonprofit funding.
Richard outlines the top three areas of impact for nonprofits—including changes to charitable giving rules—and offers practical strategies to help nonprofit leaders prepare for what’s ahead.
🎥 [Watch Part 1] – Richard outlines the top 3 impacts for nonprofits, focusing on changes to charitable donation allowances for individuals and corporations.
🎥 [Watch Part 2] – Richard dives deeper into how corporate giving behaviors may change—and what nonprofit leaders can do now to prepare.
The Top 3 Ways the 2025 Tax Bill May Affect Nonprofits
While the Tax Bill 2025 introduces some tax breaks for businesses and individuals, it also presents real challenges for nonprofits. The top three areas of impact of concern:
Reduced incentives for charitable giving
Increased audit risk for tax-exempt organizations
Greater demand for nonprofit services due to cuts in federal support programs like Medicaid and SNAP
Charitable Deduction Limits: What’s Changing?
There is a win for nonprofits: individuals who don’t itemize can now deduct up to $1,000 ($2,000 for joint filers) for charitable donations. However, the bill reduces the appeal of charitable giving for individuals who itemize. With new floors and ceilings on deductions, high-income donors may find fewer tax advantages to support their giving.
For Individuals:
A new deduction is available for those who don’t itemize:
Up to $1,000 for individuals
Up to $2,000 for joint filers
For itemizers, there’s a new itemized deduction floor of 0.5% of Adjusted Gross Income (AGI).
Example: Individual has $100k AGI
Donations up to .5% of AGI ($500): not deductible.
Donations beyond $500: deductible.
Must exceed floor. Anything in excess can be claimed.
Therefore, if the individual donated $600, only $100 can be claimed.
For Corporations
A new charitable deduction floor of 1% of taxable income is introduced.
Example: Company X has $10 million in taxable income.
o 1% of $10M = $100,000.
o Donations up to $100,000: not deductible.
o Donations beyond $100,000: deductible.
o Donations that exceed the 10% ceiling can be carried forward up to 5 years
How the 2025 Tax Bill Could Impact Nonprofit Funding: A Closer Look at Corporate Giving
As nonprofits prepare for the changes introduced by the 2025 Tax Relief for American Families and Workers Act, many nonprofit leaders are asking: How much funding is at stake?
Conflicting Forecasts: Government vs. Independent Analysis
The government's projection of impact is vastly different from some independent sector analyses.
U.S. Government estimates corporate giving could increase by $1.6B*
EY Independent study predicts a $4.5B annual decrease in corporate giving**
National Council of Nonprofits project nonprofits could lose $8.1B a year in funding*
How Corporate Giving Behavior Might Shift
Pause Giving to Reevaluate
Some corporations may pause giving to reassess their philanthropic approach under the new tax law.
Accelerate Donations in 2025
Some businesses may give more in 2025 before new legislation goes into effect.
Bundle Giving to Maximize Deductions
Starting 2026, corporations may bundle their giving, in order to maximize tax advantages. For example, instead of a $1M donation on a yearly basis, a business may choose to bundle 3 years' worth of giving in a single year and pause charitable giving in the following 2 years.
How Nonprofit Leaders Can Prepare for Potential Changes in Charitable Giving
Proposed changes in the 2025 Tax Bill—including the introduction of a “giving floor”—could significantly impact nonprofit funding, especially from corporate donors. With less favorable tax incentives on the horizon, nonprofits must be proactive to protect their financial health.
Below are 8 strategic actions—3 external and 5 internal—that nonprofit leaders can take now to build resilience.
Strategy With External Parties | Action |
1. Educate Donors | Proactively communicate how tax law affects giving and highlight the long-term impact and non-financial value of contributions. |
2. Cultivate Legacy Gifts | Planned giving options (bequests, trusts, or donor-advised funds) may be more attractive in a tax-constrained environment. |
3. Diversify Funding | Reduce reliance on corporate philanthropy by exploring earned income options, such as fee for service contracts or investing in seasonal cash liquidity (e.g., high interest rates CDs and other investments) |
Internal Strategies to Strengthen Financial Resilience | Action |
1. Run Scenario Planning & Cash Flow Models | Prepare for giving volatility & budget wisely |
2. Build Operating Reserves | Reduce expenses in 2025 to help increase reserves. |
3. Track Pledges vs. Payments | Tighten internal tracking of pledged vs. received donations. Encourage early payment of multi-year pledges. E.g. ask donors if they can pay pledges by EOY 2025. Collect old receivables before 12/31/25. |
4. Train Board/Finance Committee on Legislation | Ensure informed oversight as new legislation takes effect. |
5. Adopt Flexible Budgeting | Enable nimble responses to funding variability |
The New Bill could bring major changes to the nonprofit funding landscape for years to come - but you don't have to face these challenges alone. At Kiwi Partners, we’ve helped mission-driven organizations navigate financial, operational, and regulatory changes since 1998.
Whether you need help with cashflow modeling, strategic planning, or board training, our nonprofit accounting consultants are here to support you.
Richard Hetherington, CPA, MBA, joined the Kiwi Partners team in 1999 and has over twenty-six years of experience across the legal, financial, and nonprofit sectors. Richard has provided CFO services to over 60 nonprofits clients, providing strategic financial oversight and collaborating closely with internal accounting teams to strengthen financial operations and reporting.
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