Part 1: Why 2025 Could Be Your Best (and Worst) Year Yet

Get ready for the biggest changes to charitable giving in decades. In this two-part series, we'll break down everything nonprofit leaders need to know about the new tax law that's about to reshape fundraising forever. Part One covers what's changing and why it matters. Part Two will give you the exact action plan to turn these changes into your organization's advantage.

Big changes are coming to how Americans give money to charity. A new law called the “Big Beautiful Bill” will help some donors and make things harder for others. These changes could reshape how nonprofits raise money for years to come.

The Great Donor Divide: Winners and Losers in the New Tax Game

The new law treats everyday people and wealthy donors very differently.

For Regular People: Finally, a Break

Starting in 2026, Americans who don’t itemize their taxes can get a tax break for giving to charity. Single people can deduct up to $1,000, and married couples can deduct up to $2,000 (Gose, 2025). This is big news because most people haven’t gotten tax breaks for giving to charity in years.

Shannon McCracken from the Nonprofit Alliance says this change shows that “all giving levels are valuable — not just those gifts coming from higher-income people” (Gose, 2025).

Fewer people give to charity now than before. In 2008, nearly two-thirds of Americans gave to organized charities. Today, fewer than half do (Gose, 2025). The 2017 tax changes made this worse by taking away tax benefits for most donors.

For Wealthy People: The Party’s Over

Rich donors who itemize their taxes face new rules. They must give at least 0.5% of their income before they get any tax break. The law also caps their deductions at 35%, lower than the current 37% limit (Childress, 2025).

These changes create an interesting situation for 2025. Experts think wealthy donors will give more money this year before the new limits start in 2026.

The Great Money Grab of 2025: Why Rich Donors Are Racing Against Time

Fundraising experts are telling their wealthy clients to give money faster. Laura MacDonald from the Benefactor Group explains: “Donors may want to speed up their ‘26 payments and make them in ‘25 when they can take full advantage of the existing 100 percent deduction” (Childress, 2025).

History shows this will probably happen. When tax laws changed in 2017, donors gave an extra $4 billion before the changes took effect (Childress, 2025).

Brian Flahaven from the Council for Advancement and Support of Education expects the same thing: “I think you'll see a spike in giving this year” (Childress, 2025).

But there’s a warning: Marlissa Hudson from English Hudson tells nonprofits: “Please don’t look at that big jump and make your budget for 2026 based on what happened in 2025” (Childress, 2025).

The Secret Weapon Rich Donors Are Using: Donor-Advised Funds

One important part of the new law could change how wealthy people give money. Donor-advised funds (DAFs) are like savings accounts for charity. You put money in, get a tax break right away, then decide later which charities to support.

The new tax break for regular people won’t work with DAFs (Gose, 2025). As a result, everyday donors will give directly to charities instead of using these “giving warehouses.”

But wealthy donors might use DAFs even more in 2025. They could put lots of money into DAFs this year to get the full tax break, then give that money to charities over several years. This lets them get the biggest tax benefit while keeping flexibility for future giving.

The Growing DAF Market Opportunity

The numbers around DAFs are staggering. The market is experiencing explosive growth with 10% year-over-year asset increases and growth that’s 214 times faster than non-DAF revenue. DAF gifts are also 19 times larger on average than regular donations.

However, there are major gaps in this market. Less than 1% of Americans currently have DAFs, and 70% of DAF holders earn over $200,000. Perhaps most importantly for nonprofits, 60% don't even know which of their donors have DAFs. Even more striking: only about 20% of the $250 billion sitting in DAF assets is distributed to nonprofits each year.

Here’s the key insight for nonprofits: An average of 87% of charities that ask for a donor-advised fund gift receive a contribution within 3 years, compared with 42% of nonprofits that do not ask. Simply soliciting a DAF gift increases your likelihood of receiving one by 45%! (Lilly Family School of Philanthropy, 2020)

New Players Changing the Game

The traditional DAF world is being shaken up by new platforms targeting younger donors. Take GoFundMe, for example. Known for crowdfunding campaigns, GoFundMe has launched “Giving Funds” as what they call a “better kind of DAF.” Their approach targets next-generation givers who include giving in their financial planning, expect digital-first solutions, and value transparency.

GoFundMe’s entry into the DAF space shows how the market is evolving. Instead of the traditional model where wealthy donors park money with little urgency to distribute it, newer platforms promise to promote active giving and connect nonprofits with an expanding donor base through seamless, no-additional-work integration.

For nonprofits, this shift could mean access to GoFundMe’s large existing user base, larger gift sizes typical of DAF donations, and easier ways to tap into the growing DAF market without operational burden. Learn more about GoFundMe’s Giving Funds here.

However, there’s an important relationship challenge: Many nonprofits struggle to build connections with DAF donors. Research shows that 78.6% of organizations that received DAF gifts had been in contact with their donors, but donor contact remains the biggest concern about DAFs among nonprofits. The challenge is that sponsoring organizations act as intermediaries, making it harder for nonprofits to communicate directly with donors (Lilly Family School of Philanthropy, 2020).

This creates both a challenge and opportunity for nonprofits. They might get more direct gifts from everyday donors starting in 2026. But they might also get more money through DAFs from major donors, and the key will be finding platforms and approaches that preserve the donor relationships that drive long-term giving.

The Billion-Dollar Question: Who Wins and Who Loses?

Research from Indiana University shows the 35% cap could decrease giving by $2 billion to $8.2 billion each year. That's a drop of 1.6 to 6.3% in total giving (Childress, 2025).

The impact depends on how much money people make. A family earning $400,000 would need to give more than $2,000 to get any tax benefit under the new rules (Childress, 2025).

But the good news is the new break for regular donors could bring in lots of new giving. Experts think it could create up to $20 billion per year in extra donations (Gose, 2025). This would especially help smaller, community-focused organizations.

The New Rules of the Game: What Every Nonprofit Needs to Know

Small Organizations May Hit the Jackpot

The new tax break for regular people helps organizations where $2,000 is a big gift. As McCracken says, this means “more organizations and more causes will be supported, including those that are working very much at the community level” (Gose, 2025).

Communication Just Got Complicated

Nonprofits must talk to different donors in different ways. Wealthy donors should hear about giving urgently in 2025. Regular donors should learn about their new tax benefits starting in 2026.

The Relationship Game Changes Everything

Wealthy donors may bunch their giving by donating lots one year, then skipping the next year (Childress, 2025). With more DAF use, nonprofits must work harder to stay close to their major donors.

In Part Two, we’ll reveal the insider strategies nonprofit leaders are using to turn these changes into their biggest opportunity yet.

References:

Childress, R. (2025, July 31). Big gifts and the new tax law: Boom now, bust later? The Chronicle of Philanthropy.

Gose, B. (2025, July 29). Will the new $2,000 tax break bring back everyday donors? The Chronicle of Philanthropy.

Lilly Family School of Philanthropy. (2020). Nonprofits and donor-advised funds: Perceptions and potential impacts. Indiana University.

Citation: Anderson, Charity & Gilpin, Staci. (2025). Part 1: Why 2025 Could Be Your Best (and Worst) Year Yet. Rural Pathways News.