What the Current Tax Conversation Is Crowding Out, and What Nonprofit Leaders Are Actually Building
Randal Evans | randalevans.com/writing
Most nonprofit executives I speak with have an OBBBA folder in their inbox. Many have stopped opening what lands there. The subject lines sound urgent and interchangeable: How OBBBA Reshapes Charitable Giving; New Floors, New Caps, New Strategies; Donor‑Advised Funds in the OBBBA Era. Board members still forward alerts and webinar links, usually without comment. Staff come back from trainings armed with lists of timing and bunching strategies, yet they’re unsure how to translate all of this into actual donor conversations. Consultants talk about “getting ahead of the new environment,” and more than a few describe this new era as “doom and gloom.” Nonprofit executives, meanwhile, juggling real‑time funding gaps and community needs, are left wondering whether all this tax‑focused noise is helping them have the conversations with donors that actually matter to their work and their communities.
I’ve read a lot of the OBBBA-focused articles. I’ve written some of them. The more time I spend inside that conversation, the more I notice what it is crowding out.
The One Big Beautiful Bill Act made real but narrow changes on the income‑tax side of charitable giving. Most of the current commentary treats those changes as the main story. This piece is about what sits underneath that story. And why so many nonprofit leaders sense that the urgent conversation and the important conversation are not the same one.
What OBBBA Actually Changed
The actual scope is narrower than the volume of discussion suggests. For individual itemizers, only charitable gifts above 0.5 percent of adjusted gross income now count toward the income-tax charitable deduction. For corporations, deductions sit on top of a 1 percent floor on taxable income. For households in the top bracket, the value of itemized deductions is capped at 35 cents on the dollar. There is also a permanent above-the-line deduction for modest cash gifts by non-itemizers, a small but symbolically meaningful change.
All of these mechanics operate on the same slice of reality: the income-tax treatment of charitable gifts for a subset of donors. Even the 35-cent cap applies only to taxpayers in the top marginal bracket. Within that already small group of high‑income itemizers, only those who give above the new floors will feel the full effect.
Russell James once described the charitable sector as desperately fighting over the kiddie pool while ignoring the ocean. In those terms, OBBBA has made the kiddie pool a little shallower for a narrow band of swimmers. The pool is still there. For most donors, the rules that matter most remain intact: capital‑gains avoidance on gifts of appreciated assets, fair‑market‑value deductions within existing AGI limits, and the charity’s ability to sell and reinvest proceeds tax‑free. None of that changed.
This piece is not about whether OBBBA is good or bad policy. It is about what our intense focus on its income‑tax tweaks reveals: where our attention has been fixed, and what we have been ignoring.
The Ocean We Are Still Not Swimming In
One of the numbers that changed how I think about charitable planning is 2.3. That is the share of American household wealth held in cash and checkable accounts, drawn from Federal Reserve balance-sheet data. The other 97.7 percent sits in real estate, securities, retirement accounts, business interests, and other non-cash assets. Even if you broaden “cash” to include savings, money markets, and CDs, most analyses still find that 85 to 90 percent of net worth lives somewhere other than the checkbook
Yet the fundraising infrastructure of most nonprofits is overwhelmingly oriented toward cash. Appeals. Galas. Annual campaigns. Peer-to-peer drives. More than 90 percent of gifts by count are still made in cash, even though the largest gifts by dollar amount are often non-cash. Publicly traded stock. Closely held business interests. Real estate. Retirement assets. James’s analysis of over a million IRS Form 990 filings found that organizations receiving non-cash gifts grew their total contributions by roughly 50 percent over five years, compared with about 11 percent for those receiving only cash.
Cash is often the least efficient asset for a donor to give, from a tax standpoint. A donor who gives long‑term appreciated stock usually (1) avoids capital‑gains tax on the growth, (2) still gets an income‑tax deduction based on full market value, and (3) hands the charity an asset it can sell tax‑free and reinvest. The same donor writing a check gives away already‑taxed dollars and keeps the low‑basis asset, with all its future tax cost on their own balance sheet. OBBBA trims the deduction piece a bit for some donors, but the rest of that engine still runs the same.
Set that alongside another set of numbers that rarely show up in OBBBA webinars. Sector research suggests that development directors often stay in their roles for roughly 18 to 24 months, and nearly half say they plan to leave within two years. Commentators describe a pattern of unrealistic revenue expectations, insufficient structural support, and a relentless emphasis on short-term cash results that erodes both relationships and morale.
Put the strands together and a different picture emerges. The sector is pouring enormous professional energy into adjusting tactics around a relatively small, relatively shallow pool. Meanwhile, it is underinvesting in the structures, skills, and relationships that would let it tap the ocean of non‑cash assets that can align donors, organizations, and communities around what they actually care about. The tactical adjustments aren’t necessarily wrong. They are simply happening at the wrong scale relative to the opportunity.
Harbor House
Consider a composite organization. Call it Harbor House. It works at the intersection of housing stability and behavioral health in a regional city. The budget is just under ten million. The development team is a director, one major-gifts officer, and a support role that also handles communications.
For years, Harbor House follows a familiar pattern. The board sets ambitious annual fundraising goals. By fundraising, they mean cash contributions. The development director spends much of the year running events, managing direct mail, and courting mid-level donors for incremental increases. December is a blur of appeals and frantic follow-up. Every few years, the board hires a consultant to run a capital campaign or a planning retreat focused on revenue. For now, the organization’s capacity to receive non‑cash gifts is mostly symbolic: a brokerage account someone set up years ago and a single vague line in the gift‑acceptance policy that mentions “other property” without much detail.
When OBBBA passes, Harbor House does what its peers do. Staff attend webinars about the new floor and the 35-cent cap. They absorb cautions about bunching strategies and donor-advised funds. They hear warnings that high-income donors may reduce giving. The development director diligently updates talking points. The fundamental sequence stays the same. Year-end, cash-centric appeals, now with adjusted deduction math.
Everyone is working hard. Yet the cycle exhausts people. Development staff turn over. Donors who might have welcomed a different kind of conversation get another appeal instead. Board members experience the organization primarily through revenue reports. The pattern persists because everything about the organization’s internal rhythm reinforces it.
Imagine a neighbor with a bare patch of dirt where they want a lawn. They scatter seed, water daily, watch anxiously, pull weeds, buy more seed when patches stubbornly remain. The effort never stops. The yard never quite looks the way they hoped. Harbor House, like many nonprofits, is watering the dirt.
Why the Reflex Persists
The U.S. charitable sector (and, increasingly, much of the world) now operates in a tax‑centric frame. It is easy to assume it has always been this way and cannot be otherwise. In reality, this is relatively recent, and it was not the original design. The charitable income‑tax deduction was created to avoid penalizing authentic charitable transfers, not to manufacture a tax benefit, and it still functions that way. Tax rules are not what primarily motivate people to give; large national studies consistently find that donors rank tax benefits far below purpose, impact, and genuine human connection. The tax‑centric reflex is less a moral failing than a professional pattern.
Technical rules are bounded and knowable. You can summarize them in a client alert, teach them in a one‑hour webinar, and demonstrate expertise by tracking each new change. For nonprofit leaders and boards under budget pressure, OBBBA offers concrete levers to pull and numbers to model. For everyone touching this work, it is simply easier to debate the effect of a 0.5 percent floor than to sit with a donor family that is honestly unsure whether their giving reflects what they actually care about.
The incentive structures quietly reinforce that focus. Fundraising reports are typically built around annual cash totals. Compensation, for development staff, consultants, and many advisors, is often tied to short‑term revenue, closing gifts, or growing assets under management. In that environment, helping someone move non‑cash assets out of familiar accounts into a charitable vehicle, a direct gift, or a more participatory structure can feel, in the short term, like a loss of control or revenue, even if it serves the donor’s purposes and the community’s needs. OBBBA adds another layer of technical detail we can point to as proof that specialized expertise is needed, without forcing any change to those underlying incentives.
The cost of staying at the surface is cumulative. It shows up in organizations locked into reactive fundraising cycles. It shows up in families who never quite bring their full asset portfolios into alignment with their charitable commitments. It shows up in development professionals who entered this work because they cared deeply about people and communities, and who now find themselves measured primarily by how effectively they can move cash around inside the constraints of the latest tax bill.
When the pattern does change, it usually isn’t because of a better webinar. It’s because a different kind of conversation is happening, in a different kind of room.
If you’d like, I can next help you write one or two short, concrete examples (e.g., a community nonprofit and a donor family) that illustrate this “surface vs deeper room” contrast in practice.
A Different Kind of Room
The shift at Harbor House doesn’t begin as a grand strategy. It begins with a conversation.
The CEO, the development director, and a board member who happens to be a financial advisor with Chartered Advisor in Philanthropy training sit down without an agenda. They have all read versions of the same research. They don’t start by asking how to protect cash-gift revenue under OBBBA. They start by asking a different first question. What is Harbor House actually for, over the next ten to fifteen years, and whose commitments are we trying to honor.
It is a simple question. It is also a question the organization hasn’t asked in that form in a long time. Most of what passes for strategic planning in mid-sized nonprofits is revenue planning dressed in strategic language. This is different. The answers are not immediate. They are not supposed to be.
From that conversation, a set of small moves follows.
The board revisits the gift-acceptance policy, this time with specificity about stock, mutual funds, real estate, retirement assets, and closely held business interests. They identify a regional community foundation and a national intermediary that can accept and liquidate complex assets on Harbor House’s behalf. The organization doesn’t need to build every technical capability internally. It needs a small set of partnerships that extend what it can accept without burying the development team in administrative load.
Then the gatherings begin. Six to eight people at a time, in borrowed living rooms and community spaces, framed not as fundraising events but as conversations about the future of the work. The composition of the room is deliberate. A longtime board member. A donor family whose name has never appeared on a building. The coordinator of a peer-support group that has been doing frontline work for years. A landlord who has been willing to take chances on tenants others wouldn’t consider. A pastor who runs a warming center two blocks from one of Harbor House’s sites. And always two or three people who have themselves moved through Harbor House’s programs and are now a few steps further along in their own lives.
The conversations look different from the usual cultivation dinners. There is a story, but it is not the whole show. Staff and board members talk concretely about what Harbor House is trying to do. Reduce the number of people cycling between the streets, emergency rooms, and jail. Build genuine housing stability. Support families navigating complex behavioral health challenges. They invite participants to talk about what brought them into the room. And they share what they already bring to those concerns: relationships, experience, and the kinds of non‑cash assets that only come into view in a real conversation, not a one‑size‑fits‑all script.
Later in the evening, usually after food and some silence, the advisor on the board, a financial professionals, offers a simple frame. People hold wealth in three places. Cash flow. Assets they might reposition during life. Assets they expect to pass at death. OBBBA touches only the first, and even there only at the margins. The real leverage for both the family and the community sits in the other two.
Harbor House doesn’t present a menu of complex vehicles. It names a few simple possibilities. A gift of appreciated stock now. A charitable remainder trust funded at retirement that provides income to the donor and ultimately supports permanent supportive housing. A bequest of a percentage interest in a rental property. A qualified charitable distribution from an IRA once the donor reaches the required age. The point is not to close any of these in the moment. The point is to normalize a different kind of conversation.
Something else happens in those rooms that Harbor House has not planned for. The peer-support coordinator describes a pattern the organization’s intake data has been missing, a cluster of people cycling back through the system at a particular age whom the programs were not designed to catch. The pastor names a population the organization has been quietly underserving. A donor’s adult daughter, sitting in on a gathering with her mother, asks a question about family involvement in long-term recovery that no one on staff had thought to articulate.
Harbor House leaves those gatherings with more than prospects. Over the following year, a program focus shifts. A commitment in the strategic plan is rewritten. The gift-acceptance policy is revised a second time to match the new understanding. What the organization has heard at the edges of its work travels back into the center and changes what it is for.
The metrics begin to expand. Not only dollars raised this quarter, but the quality of the organization’s relationships with its closest allies. The number of non-cash gifts received or in process. The degree to which those gifts align with purposes both donors and the organization recognize as real.
OBBBA’s floor and caps are still there. They still require competent attention. They have moved into the background, where they belong.
The Conversations Underneath
What changes at Harbor House is not the appeals. It is what the organization can hear, and who is in the room when it hears it. The architecture makes the conversations possible. The conversations make the architecture worth building. Neither moves without the other.
Our tax‑centric reflex is not a moral failing. It is a professional pattern, reinforced by incentives and trained into us by the shape of the work. OBBBA didn’t create that pattern. It gave us a new reason to keep practicing it.
The question I keep asking the leaders I work with is not whether they understand the new rules. Many of them do, or soon will. Others decided long ago that these tax‑centric details, while important for advisors, are not where they need to focus. What I’ve learned from them is that the more important question is what kind of room they are building, and who is allowed to speak in it. What happens when a board member brings a hard question. What happens when a frontline staff member names a pattern the dashboard does not show. What happens when a donor family asks, out loud, whether their giving has actually been organized around what they care about. What happens when someone the organization has served sits at the table not as a story, but as a person with something to say.
Those are the conversations underneath the architecture. They are the ones that determine whether any of the rest of this work is real. Tax law will keep moving. Rates will adjust. Caps will change. The conversations are the only part we truly get to build. And they were the point of all this long before there was an income tax.