The tax law changed the paperwork. It didn’t change why anyone gives.
Somewhere right now, a development office is drafting an email that begins, “With the new tax law taking effect, we wanted to make sure you’re aware of how your 2026 giving may be affected.” It will explain the new floor. It will mention the deduction for donors who don’t itemize. It will say nothing about the work those gifts make possible. It will be well-meaning, technically accurate, and a quiet confession that the organization has no idea why its donors give.
The law took effect on the first of January, and the sector has spent the six months since in a low-grade panic. Law firms and accounting practices have pushed out a steady stream of “What the New Tax Law Means for Your Donors” briefings, and the webinar circuit has discovered it can sell fear by the seat.
Here is what the panic is about. A donor in the top bracket used to deduct at 37 cents on the dollar; now she deducts at 35 cents. Itemizers face a new floor — the first half a percent of their income no longer counts toward the deduction. And the roughly 9 in 10 Americans who take the standard deduction, who could never write off a donation at all, can now deduct up to $1,000 of it, $2,000 for a couple.
Did you get all that? Be honest, because neither did your donors. Nobody sitting across a kitchen table is running a half-percent-of-income floor against a thirty-five-percent cap before deciding whether your work matters. That is the whole of it: two pennies, a floor, and – for the small and middle donors, the sector spends every conference lamenting it is losing – a modest new reason to give.
And what will all of it do to giving? Very little. The most careful estimate we have – from Indiana University’s Lilly Family School of Philanthropy – expects two things to happen at once. The new limits on wealthy and corporate donors will lower giving. The new deduction for non-itemizers will raise it and bring in several million first-time donors. Put the two together, and the net change is roughly one percent less giving than there would have been: more people giving, a little less money in total. Against the $617 billion Americans gave in 2025, that is noise. And we have already watched the law do the one thing it can actually do. When the Fundraising Effectiveness Project looked at early 2026 giving, the only real mark the new rules left was on timing – some donors had moved gifts into late 2025 to beat them. Those donors did not give more, and they did not give less. They gave the same money a few weeks earlier. The only thing the new law changed was the timing.
All of this raises a question the webinars never ask. If two pennies on the dollar can change how much your donors give – not when they give, but how much – then what were they giving for? Not the mission. Nobody who believes in your work walks away from it over two cents. The only gift you lose over a number that small is one that was never really about you in the first place. It was about the write-off, and every charity in the country offers the write-off on identical terms. Yours is worth exactly what the food bank down the street is worth, and not a penny more. Which is why an annual fund that rises and falls with the tax code was never built on what your donors believe. It was built on what they could deduct.
None of which means deductibility is nothing. It shapes how a gift is made and when. A donor who gives appreciated stock instead of cash skips capital gains tax. A donor past 70½ can make a direct gift from her IRA. A donor having a strong year bunches two years of giving into one, or opens a donor-advised fund and decides later where to direct it. These are real skills, and a shop without them loses gifts it had already earned – no one on staff knew how to receive what the donor was ready to give. But knowing how to take a gift is the easy part. It tells you nothing about why the gift was offered in the first place.
But that is the ceiling of what deductibility can do. It reaches the how and the when; it never reaches the whether or the why. No deduction ever made anyone care. The decision to give – and to give to you, instead of the hundred other groups that would happily take the same gift – is made before any of the tax math begins. The deduction doesn’t create the gift. It just lowers the tax bill on a gift the donor had already decided to make.
There is a hard, practical reason to avoid leading with the deduction, and it has nothing to do with idealism. A donor you win with a tax advantage stays only as long as the advantage does. Next year, her accountant finds her a better move – a donor-advised fund, a different way to bunch her gifts, a cause with a slightly better deal – and she takes it, because the deal was the reason she came. You never really had a donor. You had an arrangement that lasted one tax year. Lead with the write-off, and that is exactly what you build: a list of donors who belong to whoever offers the best terms that year, and those terms are identical at every charity in the country.
The shop that has done the real work doesn’t lead with any of this and doesn’t have to. It accepts a gift in whatever form it comes – stock, an IRA transfer, a bequest, a check, cash in a birthday card – because the relationship was there first, and the form is just the donor’s way of acting on it. Handling all of those isn’t a sign of tax expertise. It is a sign that the donor already trusts you and has stopped worrying about the mechanics.
All of which points back to the actual work, the work no tax bulletin can do for you. People give, and keep giving, when they can see themselves in what you do: when the cause has become partly theirs, when supporting it is part of how they understand who they are. You build that one relationship at a time, and done well, across a whole donor base, it is the only thing that truly scales because it is the only thing that holds when the tax rules change, the economy turns, or a flashier appeal comes along. A tax provision can be matched by every other nonprofit any time. A donor who believes in you cannot.
So, watch what your own donors do as the deduction shrinks. If they stay, you built something real, and the new rules are a footnote. If they leave over two cents on the dollar, that is painful, but it is worth knowing; the law didn’t take those donors from you, it only showed you that you never quite had them. What holds a donor through a tax change was never something a tax change could give you. You have to build it yourself, one donor at a time, in the same years you might otherwise spend explaining a new deduction to people who were never going to give because of one.
A tax form can assign a value to a gift. It can’t say why the gift was made, or why it was made to you. That was always the relationship. That was always your work. It still is.
That’s my two cents
If you’re reading this and thinking, “This sounds like us” — it probably is.
Hope is not a fundraising strategy. And the fix is rarely what organizations think it is — a new hire, a new database, a new campaign. Most fundraising problems start upstream, in leadership and system design. That’s where Foundry begins. And we don’t stop at the diagnosis — we build the fundraising infrastructure to back it up.
If you’re ready to find out what’s actually going on and do something about it, let’s talk.