How to Build a Fundraising Strategy Using the New Tax Law

If you work in nonprofit fundraising, you've probably heard about the One Big Beautiful Bill Act (OBBBA) and the changes it made to charitable tax deductions. If your first reaction was confusion, you're not alone. The federal tax code is complicated, and it's even harder to build a fundraising strategy around something you don't fully understand yet.

However, it's worth understanding how your donor's charitable tax deduction now works.

Why? It represents one of the best opportunities to build a fundraising strategy that permanently changes how your major donors give, and how much they give.

Why a Tax Law Change Is a Strategy Opportunity

Behavioral economics tells us that people are more motivated to avoid a loss than to pursue an equivalent gain. Starting in 2026, itemizing donors, many of whom are your major donors, will no longer be able to deduct the first 0.5% of their adjusted gross income (AGI) given to charity each year. For a household with $400,000 in AGI, that means the first $2,000 they give isn't deductible. ($400,000*.05%=$2,000) 

That's a real loss, and that’s every year. As soon as major donors realize they aren’t getting the larger tax deduction they expect, they won’t be happy. It may actually cause them to pull back their giving. The Indiana University Lilly Family School of Philanthropy estimates OBBBA could reduce charitable giving by roughly $5.69 billion a year, largely driven by this change. 

Here's the flip side: confusion creates the opportunity for you to provide guidance to donors. And because donors dislike losing a deduction, they're now unusually open to guidance from the fundraiser they already trust. You. If you build a fundraising strategy that meets donors at this exact moment, you're not just protecting your revenue from a downturn. You're opening the door to conversations you couldn't have had before and laying the groundwork for major growth.

The Building Blocks of a Tax-Smart Fundraising Strategy

I’ve coined the term “Generosity Guide” to help you envision exactly how you, the professional fundraiser, can ignite generosity by helping donors navigate tax-smart giving options and bridge the gap between donors and their financial advisors.

Your job as a Generosity Guide is twofold: (1) to increase your donor’s awareness of these tax code changes that may affect them negatively and (2) to point them towards their tax advisor or financial professional armed with one key question: “What are the best tax-smart giving options for me under the new tax law? Charitable giving is important to me.”

You don't need a CPA or a CFP certification to have this simple conversation. You’d be amazed, though, how motivated your donors will be to put the wheels in motion once you signal they might lose a benefit and that other donors are starting to give in tax-smart ways. 

Background That Should Give You Confidence in a Tax-Smart Fundraising Strategy

Why do you want your donors to ask their financial advisor about tax-smart giving? Because all tax-smart charitable giving strategies lead to wealth giving. And once your donor starts giving to you from wealth, instead of from their checking account, strong research shows that it can lead to fivefold growth over time. 

As a fundraising professional, you are not a tax advisor and should not be giving any specific advice to a donor. I repeat: do not give any specific tax advice to a donor. However, here are the three tax-smart strategies you might want to be familiar with to give you confidence in the strategy. These are three of the major strategies donors are likely to hear from financial professionals.

Donor-Advised Funds (DAFs)

Since a donor gets their tax deduction the year they fund their DAF, not when grants go out to nonprofits, this presents a great tax-smart workaround for donors. How? Donors can “bunch” several years of giving into one DAF contribution and take one larger deduction instead of getting dinged by the 0.5% floor every single year by donating directly to nonprofits from their checking account. In one illustration, a $400,000 AGI household giving $2,500 a year in cash claims only $2,000 in total deductions over four years. The same household bunching $10,000 into a DAF in year one claims $8,000, four times the deduction, for the same total gift.

Qualified Charitable Distributions (QCDs)

For donors 70½ and older, a QCD lets them give directly from a traditional IRA and is 100% tax-exempt. It sidesteps the 0.5% floor entirely and applies whether the donor itemizes or takes the standard deduction. In 2026, donors can give up to $111,000 per person, or $222,000 per couple, this way (adjusted upwards for inflation every year). Additionally, for donors 73 and older, a QCD is even more tax advantageous. They are required to take Required Minimum Distributions from their IRA every year, which are taxable as income, unless they give it to a nonprofit instead as a tax-exempt gift. So, charitable gift vs. paying income tax on those funds? I know which one I would choose if given the choice. 

Appreciated Securities

Donors who give stock, index funds, mutual funds, bonds, etc. – instead of cash – avoid capital gains tax on the appreciation, and their gift costs them less than what it's actually worth to your organization. It doesn’t sidestep the .5% annual ding, but it’s a far better tax-smart move than donating from a checking account. (And the advisor can also show their client how to take further steps to sidestep the .5%, but that’s again, their job, not yours.)

Let the Financial Professional Advise Your Donors. You Just Need to Get the Ball Rolling

Having these tax-smart strategies in the back of your mind should give you confidence to motivate your donors to talk to their financial advisor. Then let the advisors do the rest. These experts will know what works best for their clients. They will also be in a position to help set up the paperwork so that your donors start giving from wealth.  

Where the Growth Actually Comes From

Dr. Russell James, a professor at Texas Tech University, analyzed more than one million tax returns across over 250,000 nonprofits over five years. His finding: organizations that receive any noncash gifts grow 5 to 6 times faster than organizations that rely only on cash gifts.

The reason is straightforward. Only about 3% of a donor's assets typically sit in a checking account, the money used to pay bills and cover disposable expenses. The other 97% is wealth: investments, retirement accounts, appreciated stock, assets set aside for the future. A fundraising strategy built only around cash asks is competing for a sliver of what a donor actually has to give.

A strategy built around tax-smart, wealth-based giving opens up the rest.

That's the whole point of building your fundraising strategy around tax-smart giving. OBBBA creates confusion for major donors and decreases their charitable tax deduction if they itemize. This gives fundraisers a natural conversation starter with donors that can lead them to change their giving behavior to non-cash asset giving, also known as wealth giving. 

Instigating behavior change is hard. But if you are willing to step into this new role as a Generosity Guide and start the conversation, you will be rewarded. The loss of a donor’s expected tax deduction and the awareness that others are finding tax-smart ways to give motivates them to change their giving behavior in ideal ways for both you and your nonprofit.

Building a fundraising strategy around tax law doesn't involve becoming a tax expert at all. It requires a willingness to have a different kind of conversation with your major donors and point them in the right direction.  

The Generosity Guide™ High-Growth Major Gifts Framework

This article is just the surface of what you can accomplish using the Generosity Guide™ High-Growth Major Gifts Framework at your nonprofit. Schedule a Discovery Call with Donor Boom to learn conversation starters, optimal timing, internal and external readiness steps to take, and more. 

Build your new fundraising strategy around the research-backed Generosity Guide™ High-Growth Major Gifts Framework and start reaching your high-growth fundraising goals.

Donor Boom is not a tax advisor, and neither are you if you're a fundraiser. But you can become a Generosity Guide. Always consult a professional tax advisor for tax advice.