What charitable giving tax law changes mean for local philanthropy

August 1, 2025

By Erin Belby

A new deduction for everyday donors and growing scrutiny of endowments are reshaping how we give — and how we build trust

Starting in 2026, new charitable giving tax law changes will affect how Americans, including residents of the La Crosse area, support the causes they care about. Part of a federal legislative package known as the One Big Beautiful Bill Act, these updates reflect both progress and challenges for the philanthropic sector.

While one change offers a new incentive for everyday donors, another highlights growing skepticism toward large endowed funds. Together, they mark a shift in how philanthropy is understood — and trusted.

New deduction helps everyday philanthropists

One of the most impactful changes in OBBBA is the introduction of a permanent charitable deduction for non-itemizers. Starting with tax year 2026, taxpayers who claim the standard deduction will be allowed to deduct:

• Up to $1,000 for individuals
• Up to $2,000 for married couples filing jointly

This deduction applies only to cash donations to public charities — not to donor-advised funds (DAFs) or private foundations.

Why does this matter? Most taxpayers don’t itemize. Until now, they’ve received no tax benefit for giving. This change is a meaningful win for people who give more modestly but consistently — the kind of grassroots generosity that keeps communities like La Crosse strong.

At La Crosse Area Community Foundation, we regularly see the impact of $25, $100, or $500 gifts. The new deduction affirms what we’ve always known: philanthropy belongs to everyone, and every gift matters.

Endowment excise tax doesn’t affect us — but sends a message

Another key provision in OBBBA is a revision and expansion of an excise tax on the investment income of certain colleges and universities with large endowments (typically exceeding $250,000 per student). While this tax does not apply to community foundations like LACF, it reflects a broader shift in public sentiment — one that all endowed charitable institutions must take seriously.

Why the tax was introduced

Though positioned as a revenue-raising measure, the excise tax also responds to growing concern that:

• Some large endowments are hoarding wealth while students and families struggle with rising tuition and debt.
• Distributions may be too limited, slow, or opaque, especially given the scale of these assets.
• Philanthropic tax advantages are being used without clear, measurable public benefit.

In short, the tax reflects a deeper question: Are endowed charitable institutions doing enough — fast enough — with the resources they’ve been entrusted with?

This concern doesn’t stop at universities. While community foundations like ours are not subject to the excise tax, the sentiment behind it has implications for all organizations that manage permanent charitable assets.

Rebuilding trust in endowed funds

Endowments are designed for long-term community benefit, not short-term spending. At LACF, our endowed funds generate grant dollars every year to support nonprofits, scholarships, and emerging needs in La Crosse County.

But we also recognize that trust isn’t automatic. It’s built through:

• Transparency — Clearly communicating how endowments work and how grants are distributed.
• Accountability — Demonstrating measurable community impact.
• Responsiveness — Balancing long-term sustainability with urgent needs.
• Inclusion — Ensuring diverse community voices guide how funds are used.

If community members don’t understand how endowments function — or feel disconnected from decision-making — it’s our job to close that gap.

What this means for you

Whether you’re a donor, nonprofit leader, or simply someone who cares about the future of our community, these charitable giving tax law changes matter:

• If you give but don’t itemize, you’ll soon get a tax break, up to $2,000 per year for joint filers.
• If you manage or support an endowed fund, now is the time to prioritize transparency and engagement.
• If you’re rethinking your giving strategy, we’re here to help with personalized support.

At La Crosse Area Community Foundation, we’re proud to steward charitable assets for good and forever — and the opportunity it offers to strengthen public understanding of what endowments really do.