2025 has ushered in numerous policies impacting the philanthropic sector—from tax changes to federal funding cuts—shifting how individuals, companies, and nonprofits may approach decision-making this year and beyond. This topic among many others rose to the top of the conversations among leading corporate responsibility professionals at CECP’s annual Summit. Research indicates that provisions related to corporate giving included in the new tax act may reduce average annual corporate charitable giving by approximately $4.5 billion,[1] and the proposed 2026 budget calls for cuts to public services and nonprofit organizations.[2] With these changes, corporate purpose professionals should assess how they are supporting nonprofits, engaging employees, and spending philanthropic capital.
- Supporting nonprofits
Recent cuts and freezes to federal funding can have a significant impact on many nonprofits since at least 30% of nonprofits received government funding in recent years.[3] A recent analysis from Candid found that removing government grants would result in 19% of government grantees running out of cash in three months, with nearly 2.8 million jobs at risk .[4] These funding changes coupled with rising costs and policies impacting the work of, and communities served by, nonprofits are creating a challenging environment, according to nonprofit leaders.[5] Here are some ways corporate philanthropy can make a difference:
- Proactively communicate with your nonprofit partners to understand their current state, concerns, and needs.
- Consider accelerated funding and multiyear commitments when appropriate.
- Reduce restrictions and reporting requirements so nonprofits can focus on their community work, rather than administration.
- Invest in the well-being of nonprofit leaders and staff, as burnout and retention are two key challenges they are currently facing.
Now is the time to think through how you may modify your grantmaking practices to align with emerging nonprofit needs.
- Engaging employees
The new tax act has introduced changes to the tax treatment of charitable gifts from individuals, which directly applies to your employee population.
Starting in 2026, filers can take an above-the-line deduction of up to $1,000 for single individuals and $2,000 for married joint filers for charitable cash contributions to nonprofit organizations, excluding donor-advised fund sponsors and private non-operating foundations. That means a wider range of employees will be eligible for tax benefits from making charitable donations. As their employer, you can help their dollars go even further by activating or investing more in matching gift programs.
For your executives and highly compensated employees, the new tax act caps the tax benefits of itemized charitable deductions at 35%, even for those in the 37% marginal tax bracket. This means that employees in higher tax brackets who are considering a significant philanthropic gift may want to think about accelerating their gift in 2025 to maximize their deduction under the current marginal rate before the new cap goes into effect. Educating employees around tax-smart giving approaches this year could be valuable.
- Philanthropic capital
The new tax act also introduces provisions related to corporate philanthropy. Corporations will only be entitled to deduct charitable contributions to qualified charities that exceed 1% of their taxable income. If your company is concerned about meeting the 1% floor on an annual basis, you may consider accelerating and increasing giving into a philanthropic vehicle like a corporate foundation or donor-advised fund to meet that threshold. When you make contributions using a donor-advised fund, you can invest the assets so they can grow over time, potentially allowing you to grant more to charity. This tax strategy can also be applied by making larger, multiyear commitments to strategic nonprofit partners, echoing recommendations in the “Supporting nonprofits” section. See also CECP’s guidance in this area.
Conclusion
It’s always challenging keeping up with changes impacting the nonprofit and philanthropic sectors. With additional knowledge and resources, CECP affiliated companies are poised to meet this moment and continue to support their employees, communities, and nonprofit partners. If you have questions or would like to continue the conversation please reach out to Maeve Miccio, head of Fidelity Philanthropic Consulting.
About Fidelity Investments®
Fidelity Investments®, a global leader in helping customers strengthen and secure their financial well-being, also provides purpose-driven expertise and solutions for organizations and their employees. Access customized philanthropic guidance, a flexible workplace giving platform, and tax-smart donor-advised funds sponsored by Fidelity Charitable®, to make a greater impact.
Fidelity Charitable is the brand name for the Fidelity Investments® Charitable Gift Fund, an independent public charity with a donor-advised fund program. Various Fidelity companies provide services to Fidelity Charitable. The Fidelity Charitable name and logo, and Fidelity are registered service marks of FMR LLC, used by Fidelity Charitable under license. 1216602.1.0
[1] Ernst-Young-Study-on-1-Floor-on-Corporate-Charitable-Donations.pdf.
[2] Federal Budget Proposal Threatens Billions in Cuts to Nonprofits and Vital Services Across the U.S. – Center for Nonprofit Excellence.
[3] https://blog.candid.org/post/how-losing-government-funding-impacts-nonprofits-candid-urban-institute-data/#:~:text=Candid’s%20analysis%20found%20that%20nearly,either%20government%20grants%20or%20contracts.
[4] https://blog.candid.org/post/how-long-nonprofits-cash-runway-can-survive-without-government-grants/#:~:text=Over%20the%20past%20few%20months,Public%20dashboard%20provide%20some%20answers.
[5] https://cep.org/wp-content/uploads/2025/05/NVP_State-of-Nonprofits_2025.pdf.