How the 2025 Tax Law Changes Capital Campaign Giving: Interview with Sari McConnell

As capital campaign leaders look ahead to 2026, a quiet but consequential change in the tax code is beginning to shape donor behavior — and donor sentiment. New limits on the deductibility of charitable gifts are already creating confusion and anxiety among major donors, particularly those accustomed to itemizing and maximizing the tax impact of their generosity.

In this interview, we sat down with Sari McConnell of Donor Boom to unpack what’s changing in the 2025 tax laws, why it matters so much for capital campaigns, and how fundraisers can turn this moment of uncertainty into a powerful opportunity.

Why 2025 Tax Changes Matter for Major Donors

Sari’s insights reveal why proactive, tax-smart conversations aren’t just helpful right now — they’re essential for sustaining momentum and helping donors give with confidence and clarity.

DISCLAIMER: Always have donors check with their own tax and financial professionals. Nonprofits should never give tax advice.

What’s changing in the 2025 tax laws, and why is this causing anxiety for capital campaigns?

The 2025 tax law changes include several adjustments to the deductibility of charitable gifts, and a few of these shifts have important implications for capital campaigns. One of the most significant changes affects generous taxpayers who itemize their deductions and can therefore typically deduct 100% of their charitable giving. (This is the case for the majority of major donors to capital campaigns.)

Beginning in 2026, the first 0.5% of a donor household’s adjusted gross income (AGI) that they give charitably each year will no longer be tax-deductible. For example, a household earning $500,000 annually would lose the deduction on the first $2,500 they give each year.

At first glance, many donors will simply hear: “I lose my tax deduction,” which may cause confusion or concern. During a capital campaign — especially in the quiet phase — this misunderstanding can create hesitancy and may even lead some donors to scale back their giving. Importantly, this anxiety will only persist if fundraisers allow donors to interpret the law on their own.

Clear, proactive communication will be essential to maintaining donor confidence and sustaining campaign momentum. And by guiding donors toward tax-smart giving options, you can help them avoid much or all of the penalty built into the 2025 tax law.

Why is this a rare moment to guide donors toward giving from their wealth instead of their disposable income?

This moment is uniquely powerful for guiding donors to give from their wealth rather than their disposable income. Behavioral economics shows that people are far more motivated to avoid losses than to pursue gains.

Unlike previous tax changes affecting charitable giving, the upcoming 2026 shift will create a loss for itemizing donors, who stand to lose a significant tax deduction. Because donors strongly dislike losing a deduction, they will be unusually open to guidance from nonprofit fundraisers — especially when professionals can show them ways to preserve some or all of that tax benefit. This creates a rare opportunity for nonprofits to influence donor behavior in meaningful and lasting ways.

By helping donors understand and adopt tax-smart giving strategies now, you will be leading them away from newly tax-disadvantaged gifts of disposable income sitting in their checking account and towards gifts from their wealth — using tools such as donor-advised funds, qualified charitable distributions, and appreciated stock.

Research consistently shows that when donors shift to wealth-based giving, their overall generosity increases substantially. This is an extraordinary moment to reset giving behavior and maximize impact for both donors and nonprofits.

How would donors use tools such as donor-advised funds and appreciated stock in a more tax efficient way while supporting a capital campaign?

Given that the new 0.5% AGI floor reduces what donors can deduct each year, the key is finding a smart way to work around it. That’s where a donor-advised fund (DAF) saves the day because you receive the deduction in the year you put money into the DAF — not when you make grants to nonprofits. That timing allows you to “bunch” several years of giving into a single DAF contribution so you only hit the 0.5% floor once.

For example, if your AGI is $500,000, your first $2,500 of charitable giving is no longer deductible. If you give directly to nonprofits every year, you’ll lose that $2,500 deduction annually — $10,000 over four years. But if you contribute four years of giving to a DAF upfront, you lose the $2,500 deduction only in that first year and can then distribute grants over time.

A DAF also gives donors practical benefits: simpler tax paperwork and a single place to track their charitable giving history.

This bunching strategy is especially worth paying attention to if you have HNW donors involved in your capital campaign. If you have a major donor whose AGI is $5,000,000, the first .5% or $25,000 is no longer deductible. The strategy outlined above still applies and results in even bigger tax savings.

Donating appreciated stock still lets you avoid capital-gains tax, but it doesn’t bypass the 0.5% issue unless you move the stock into a DAF first. Doing so lets you take the full deduction (minus the one-time 0.5% floor) and then support nonprofits over time without losing deductibility year after year.

How about qualified charitable distributions?

For donors age 70½ and older, a Qualified Charitable Distribution (QCD) is now the most tax-efficient way to give. Starting at 70½, you can donate directly from your IRA to a nonprofit, and the amount you give is excluded from your taxable income. It doesn’t matter whether you take the standard deduction or itemize, and your gift is not subject to the new 0.5% AGI floor.

At age 73, the advantages grow: a QCD can count toward your Required Minimum Distribution (RMD), and reduce your taxable income. Among its many benefits, a QCD is wonderful because you can put these funds to work in support of your favorite nonprofit instead of paying taxes on them!

Beginning in 2026, the annual QCD limit increases to $108,000 per person and be inflation-adjusted over time. QCDs have been available for years, but with the new 0.5% issue looming, which a QCD sidesteps altogether, there has never been a stronger case for using them.

For couples in which both spouses have IRAs and have other resources to live on, this could translate to as much as $216,000 per household directed to your capital campaign in a single year.

How can modest-appearing longtime donors make significant IRA gifts?

Many loyal, longtime donors may appear modest in their annual giving because they are careful with their cash flow, even though they are actually quite asset-rich. For donors aged 70½ or older, one powerful but often overlooked opportunity is the ability to make Qualified Charitable Distributions (QCDs) directly from their IRAs.

QCDs allow these [older] donors to contribute substantial amounts — far beyond what they typically give from their checking accounts — and be rewarded with significant tax benefits as explained above. Even someone who has been giving $1,000 a year from a checking account may be capable of making gifts of $25,000, $50,000, or much more through their IRA.

The challenge is that many donors simply do not realize that QCDs exist or that they can use their IRAs not only for legacy gifts but also for impactful charitable giving while they are alive. It is the fundraiser’s role to introduce and explain this option, helping donors align their assets with their philanthropic intentions.

What role can fundraisers play if they’re not tax advisors?

Fundraisers don’t need to act as tax advisors — in fact, they shouldn’t. Instead, their role is to offer donors options and illustrate how others are giving in tax-smart ways. By sharing examples and possibilities, fundraisers can inspire donors to consult their own tax professionals to determine what’s appropriate for their personal situation.

In this way, fundraisers position themselves not as financial planners but as “generosity guides,” able to explain at a high level how charitable tools such as donor-advised funds or qualified charitable distributions can be used more tax advantageously. work and why they matter.

Even if your capital campaign donor is already giving from their wealth, you are in a position to guide them towards even more tax-efficient ways to give their gift in light of the new tax law.

Approaching conversations this way builds trust with donors, including those already giving from their wealth, because it demonstrates that the fundraiser is looking out for their interests and helping them give more effectively. Avoiding these discussions altogether can lead to donor confusion and missed opportunities for meaningful, tax-efficient gifts.

What skills and conversations do fundraisers need so they don’t lose donor support because of the AGI floor?

To ensure they don’t lose donor support because of the AGI floor, fundraisers need to develop both their knowledge and their confidence in discussing tax-smart giving:

1. First, it’s important to understand the basics — especially the acronyms and the high-level changes that are coming — so you can clearly explain them to donors.
2. Equally essential is having simple, confident language to describe tax-efficient ways to give.

Fundraisers should not wait for donors to raise these topics on their own; instead, they need to proactively initiate the conversation. And because these discussions may be new, practice is crucial.

If you call a donor and let them know you have tax-smart guidance to share, they will call you back — so you must be prepared. When you are ready to have this conversation, it opens new doors and adds a powerful new dimension to your donor relationships.

Don’t Miss this Opportunity With Your Donors

This is a transformative moment in our field, so fundraisers should lean into it! Fundraisers who step forward with tax-smart guidance will not only retain donor confidence — they’ll become the trusted advisors who help donors give at their highest capacity.

Sign up for Donor Boom’s new Launchpad series: Navigating the New Tax Law: Strategic Guidance for Nonprofits. This two-session program will help you turn tax lemons into fundraising lemonade.