Preparing for an Unusual End-of-Year Giving Season

Written by:
Erin Tanner, Chief Financial Officer, CICF
Jennifer Turner, Vice President of Philanthropy, CICF

After one of the most chaotic fiscal rides in memory, the end-of-year giving season is finally upon the nonprofit sector. What’s more, there are predictions that, if the market holds, donors may look to increase their donations in order to maximize certain tax benefits that will expire January 1st due to the “One Big Beautiful Bill Act”. In short, we could see a season of boosted giving this Q4.

That’s our hope, anyway. But if this year has proven anything, it’s that we should take nothing for granted. Nonprofits who have the capacity are encouraged to make budgets for a variety of outcomes—good, bad, and indifferent. We’ll show you how.

But first, how exactly is OBBBA changing the giving game?

Giving in 2026 Could Look Different 

There are several detailed explorations of how the new tax and spending law will benefit and/or reduce giving due to laws taking effect in the New Year. (CICF also published its own look at the bill’s impact on service providers in Central Indiana.) 

These are all worth reading in full, but to boil it down, the new law’s tax implications will:  

  1. Raise the standard deduction for tax filers—historically something that reduces giving. 
  2. Establish a new provision in which only the donated amount that exceeds .5% of your annual Adjusted Gross Income will be eligible for deduction. (For example, if you made $1 million in 2026, you will only be able to deduct the gifts made once you exceed $5,000.) 
  3. Provide new deductions for taxpayers who do not itemize. This encourages more charitable giving since the vast majority of us do not itemize tax returns. The bill offers deductions of up to $1,000 for single filers and $2,000 for those married and filing jointly. (Unfortunately, non-cash donations and any gifts to donor-advised funds will be excluded.) 

New Messages to Donors 

For nonprofit organizations looking to make the most of these new changes (and, again, who have the capacity), you have an important message to send to major donors before the end of the year.  

First and foremost, make sure they know that availing themselves of the highest tax benefit this year is a win-win: Donors can generate more tax benefit by “bundling” (or “bunching”) multiple years’ worth of donations before January 1st, which in turn gives your organization greater stability to budget further into the future. 

And remember, small and mid-level donors get a message, too. In the new year, they will have a brand-new benefit in that $1,000 to $2,000 deduction for non-itemized tax filing. Once again, there’s potential for multiple benefits here; young people are less likely to itemize their tax returns, so by engaging younger donors on this new benefit (while always acknowledging that it’s unlikely to be their primary motivation) you increase visibility with a cohort that will eventually be your most valuable contributors.

Budgeting For Any Weather

While hoping for the best outcome, certainty around year-end-giving is in short supply. That’s why it’s a good idea to try and assemble three budgets—one for good, bad, and typical scenarios.  

If you use spreadsheet software like Excel, you could create budgets for three different scenarios by reducing or raising values and relying on your formulas.  

Begin by creating a forecast of how you expect to end the year—that should provide a jumping-off point. Then, create a list of assumptions around revenue and expenses and adjust the assumptions based on the given scenario.  

  • For example, your typical-case scenario budget might assume a regular percentage increase in revenue and expenses compared to the prior year. Then, compare the ratios of both personnel costs and program costs to revenue.  
  • Now, create a scenario where you show a decrease in revenue, a worst-case. Adjust to ensure that your personnel costs remain in proportion. Are there any regular grants you receive that are suddenly risky? Would a down-market reduce potential year-end donations among certain donors? 
  • Finally, update assumptions for what would happen if your revenue increased beyond what you would normally expect as your best-case scenario. For example, if major donors bundled three years’ worth of giving, how far ahead would you be? 

Raising Revenue and Cutting Costs

We hope a worst-case scenario never comes to pass, but how can we respond if it does? 

Start by reviewing your revenue across all five major categories:  

  1. Grants  
  2. Program/service fees 
  3. Fundraising events 
  4. Individual Contributions  
  5. Corporate Contributions 

What portion of revenue comes from each category? Are there opportunities to increase revenue in one or more areas? Be realistic about what you can raise for contributed revenue. It can be tempting (especially to those outside the fundraising department) to set a fundraising goal that covers any budgetary gap. But if you set a goal, make a realistic plan to achieve that goal.  

Also, here’s an important cautionary word about grants. Previously, government grants were so rock-solid that they could literally be taken to the bank. Groups in Indiana have learned that’s no longer true. Additionally, a recent executive order proclaims that federal grants must only fund programming that will “demonstrably advance the President’s policy priorities.” The legality and implications of that order will be challenged; however, consider it a factor in play as you consider this particular stream of revenue. 

Now, for costs. For many of us, personnel is the biggest line item in the budget. That means if revenue drops, tough decisions about staffing or wages are often unavoidable. It’s painful but ignoring that reality can put the whole organization—and its mission—at risk.  

One way to prepare is to build your budget by department. Department-level budgets not only help us better track performance, they also provide a clearer picture of where adjustments might be made if funding changes. Having budgetary detail makes it easier to plan, act, and protect as much of your mission as possible when resources are tight.   

Tell Me More About That Best-Case Scenario 

Let’s say changes in the tax law do, in fact, incentivize increased year-end bundling of gifts; or let’s say the incentives for a larger donor-base among non-itemizers take off and lead to further giving in 2026. What is your best use of unexpected funding? 

If you haven’t already created an operating reserve, or if you’ve had to dip into it, now’s the time to create or replenish one. Ideally, you want four to six months (if not twelve) of operational funding in reserve.  

Or, if that’s already taken care of, now could be the time to establish or enlarge an endowment. That provides greater sustainability with less reliance on unreliable sources of funding. 

Easier Said Than Done 

We’ve already noted this, but all the above depends on your capacity. Some organizations have already cut staff or taken on new revenue-raising obligations this year. Creating more than one budget may not be feasible. But if it’s as feasible as updating a spreadsheet, or thinking comprehensively about your department budgets, then multi-scenario planning could be easier than you think.