Tax Law Change in 2026: Fundraising Risks, Opportunities, and a Game Plan

The tax landscape is changing — and so should our fundraising.

2026 will bring one of the biggest shifts in charitable tax policy in recent years. For nonprofit fundraisers, it’s critical for us to understand how these policy changes will likely impact donor behavior in the coming year.

The good news? This may be an opportunity to grow donor engagement, not lose it.

So what’s changing? Well, there’s something in it for almost everyone.

Here’s a quick breakdown (and we promise it will be quick, we know tax law isn’t the most exciting …) on what’s coming and how we may see this play out across audiences:

• A New Deduction: Starting in 2026, people who don’t itemize their taxes can still deduct charitable giving — up to $1,000 or $2,000 for couples filing jointly.

  • Who’s Impacted: Millions of donors who take the standard deduction.

•   A New Deduction Floor: Donors who do itemize their taxes will only be able to deduct charitable gifts that exceed 0.5% of their Adjusted Gross Income.

  • Who’s Impacted: Most likely mid-level donors who itemize but give smaller gifts in comparison to major donors.

• A Benefit Cap: For donors in the highest tax bracket, the tax benefit of their gifts will be capped at 35%.

  • Who’s Impacted: This will likely impact major donor programs most.

•  For Corporations: Starting in 2026, a corporation can only claim a deduction for charitable contributions once their total charitable contributions exceed 1% of its taxable income for the year.

  • Who’s Impacted: Corporate donors and private foundations — especially those who give smaller gifts.

Audiences to Watch in 2026:

• Large or high-income donors are likely to itemize — is their giving behavior changing? Are you seeing even more of their gifts come in via other methods (DAF/IRA, etc.) vs. a check or credit card donation as they look to these vehicles to optimize their tax efficiency?

• Mid-level donors are likely itemizers who give more moderate amounts. Some in this audience may reduce the frequency of smaller gifts they make throughout the year while making fewer, slightly larger, gifts to maintain their deduction.

• Smaller donors (under $1,000) are less likely to itemize and may now have an incentive to increase their giving. 

• Corporate donors may see smaller gifts decreasing while larger corporate donors may adjust their total giving to surpass the 1% threshold.

Creating Your 2026 Game Plan

The earlier you start, the better positioned you’ll be to navigate these changes — and even turn them into opportunities. Here’s a roadmap:

1. Know Your Donors

• Track giving vehicles: Pay attention to DAFs, IRA/QCDs, and recurring giving — this will show whether donors are adjusting their giving strategy.

• Flag potential shifts: Watch for changes in frequency, timing, or size of gifts across segments. Early detection means early response.

2. Monitor Trends & Analyze Data

• Set up dashboards: Track year-over-year giving trends, comparing pre-2026 vs. post-2026 behaviors.

• Look for patterns: Are high-income donors moving more gifts into DAFs or IRAs? Are small donors responding to the new deduction?

• Report regularly: Keep leadership and fundraising teams informed so strategies can be adjusted quickly.

3. Tailor Messaging

• Lead with impact: Emphasize stories, outcomes, and tangible results. Tax benefits are secondary — a nice bonus, not the primary motivator for donors.

• Segment your asks:

  • Smaller donors: Highlight the above-the-line deduction and encourage recurring giving for consistent impact where appropriate.

  • Mid-level donors: When you can have a conversation, help them understand the 0.5% floor and suggest multi-gift strategies or slightly larger gifts to maximize benefits.

  • Major donors: Share strategic options like DAFs, IRA gifts, and timing of large contributions to optimize impact and tax benefit.

  • Corporate donors: Offer guidance on bundling gifts, timing, and giving thresholds to ensure deductions and maximize engagement.

4. Educate & Guide Donors

• In conversations, make it easy for donors to understand options without overwhelming them.

• Encourage conversations with donors about giving vehicles that suit their goals and financial situation.

5. Be Ready to Adjust

2026 will be the first year we see real behavioral shifts — be prepared to pivot strategies if trends show unexpected changes. Don’t wait until the all-important year-end timeframe to know if your donors are behaving differently when it comes to tax benefits.

With early planning, thoughtful messaging, and careful tracking, you will be able to understand donor behavior as it evolves, respond quickly to shifts, and create strategies that keep giving strong while helping donors make the biggest impact possible.

Change doesn’t have to slow your fundraising — it can strengthen it. If you want a partner who can help you anticipate donor behavior, adapt your strategy, and keep giving strong through 2026 and beyond, we’re here to help.

Connect with us to start planning your next move.