What 2026 Tax Law Changes Reveal About Your Fundraising Infrastructure

Written By Gabie Benson

The most significant change to charitable deduction rules in years went into effect on January 1, 2026.

Over the past decade, tax deductions have become less of a driving force in charitable giving. These changes could create true incentives, ultimately helping you raise more money. 

But they’ll only work if you have the systems to support them.

Disclaimer: I am not a tax expert. This blog provides fundraising strategy guidance, not tax advice. For specific tax guidance related to your organization, please consult your CPA or financial advisors on your board.

How 2026 Tax Law Impacts Nonprofit Donors

Let’s explore what’s changed and what it means for your fundraising.

Universal Charitable Deduction for Non-Itemizers

Taxpayers who take the standard deduction may now claim a charitable deduction of up to $1,000 for individuals and $2,000 for married couples filing jointly, even if they don't itemize. 

This change extends a federal tax incentive for charitable giving to a much broader group of donors, many of whom historically received no tax benefit for their contributions.

This means your everyday supporters just became more tax-motivated. From a fundraising perspective, this strengthens the case for investing in small-to-mid-level donor strategies, including broad-based appeals, monthly giving, and consistent stewardship that encourages repeat giving rather than one-time gifts.

Gift Bunching and Donor-Advised Funds (DAFs)

For taxpayers who itemize, charitable contributions are now deductible only to the extent they exceed 0.5% of adjusted gross income (AGI). While this doesn't eliminate the charitable deduction, it does encourage donors to consolidate or "bunch" giving into fewer, larger gifts in order to clear the threshold in a given tax year.

Additionally, the value of itemized deductions, including charitable contributions, is effectively capped at 35% for high-income taxpayers. While charitable giving remains deductible, this reduces the marginal tax benefit for donors in the highest tax brackets.

This shifts the timing and structure of contributions. Instead of following an annual giving pattern, you may see donors bundle multiple years of support into a single larger gift, then distribute it through a DAF over time. From a fundraising perspective, this means conversations with itemizing donors, particularly wealthier supporters, should focus on multi-year gift planning, gift bunching, and alignment with long-term partnership rather than tax savings alone.

Non-Cash and Legacy Giving

Appreciated stock, retirement assets, and planned legacy gifts can offer tax advantages that work well under the new rules. These options resonate particularly with high-net-worth supporters who are looking for strategic ways to maximize both impact and tax efficiency.

These 2 strategies stand out:

Qualified Charitable Distributions (QCDs)

For individuals age 70½ and older, QCDs from IRAs remain an effective tax-efficient giving option. QCDs allow donors to transfer funds directly from an IRA to a qualified charity, reducing taxable income and satisfying required minimum distributions without relying on itemized deductions.

Carry-forward of Excess Contributions

Charitable contributions that exceed annual deduction limits may generally be carried forward for up to 5 subsequent tax years. This provision supports multi-year planning strategies, allowing donors to make larger gifts in high-income years and apply the tax benefit over time.

Building a System That Incentivizes Donations

The 2026 tax law changes are a stress test for nonprofit organizations. They reveal whether your fundraising infrastructure is strong enough to support strategic giving decisions.

Tax law updates don't change donor behavior on their own. Without organized donor data, strategic segmentation, and consistent stewardship systems, nonprofits will get little return from these incentives. They'll sit there like unopened mail.

Organizations with strong infrastructure will be best positioned. That means having systems that can:

  • Identify which donors benefit from universal deductions vs. itemization

  • Track and steward DAF and bunching opportunities

  • Personalize messaging based on donor segment and capacity

  • Maintain consistency even during staff transitions

Fundraising challenges are usually systems problems, not effort problems.

How to Talk About These Changes with Donors

When you're ready to have conversations with donors about the 2026 tax changes, here's donor-friendly language you can use:

"I wanted to share something that might be helpful as you think about your philanthropy. Starting in 2026, the federal tax rules now allow everyone who gives to qualified charities like ours to claim up to $1,000 (or $2,000 if you file jointly) in charitable deductions even if you don't itemize your taxes. That's a new opportunity to support the causes you care about while reducing your taxable income.

For donors who do itemize, there's a small threshold before a donation becomes deductible. Many donors are choosing to make multiple years' worth of gifts now or use donor-advised funds so they can maximize their tax benefit.

Both can make a huge impact on our mission.

I'm happy to talk through how this might work with your financial advisor. Our goal is to help you make the biggest impact with your giving."

You can also use these shorter versions for appeals or social media:

  • For most communications: "New federal tax rules mean many donors can now receive a charitable tax deduction even if they don't itemize. Your gift this year can make a difference for those we serve while also providing a tax benefit."

  • For social media: "Giving just got a little easier. Updated tax rules allow more donors to claim a charitable deduction, making your support for this mission impactful in more ways than one."

  • For large gifts: "With recent tax changes, some donors are choosing to concentrate their giving to maximize both impact and tax benefits. A gift to this campaign can do both."

Your Systems Playbook

Here are practical, systems-driven actions you can take right now:

Action 1: Use Simple Language to Educate Donors

Donors don't need to understand the intricacies of tax law. They need clear, accessible language that helps them see how giving benefits both your mission and their financial situation. Avoid jargon and make it easy to understand.

Action 2: Segment Communications by Donor Type

Not every donor should get the same message. Segment by giving behavior, age, and planning sophistication. Small donors need to know about universal deductions. Major donors need to understand DAFs and bunching. Legacy prospects want information about appreciated assets and estate planning.

Action 3: Integrate Tax-Aware Language Into Your Touchpoints

Tax-aware messaging shouldn't be a separate campaign. It should be woven into your existing fundraising conversations and stewardship touchpoints. Make it natural and consistent.

Action 4: Use tools like AI and Automation to Support Your Workflows

AI (if built into your database) and automation tools can flag opportunities with tax benefits, trigger personalized outreach, and maintain consistent stewardship. These systems reduce reliance on individual staff members and protect institutional knowledge during transitions.

Action 5: Equip Staff and Board with Consistent Messaging

Your team needs to be aligned. Staff and board members should have donor-ready talking points they can use confidently. When everyone speaks the same language, donors will trust your organization more.

Building a Strong Fundraising Infrastructure

At Sprout Fundraising & Consulting, we serve as a partner to growing nonprofits. We build sustainable fundraising systems that support your long-term growth.

This includes:

  • Fund development strategy and planning: We help you map out the year, identify priorities, and build campaigns that align with your mission needs.

  • Donor data and CRM systems implementation: We organize your data, build segmentation strategies, and set up automation that protects donor relationships.

  • Communications and marketing execution: We write appeals, manage campaigns, and ensure consistent donor touchpoints throughout the year.

  • Campaign planning and stewardship systems: We design stewardship workflows that keep donors engaged and build long-term loyalty.

  • Project management and accountability: We keep everything on track so no important task gets missed.

Your Outsourced Fundraising Development Team

Sprout functions as your strategic engine so you can focus on relationship-building, vision, and mission growth. We handle the infrastructure so you can confidently lead your organization.

If you're ready to build systems that make tax incentives actually work, book a free consultation. We'll assess your current infrastructure and help you create a plan that frees up your time for high-impact leadership responsibilities.

Book a Free Consultation

Additional Resources

To learn more about the 2026 tax law changes and how they impact charitable giving, consult these trusted resources:

General Tax Information

Donor-Advised Funds

Planned Giving and Non-Cash Assets

Professional Guidance: Remember to consult with your organization's CPA or financial advisors for guidance specific to your nonprofit's situation. The information in this blog is for educational purposes only and does not constitute tax or legal advice.

Gabie Benson
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Building a High-Performing Nonprofit Board for More Effective Fundraising