Charitable Giving and the New Tax Law: What Capital Campaign Leaders Need to Know

When Congress passed the One Big Beautiful Bill Act (OBBBA) on July 4th, 2025, most of the news coverage focused on its wide-reaching tax and spending changes. Less attention has been given to provisions that directly affect charitable giving. These adjustments matter to every nonprofit, but they carry special weight for organizations preparing or running a capital campaign.

The charitable giving provisions take effect on January 1st, 2026. That creates both a window of opportunity in 2025 and new planning considerations for the years that follow. Campaign leaders who take the time to understand how these changes influence donor behavior will be better prepared to guide conversations and secure commitments.

Key Provisions of the New Tax Law

The most widely discussed change is the introduction of a new above-the-line deduction for charitable giving. For the first time in years, taxpayers who use the standard deduction can claim a modest charitable deduction. Individuals can deduct up to $1,000 in cash contributions, while married couples filing jointly can deduct up to $2,000.

This provision does not apply to contributions made to donor-advised funds. Even with that limitation, many nonprofits may see a slight increase in smaller gifts from donors who have not itemized in the past.

The adjustments are less favorable for itemizers. Beginning in 2026, charitable contributions will only be deductible once they exceed 0.5 percent of adjusted gross income (AGI). For example, someone earning $200,000 will not be able to deduct the first $1,000 they give each year. In addition, the maximum deduction rate for high-income taxpayers will drop from 37 percent to 35 percent. The existing ceiling of 60 percent of AGI for cash contributions remains unchanged.

These changes alter the timing and structure of how many donors think about larger gifts.

The Role of Gift Bunching

Gift bunching will play a central role in how donors respond to the new framework. Bunching is the practice of consolidating several years of giving into one calendar year so that the amount clears the new deductibility threshold.

Consider a donor who earns $200,000 each year and likes to contribute $500 annually. Under the new law, those gifts will not reach the deductible threshold. If the donor combines three years of contributions into one $1,500 gift, the contribution now qualifies for a deduction.

For those who want to maintain a steady stream of support to nonprofits, donor-advised funds make this strategy even more flexible. A donor can contribute a large amount to a fund in a single year to receive the tax benefit, while distributing grants from that fund to charities over time.

Implications for Capital Campaigns

Capital campaigns naturally involve multi-year commitments. Traditionally, many donors have pledged a total gift and divided it into annual installments over five years. The new law provides strong incentives for donors to change that pattern.

Instead of making equal payments each year, donors may decide to fulfill their pledges upfront or group several years of payments together. This approach increases the tax value of the gift while still meeting the donor’s philanthropic goals.

For campaigns, this can change the flow of contributions. Organizations may receive larger amounts earlier in the campaign cycle, which can create momentum and reduce the need for borrowing. At the same time, fewer pledge payments may be scheduled in later years, which could affect how the organization plans for long-term revenue. Campaign leaders need to anticipate both possibilities and plan budgets with care.

The new law also strengthens the case for early solicitation. Donors who are considering a significant campaign pledge may be encouraged to accelerate their gift before 2026 while the more favorable deduction rules remain in effect. That creates urgency and can lead to more immediate commitments.

5 Practical Steps for Campaign Leaders

Below are five practical steps you can take to ensure you make the most of the new tax law.

1. Rethink Pledge Conversations

Campaign staff should begin donor conversations with an openness to new pledge structures. A donor who previously planned to spread a six-figure gift over several years may find that consolidating payments is a better financial decision.

2. Provide Clear Information

Many donors are not yet familiar with the new rules. Campaign leaders can add value by offering straightforward explanations of the changes, showing how different approaches affect tax benefits, and pointing to professional advisors for personalized guidance.

3. Coordinate with Advisors

High-capacity donors often rely on accountants, attorneys, and financial planners. Campaign representatives can acknowledge that reality and support donors by encouraging them to seek professional advice. In some cases, it may be appropriate for campaign leaders to work directly with donor advisors to align gift timing with campaign goals.

4. Adjust Cash Flow Models

Campaign financial projections should take into account the likelihood that more contributions will arrive early. While this can accelerate progress toward campaign goals, it requires careful financial management to sustain operations and deliver on long-term commitments.

5. Take Advantage of 2025

The year ahead offers a unique opportunity. Donors who act before December 31st, 2025 can still benefit from the existing deduction rules. Campaigns that are currently active should encourage prospective donors to make decisions now rather than wait until 2026.

Looking Ahead to 2026 and Beyond

The new tax law introduces both opportunities and challenges for charitable giving. The above-the-line deduction may broaden participation among smaller donors, while the new thresholds and deduction limits for itemizers will encourage many larger donors to change their approach.

For capital campaigns, gift bunching stands out as one of the most significant developments. Campaign leaders who adapt to this reality by reshaping pledge conversations, educating donors, and planning for altered cash flows will be well positioned for success.

The next 18 months are especially important. Campaigns can make the most of the current rules in 2025 while preparing for a new environment beginning in 2026. By combining urgency with thoughtful planning, organizations can strengthen their campaigns and help donors achieve both their charitable and financial goals.