THE EVOLVE BLOG

The Not-So-Beautiful Bill: Congress Just Passed Tax Reform That Could Cost Charities $100 Billion

By Dan Hubbard

Posted: July 3, 2025

Just minutes ago, Congress passed the One Big Beautiful Bill Act (OBBBA)—but for Delaware nonprofits and the donors who support them, there is little beautiful about it.

With the President set to sign the bill into law tomorrow, on Independence Day, charitable organizations and their supporters across the state face unprecedented challenges: greater community needs, reduced resources, and fewer protections for vulnerable Delawareans.

Independent research projects that OBBBA could lead to over $100 billion in lost charitable giving nationwide over the next decade. At the same time, sweeping cuts to Medicaid, food assistance, and nonprofit tax treatment will increase demands on Delaware’s community organizations—many of which are already stretched thin.

What This Means for Charitable Giving

1) Capped Charitable Deductions for Itemizers

> The bill limits the tax benefit of charitable donations to 35%, even for donors taxed at the highest bracket.

> This change is expected to reduce individual giving by $41 to $61 billion over 10 years.

> The government stands to gain only $34.4 billion, meaning society loses more than it gains.

2) 1% Floor on Corporate Giving

> Corporations will need to give more than 1% of pre-tax profits before claiming any deduction.

> This could reduce corporate donations by $45 billion over the decade.

> The government expects only $16.6 billion in new revenue—far less than the losses in giving.

Impact on Health and Human Services

OBBBA includes cuts to Medicaid and changes to SNAP (food stamps) that will place enormous strain on Delaware’s nonprofit hospitals, clinics, food banks, and other safety-net providers.

Millions could lose Medicaid coverage due to new work requirements and eligibility changes. The bill expands work requirements for SNAP, meaning parents of children as young as 14 must work, volunteer, or attend training to keep food benefits.

More uninsured and food-insecure Delawareans will turn to nonprofits for help, increasing demand for limited resources. Cuts to Medicaid-related provider taxes could threaten rural hospital services, risking closures.

Rising Need, Shrinking Support

> Millions could lose Medicaid coverage due to new work requirements and eligibility changes.

> More uninsured Delawareans will turn to nonprofit hospitals and community clinics for care, often unable to pay.

> Cuts to Medicaid-related provider taxes could threaten rural hospital services, risking closures.

Hospital Leaders Raise Alarm

Rick Pollack, CEO of the American Hospital Association, called the Medicaid cuts “the largest ever proposed by Congress” and warned of “irreparable harm” to healthcare access. Even with a $50 billion fund for rural hospitals included, leaders say it is “not nearly enough” to offset the damage—especially in communities where access is already fragile.

How Low-Income Delawareans Are Affected

> Work requirements for Medicaid and SNAP may cause millions to lose benefits.

> Parents of children as young as 14 will need to work, volunteer, or attend training to keep benefits, but there IS NO MONEY added in the Bill to cover child care.

> Most losing Medicaid coverage will NOT gain job-based health insurance, leaving thousands without any affordable health care options.

> According to analysis, the lowest-income households could see an average reduction of $165 annually, while middle-income households will see modest increases.

Additional Strains on Delaware Nonprofits

> The return of taxes on employee transit benefits (“parking tax”).

> Expanded excise taxes on compensation now affecting all nonprofit employees.

> New taxes on private foundations and endowments that reduce grant funding.

Some Positive Notes—But They Don’t Offset the Losses

> Extension of the charitable deduction for non-itemizers may encourage smaller donations.

> Simplifications in the tax code could help smaller nonprofits with compliance.

How Donors and Delaware Nonprofits Can Respond

For Donors:

> Understand the impact these changes may have on your giving incentives.

> Consider how your support is more crucial than ever to help nonprofits fill gaps left by federal cuts.

For Nonprofits:

> Communicate clearly with donors and stakeholders about the challenges ahead.

> Track impacts on funding, service demand, and operational costs.

> Partner with other organizations and advocates to push for policy changes.

Together:

> Stay engaged with policymakers and the public.

> Share stories and data to raise awareness.

Now More Than Ever, Collaboration Is Key

This is a critical moment for Delaware nonprofits to coalesce around their missions by partnering with other organizations facing similar challenges. Pooling resources and coordinating efforts can help minimize costs and maximize impact—ensuring that, despite reduced funding and rising demand, the people who rely on your services continue to receive the care and support they need.

On This Independence Day, Let’s Recommit

The signing of OBBBA may limit our ability to serve the Delaware community, but independence means resilience and action.

We call on donors, nonprofits, and community members to stand united—to protect the services Delawareans depend on and to ensure that no one is left behind.

The mission is urgent. The work matters. And together, we are just getting started.