Reclaiming the Lost Donor Class by A New Opportunity for Philanthropy
After two decades of steady decline in the percentage of Americans who give to charity, a new provision in the recently passed federal tax bill could help reverse the trend. In his opinion piece for The Chronicle of Philanthropy, Howard Husock, a senior fellow at the American Enterprise Institute, highlights how this change—though modest—offers an important opportunity for nonprofits to reconnect with the broad base of everyday donors that has largely disengaged from organized philanthropy over the past twenty years.
Starting in 2026, the tax code will allow for a limited "above-the-line" charitable deduction: $1,000 for individuals and $2,000 for married couples, even if they don’t itemize. This marks a significant policy shift. As Husock explains, “Unlike past deductions that disproportionately benefited wealthier households with itemized returns, this version includes a universal element that acknowledges the value of charitable giving by ordinary Americans.”
While this provision won't completely solve the underlying issues facing nonprofit fundraising, it represents an important philosophical step. It reaffirms that charitable giving is not solely the domain of the wealthy or those with complex tax strategies. Instead, it restores some incentive—and recognition—for the millions of middle- and lower-income Americans who give smaller, regular gifts. For nonprofits focused on annual giving, this is more than symbolic—it’s strategic.
Over the past twenty years, fundraising strategies have increasingly catered to high-net-worth individuals and major gift programs. In the process, many organizations have deprioritized their broad-based donor programs, resulting in a loss of both donor volume and long-term sustainability. Husock rightly frames this new deduction as a way to "counteract the psychological shift away from giving," reminding people that every donation counts and that charitable acts—regardless of size—are worth supporting at the federal policy level.
This moment is an invitation. Nonprofits should be preparing now to build marketing and engagement strategies that speak directly to this revitalized donor class. That means strengthening annual giving programs, personalizing communication for first-time or lapsed donors, and re-emphasizing the impact of $25, $100, and $500 gifts. For donors, it’s a reminder that they’re not invisible. The tax code has taken a small but meaningful step to recognize their role in the philanthropic ecosystem.
Ultimately, as Husock notes, this change may help address “a moral hazard created when only the wealthy feel rewarded for giving.” While the deduction amounts are relatively modest, the principle is powerful: if we value a healthy civil society, we should encourage broad participation in giving.
Nonprofits and donors alike should treat this policy shift as a much-needed chance to reconnect with the vast middle—Americans who want to give but haven’t felt that their support matters. With the right message and strategy, this can be a turning point in reviving community-based philanthropy.
