Engaging corporate donors in the OBBBA era
Written by Diana Coyle, CICF Director of Nonprofit Services & Sustainability
The dust is settling on the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. Charities are beginning to wrap their arms around the new law’s significant shift in the tax treatment of corporate charitable donations.
Beginning in 2026, a new 1% floor will apply, meaning corporations must donate more than 1% of taxable income before any charitable contributions become deductible. This limitation is in addition to the current 10% “ceiling.” Navigating these two laws, along with the five-year carryforward rules for unused deductions, will present challenges for both charities and the companies that support them.
So what can you do? Here are three suggestions:
First, get a jump on the issue this year before the new law kicks in. Reach out proactively to your corporate donors and offer to meet with their finance teams to help structure donations in 2025 to maximize tax benefits.
Second, get up to speed on how a “bunching” strategy—deliberately combining multiple years of giving into one larger gift year to surpass the 1% floor—might work in 2026 and beyond. With careful planning and coordination with corporate donors, you can take steps to blunt the effect of feast or famine donation cycles that could make it hard for your organization to budget and plan its programs.
Third, keep in mind that companies may still be able to deduct charity sponsorships as marketing expenses if the payment provides a direct business benefit, such as advertising, rather than being considered a pure charitable donation. Under IRS rules, a business will need to substantiate the benefit received. Note also that your organization will need to properly account for this support on your end of the transaction, including determining whether to report it as “unrelated taxable income.”
As is the case with any tax rules—and especially new rules that are not yet well understood—the issues are complex with lots of legal twists and turns! Reach out to your legal and tax advisors to get up to speed on how the new rules might impact your own specific situation, and consider us a the CICF Collaborative (which includes Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana), as a sounding board in those discussions. We are here to help!
About the CICF Collaborative
CICF Collaborative is a partnership of philanthropic organizations working together to strengthen communities across the region. Each entity within the CICF Collaborative (including the cornerstone entities, Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana) brings deep knowledge, strong relationships, and its own individual, focused mission. The CICF Collaborative unities the entities by providing shared services, allowing the entities to operate more efficiently and effectively. By leveraging what we each do best, we’re able to better serve our communities and create more lasting impact, together. Learn more »
About the Author
Diana Coyle, director of nonprofit services and sustainability, is dedicated to helping Central Indiana nonprofits access the tools, knowledge, and relationships they need to thrive. In collaboration with her CICF colleagues she supports CICF fundholders offering professional development, resources, and technical assistance that strengthen organizations and their leaders. With more than 15 years of experience in leadership and community engagement, she is committed to fostering connections that amplify the missions of nonprofits and create lasting impact across the region.