Featured: <span>Education</span>

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Most people don’t enjoy asking for money—asking feels awkward. So don’t rely on courage or charisma; rely on method. Behavioral design—clear framing, smart timing, and low-friction paths—turns dread into a predictable decision flow. With the right strategies, rooted in behavioral science, a nonprofit can turn asking for funds into one of its greatest strengths.

Why People Give: The Psychology

Giving isn’t just a whim—it’s the end result of a whole series of thoughts, feelings, and decisions. Psychologists have mapped out this process in detail. There are three models that explain how donors’ attitudes shape the way they give:

The Hierarchy of Effects lays out the steps a donor takes, from first learning about your organization to making a gift.

Functional Attitude Theory explores the motivations and needs that drive a donor’s decision.

The Multi-Attribute Model explains how, after a person decides why they want to give, they decide which organization deserves their support.

Understanding these models reveals where potential donors might get stuck, how to move them toward action, and why they may choose to support your organization over another.

Hierarchy of Effects – The Donor’s Journey

The Hierarchy of Effects model breaks down a donor’s journey into clear, sequential steps:

Awareness: The donor needs to know your organization exists.

Knowledge: They want a clear sense of your mission and impact.

Liking: They develop an emotional connection to your work.

Preference: They start to choose your cause over others.

Conviction: The belief forms that their gift will truly make a difference.

Action: All of this leads to the actual donation.

At each stage, different strategies are effective. A compelling video or strong branding sparks initial awareness, while clear impact metrics help build trust. Stories from beneficiaries foster connection, and a distinctive hook sets you apart. Tangible results reinforce donor confidence, and a simple, mobile-friendly giving platform makes it effortless to take action.

In real life, it might look like this:

David first hears about your nonprofit when a friend shares a campaign post online (awareness). Curious, he visits your website and reads your mission statement and recent success stories (knowledge). He watches a short video of a family that your organization helped and starts to feel a real connection to the cause (liking). Over the next few weeks, he notices himself thinking of your organization first when he considers giving (preference). Your newsletter shares data and stories that convince him that his gift will make a difference (conviction). When he clicks a “Give Now” link and makes a donation in under a minute, he’s crossed the final step (action).

 Functional Attitude Theory – Why They Care

After understanding how people make giving decisions, the next question is why they give at all. Functional Attitude Theory answers this by showing that a single act of giving can be motivated by a range of needs—practical, personal, or emotional.

The theory identifies four main functions that can drive a gift, depending on what’s most important to the donor at that moment. Sometimes people give because they want results—they’re looking for clear, tangible outcomes, such as, “Your $100 trains a teacher, impacting 50 students.” Other times, giving is about expressing identity and values. For those donors, a campaign claiming, “Empower every child to reach their potential,” feels personal.

There are also moments when people donate to feel like they’re doing the right thing or protecting something important. They’ll respond to affirming language, such as, “Your support creates lasting change.” And sometimes, it’s all about transparency and hard numbers. “Every $1 invested yields $4 in community benefits,” really resonates with those who want to know exactly where and how far their money can go.

Multi-Attribute Attitude Models: How the Donor Chooses You

Of course, motivation is only part of the story. Once a person decides why they want to give, there’s still the question of who will earn their support.

Even when the heart says yes, the mind still runs the numbers. Donors use a mental scorecard to weigh what they know about an organization against what matters most to them. Psychologists call this a multi-attribute model, and one of the best-known is the Fishbein Model.

Each donor values different factors—organizational efficiency, transparency, alignment with personal values, or innovation. The same person might care about efficiency in one case and about mission and values in another. The key is for the organization to match its message to what matters most to its audience. Some organizations segment communications for different groups; others pick a primary motivator based on their supporters’ top concerns. One nonprofit can appeal to donors with different priorities by how it frames its message. For instance, a clean water organization might highlight “94% of funds go directly to water projects” to reach data-driven supporters, while telling the story of a transformed village for those motivated by values.

The Science of Successful Fundraising

Putting these ideas into practice means mapping your donor base—figuring out what drives your people, and how they decide where to give. Build campaigns that speak directly to those motivations. Where you can, segment your communications and tailor the message to match what matters to each group.

Fundraising doesn’t have to be a shot in the dark. Use behavioral science to create more targeted campaigns, speak to your donors’ real motivations, and build trust that actually leads to action.

This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.

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Updated 8/13/25 to reflect provisions in the final bill.

The One Big Beautiful Act (OBBA) is a game-changer in many ways. Several provisions stand out as noteworthy for the nonprofit sector and have drawn attention from both nonprofit entities and taxpayers. While headlines focus on corporate tax cuts and changes to individual brackets, the nonprofit sector —particularly for schools and charities—could experience ripple effects that may impact revenue streams and reshape fundraising strategies.

The legislation addresses two significant areas for the nonprofit industry: education funding systems and charitable tax deductions.

Who will be the winners — or losers — when these tax changes are implemented? Below is a summary of the most relevant provisions impacting the nonprofit and charitable sectors and our thoughts on how they may play out.

Education and Scholarship Programs

Tax Credit for Contributions to Scholarship Organizations

The bill establishes a new non-refundable federal tax credit of up to $1,700 for individuals who donate to qualified Scholarship Granting Organizations (SGOs) in states that opt into the program.

To be eligible, SGOs must be 501(c)(3) nonprofits (not private foundations) and meet strict operational and reporting requirements, including allocating at least 90% of revenue to scholarships and ensuring scholarships go to at least 10 students per year. States must also designate eligible SGOs and submit them to the federal government.

Winners:

Individual donors benefit from a dollar-for-dollar federal tax credit—up to $1,700 per return—when giving to SGOs in participating states. The credit can be carried forward for up to five years if unused. Education-focused nonprofits that qualify as SGOs may see increased donations, especially in states that opt in. Most important to taxpayers, families receiving scholarships gain access to broader K–12 education options, with scholarships becoming tax-free starting in 2027.

Losers:

Non-education nonprofits may face increased competition for charitable dollars, as donors shift giving to SGOs to maximize tax savings. Donors in non-participating states cannot claim the credit unless they give to SGOs in states that have opted in, creating potential disparities in who benefits.

Read more about SGO tax credits here.

Expanded Uses of 529 College Savings Account

A 529 College Savings Account is a tax-advantaged investment account used to save for education expenses. Like an IRA, a 529 plan grows tax-free, so by the time account holders need to use it for education expenses, the funds have had time to grow—and withdrawals remain tax-free when used for qualified purposes.

Previously limited to college expenses, the OBBA expands the use of 529 savings plans beyond their previous scope——to now include K–12 education costs, such as private and religious school tuition. It also permits the use of funds for certain credentialing and professional certification programs.

Moreover, under the new law, families may now use up to $20,000 per year from a 529 plan to cover K–12 education costs. This is double the previous $10,000 annual limit.

Winners:

Private and religious K–12 schools may see increased enrollment as the expanded $20,000 cap makes tuition more financially manageable for families. Families will enjoy greater flexibility and tax advantages in planning for their children’s educational needs, from early schooling through career training. For workforce development and certification providers, new funding streams may develop as 529 funds become eligible for use toward certain credentialing programs.

Losers:

As more families explore private school options now supported by expanded 529 access, and Scholarship Granting Organizations (SGOs) attract increased donations through the new non-refundable federal tax credit, public schools could experience declining enrollment and reduced funding. Colleges and universities may experience a decline in 529-funded enrollments, as families allocate a greater share of savings to K–12 education or non-degree programs.

Individual Charitable Deductions

Charitable Deduction for Non-Itemizers

Beginning in 2026, taxpayers who do not itemize deductions will be able to claim a modest charitable deduction on their cash contributions— $1,000 for individuals and $2,000 for joint filers. —

Winners:

Charities will enjoy a broader donor base, and smaller nonprofits that rely on modest individual donations may also see a boost in contributions.

We don’t believe this provision will have a significant impact on the non-profit sector as a whole, but it does offer a meaningful benefit to individual taxpayers by providing targeted tax relief.

Restrictions on Charitable Giving

New Minimum for Corporate Charitable Deductions

Under the newly enacted law, corporations can continue to deduct charitable contributions of up to 10% of their taxable income. However, companies that give less than 1% of their taxable income in a year will no longer be eligible for a charitable deduction. This change is intended to encourage baseline levels of giving. Donations that fall below the 1% threshold cannot be deducted in that year, though companies are allowed to carry forward those contributions to a future year in which they do meet the minimum requirement.

New Minimum for Individual Charitable Deductions

For individuals, the law introduces a 0.5% floor on charitable deductions, effective for tax years beginning after December 31, 2025. An individual’s otherwise deductible charitable contributions must be reduced by 0.5% of their contribution base—generally their adjusted gross income (AGI). The law also provides ordering rules for how contributions are applied and allows for carryforwards of contributions disallowed by the floor.

In addition, the law permanently extends the 60% AGI ceiling for cash contributions to most public charities. This ceiling, which was previously set to expire after 2025, now ensures that individuals may continue to deduct cash contributions to these charities up to 60% of their AGI.

Cap on Deductions for Individuals’ Charitable Giving

If an individual taxpayer itemizes his taxes and donates to charity, his tax savings usually depend on his top tax rate. For example, a taxpayer in the 37% tax bracket will be eligible for a $3,700 tax deduction on $10,000 in charitable donations. However, OBBA provisions establish a cap on itemized deductions; even high earners can’t deduct charitable donations at more than a 35% rate, regardless of how much they give.

Winners:

Nonprofits with strong corporate partnerships will benefit from this provision, as companies may increase donations to meet the 1% threshold. Larger charities are more likely to receive increased corporate giving as businesses increase their giving to reach the threshold. Finally, individual donors making large cash contributions benefit from the permanent 60% ceiling.

Losers:

Corporations donating less than 1% won’t receive a deduction that year but can carry it forward once the threshold is met. Similarly, individuals must exceed a 0.5% AGI floor to see tax benefits from their contributions. For individuals in high tax brackets, OBBA’s new cap on charitable deduction rates may reduce the value of their deductions.

Overall Impact

Bottom Line for Nonprofits

New donor incentives, such as the expanded scholarship credit and corporate deduction floor, could boost fundraising. For our clients and community, the $1,700 federal tax credit for contributions to scholarship organizations is the legislation’s biggest win. It will enable families and breadwinners to set aside tax-free funds for schooling for a broader range of students.

As always, nonprofits should be aware and informed of their exposures and vulnerabilities and stay adaptable as tax laws continue to shift and evolve.

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There was a time, not so long ago, when “doing the books” meant drowning in paper, waiting weeks for reports, and bracing for bad news at month’s end. Surprise overdraft? Missed payment? Misfiled invoice? It was all part of the game. And for business owners, staying on top of finances often felt more like damage control than decision-making.

But here’s the good news: those days are over.

Cloud-based tools have revolutionized the way businesses can manage and see their finances. If you’re still buried in spreadsheets or waiting for your accountant or bookkeeper to “close the month,” it’s time for a reset. Real-time financial clarity isn’t just possible now—it’s the new standard.

The old way: a recipe for frustration

Let me paint you a picture of how things used to work. A decade ago, my team and I would spend countless hours driving to client offices and sitting on desktop computers running QuickBooks Desktop. Month-end closings were marathon sessions that stretched into weekends. Clients would call frantically asking about their cash flow, and I’d have to tell them, “Give me a few days to get caught up, and I’ll send you a report.”

The inefficiency was staggering. Recordkeeping and payments were reactive instead of proactive, always playing catch-up rather than providing the strategic guidance businesses desperately needed. Financial reports were often weeks behind, making them historical documents rather than actionable business intelligence. It was frustrating for everyone involved.

The cloud changed everything

Online and AI platforms have redefined what’s possible for small and growing businesses. These aren’t just upgrades to traditional accounting software; they’re entirely different ecosystems.

First in line is QuickBooks Online. With this tool, a business’s bookkeeping team can connect directly to bank accounts, credit cards, and payment processors. Transactions flow in automatically, saving hours of manual entry. More importantly, the numbers can be reviewed and reconciled in near-real time. Business owners don’t have to wait 30 days to see what’s happened—their teams can work with data that’s fresh, accurate, and actionable.

Bill.com is another game-changer. Managing payables used to mean chasing approvals, mailing checks, and hoping nothing got lost. Using this platform, invoices can be emailed, scanned by AI, and routed for approval. Once cleared, payments can be scheduled electronically. No paper. No delays. Every transaction syncs seamlessly with the ledger.

We’ve seen the impact. One of our mid-sized retail clients cut AP processing time from 10 hours a week to under two. Their staff now focuses on higher-value tasks, and costly errors like duplicate payments? Gone.

Convenience plus clarity

The convenience factor of cloud tools is obvious. But what excites me most is the clarity they bring.

When a business’s books are updated weekly—or even daily—they can see their cash position at a glance. They know what came in, what went out, and what’s coming due. That kind of real-time visibility is a huge shift from the old days of waiting on monthly reports.

Here’s a simple but powerful example: Derek’s Drills Co. was preparing to invest in a state‑of‑the‑art rotary drilling rig valued at approximately $2.5 million. In the past, the company might have made the purchase based on rough estimates, limited historical data, or outdated spreadsheets. But because its books were up-to-date, executives could walk through the numbers—cash flow trends, recent expenses, outstanding receivables—and decide if the timing was right. Turns out, waiting two more weeks made a big difference. That’s the kind of decision-making power current data gives you.

Empowering businesses to grow smarter

Another advantage of cloud-based tools is the flexibility they offer growing businesses. When routine tasks—such as payables or reconciliations—are handled through streamlined systems, in-house staff can be redeployed to more strategic work. With automation in place, one company was able to shift a full-time office manager from manual invoice entry and check processing into a business development role—both a better fit for his skills and a priority for the organization.

Cloud access also helps safeguard operations during staffing changes. In one case, when a company’s longtime bookkeeper left unexpectedly, their cloud systems allowed the transition to happen smoothly. Payroll still went out on time, vendors were paid, and day-to-day operations continued without interruption.

The takeaway: a well-designed setup can provide continuity, clarity, and capacity when you need them most.

Automation is a tool, not a replacement

One question I hear a lot is, “If all this can be automated, why do I need a bookkeeper or advisor?”

The answer is simple: automation helps, but oversight is essential.

These systems are smart, but they’re not perfect. AI can scan an invoice or categorize a transaction, but it can’t tell you if a vendor double-billed you. It won’t notice that a regular customer’s payment is late, or that your spending is trending higher than normal in one category.

That’s where your professional team comes in. They can review what the systems process and match data to reality. And perhaps most importantly, they can spot the story in the numbers—what’s working, what’s not, and where you might need to pay closer attention.

Is it time to reevaluate your approach?

Cloud-based platforms have completely reshaped the way financial management works. They’ve made businesses more nimble, financial data more accessible, and decision-making more grounded in real-time insight. In my experience, these tools don’t just improve workflows; they fundamentally change the way business owners relate to their numbers. It’s not about catching up—it’s about staying ahead.

If you’re still relying on outdated systems or only reviewing your books once a month (or quarter), it may be time to reconsider. Moving to the cloud isn’t just a tech upgrade; it’s a mindset shift that gives you faster access to information, fewer surprises, and better control over your financial future.

The tools are here. The support is here. What’s left is your decision to run your business with the kind of clarity today’s environment both demands and rewards.

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The following is a true narrative. Names and identifying details have been changed to protect confidentiality.

David Klein didn’t set out to violate federal law. He just needed to make payroll.

I met David when he called our office in a panic. As executive director of Rofeh Services, a nonprofit that helps families navigate medical crises, he was used to managing cash flow problems. But this time, he was staring down the IRS.

The core problem was simple. Rofeh didn’t have enough money to cover its operating expenses. Payroll, rent, vendor bills—the numbers didn’t work. The only liquid funds in the account were the payroll taxes that had already been withheld from employee paychecks: federal income tax, Social Security, and Medicare. That money was supposed to go to the IRS. It was set aside, held in trust.

But David needed to keep the lights on, and the staff paid.

So, he used it.

Over the course of several months, he dipped into the withheld trust funds whenever cash got tight. Just enough to keep payroll going. Each time, he told himself it was temporary—that he’d make it right once funding stabilized. It wasn’t a scheme. It wasn’t theft in his mind. It was survival. A way to buy time.

But the reprieve he was counting on never materialized. Instead, a letter from the IRS arrived.

Rofeh Services owed over $350,000 to the IRS. But the bigger blow came in a second envelope. David himself had been named. The IRS viewed his actions not as a bookkeeping shortcut but as a deliberate misuse of federal funds. Under IRC §6672, they held him personally liable for the entire trust portion. And if they concluded that his decision was willful and knowing, they could escalate the case beyond civil penalties—all the way to felony prosecution, with real prison time on the table.

This is what most people miss. Payroll taxes aren’t just another line item. They don’t belong to the organization. They don’t even belong to the employer. They are held in trust and using them for anything else—even for reasons that feel justified—can trigger personal and criminal exposure.

When I saw the facts, I moved his file to the top of my stack. This was no longer a collections issue. It was a crisis.

First, we stabilized the situation. All future payroll taxes were filed and paid on time. The IRS doesn’t negotiate while you’re still violating.

Next, we ran the numbers. The trust fund portion—the part that exposed David personally—was significant. There was no way to pay in full. Our best move was to file for an Offer in Compromise (OIC).

The OIC process is a grind. Weeks of document gathering, financial disclosures, and IRS scrutiny. Our top priority was keeping David out of a courtroom—or worse. One element gave us a clear path to do that.

By default, when a taxpayer submits a payment toward an outstanding tax balance, the IRS applies it however they see fit—typically to penalties and interest first. But a little-known provision allows taxpayers to designate how voluntary payments are applied. Under Rev. Rul. 79-284, the IRS is required to honor that designation if made clearly. What most people don’t know is that you can even designate an OIC 20% payment towards the trust fund only. By directing the payment to the trust fund portion, we immediately eliminated David’s personal exposure.

When we submitted the designation, the Revenue Officer pushed back. She insisted that you can’t designate an initial OIC payment towards the trust fund only and that the IRS would apply the payment at its discretion, regardless of what we requested.

We didn’t press the issue. The law was clear, and we were confident in our position—but our priority wasn’t to win an argument. It was to keep our client out of court, and out of prison. Preserving a productive relationship with the IRS was essential to that goal.

We gave her the space to reconsider without forcing a confrontation.

“That’s surprising,” I said. “The Offer in Compromise form and the Internal Revenue Manual seem to permit it. Can you walk us through your position?”

Two days later, they reversed course. The payment was applied as directed. David was out of the blast zone.

What followed was slow and procedural—paperwork, correspondence, and the final approval. But the danger had passed. David was no longer at risk of indictment. He could walk into his office without wondering if it might be his last day there.

Today, Rofeh is still running, continuing its mission to help families navigate complex medical crises. David is still at the helm. But the experience reshaped how he thinks about risk, responsibility, and the limits of good intentions. This isn’t just a cautionary tale—it’s a reminder that following the rules is only part of the story. When you find yourself in a bind, it’s knowing how to work within the system that can make all the difference.

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The One Big Beautiful Bill Act (OBBBA), passed by the 119th U.S. Congress and signed into law on July 4th, 2025, introduces several sweeping tax and funding reforms. Among these, one provision has sparked particular interest—and, frankly, some misconceptions—among nonprofits and individual taxpayers: a new federal scholarship tax credit program.

Key Takeaways

A New Tax Credit: Taxpayers may claim a nonrefundable federal credit of up to $1,700 for donations to qualified Scholarship Granting Organizations (SGOs) operating in states that opt in.

Scholarships Are Tax-Free Starting 2027: Eligible families can use scholarships for a wide range of K–12 education expenses, and awards will be excluded from federal income starting in 2027.

States Control Access: The credit is only available for donations made to SGOs in “Covered States” that have elected to participate; this may create potential state-by-state differences.

The provision is designed to incentivize private donations to Scholarship Granting Organizations (SGOs), which in turn provide funding to help eligible students pay for elementary and secondary education expenses. This program has been talked about in some circles as a potential windfall, with rumors of liberal tax breaks and government-funded generosity. Time to think again.

The opportunity here is real but measured—and only accessible to those who carefully follow the rules.

What the Law Offers to Taxpayers

Under the OBBBA, individual taxpayers who are U.S. citizens or residents may claim a nonrefundable federal tax credit of up to $1,700 annually for donations made to qualifying SGOs. To be clear, this is not a deduction; this is a credit that directly reduces the tax you owe. But it’s also nonrefundable, meaning it can’t exceed your tax liability.

If you’ve also claimed a state-level credit for the same contribution, the federal credit will be reduced accordingly. You also can’t double-dip by taking a charitable deduction on the same gift. However, if your credit exceeds your tax liability in a given year, you may carry it forward for up to five years.

There’s a catch: this credit only applies to donations made to SGOs operating in states that elect to participate in the program. Additionally, a taxpayer making a donation to a nonprofit SGO cannot receive a federal credit unless the state in which it operates has formally joined the program, and its governor has designated it as eligible.

What It Means for Nonprofits

For nonprofits dedicated to awarding scholarships, this provision opens up a new funding channel—if they meet strict criteria to qualify as SGOs under the law.

To participate, an organization must be a 501(c)(3) nonprofit that is not classified as a private foundation. It must also operate in a state that has opted in, be listed by that state, and submitted by the state to the Secretary of the Treasury. Contributions can only be used within the state in which they are received and must be kept in separate accounts that do not commingle with other funds.

Operational requirements are precise. SGOs must award scholarships to at least ten students (and not all from the same school), and 90% of revenues must go directly toward scholarships. These scholarships may only be used for qualified elementary and secondary education expenses, such as tuition, books, supplies, tutoring, and certain support services.

Importantly, organizations cannot earmark donations for specific students, nor can they provide scholarships to board members, substantial donors, or their family members. Prioritization is also required—SGOs must give first consideration to students who received scholarships the previous year, and then to students with siblings who have received one.

To determine eligibility, SGOs must verify family income and household size, and we expect that future regulations will provide required guidelines for SGOs to adhere to.

State Participation: The Covered State Requirement

For the program to function, states must elect to participate. States must notify the Secretary of the Treasury of their election and provide a list of SGOs designated as eligible within their state.

States, in other words, serve as the gatekeepers to this federal credit. Without state-level action, residents cannot benefit from it—even if they meet every other requirement.

We are watching closely to see how states will respond. It is unclear whether states will be allowed to impose additional requirements on SGOs beyond what is outlined at the federal level. If so, this could lead to a patchwork system where nonprofit eligibility and donor benefits vary significantly by geography.

For instance, a state could conceivably require SGOs to meet higher financial thresholds, undergo additional audits, or limit scholarship eligibility based on local criteria. That might shift the picture considerably, especially for smaller nonprofits hoping to participate.

We’ll know more once the final federal regulations are issued, but until then, this remains an area of uncertainty and one worth monitoring.

The Nuts and Bolts: Who Qualifies for the Scholarships

Families that benefit from SGO scholarships must also meet clear criteria. The program is targeted at students from low- to moderate-income households, specifically those with income at or below 300% of the Area Median Gross Income (AMGI). The student must also be eligible to enroll in a public elementary or secondary school, even if the scholarship is used for a private or alternative education option.

The scholarships can be used for a wide range of expenses, including tuition, fees, academic materials, tutoring, special education services, transportation, and room and board, depending on the student’s needs.

An additional benefit: beginning in 2027, these scholarships will be excluded from gross income for federal tax purposes. That’s a meaningful financial advantage for recipient families.

Timing and Takeaways

The scholarship tax credit and related provisions will apply to tax year 2027 and forward. That means nonprofits, donors, and state governments have some time to prepare—but should start planning now to ensure compliance.

The income exclusion for scholarship recipients will take effect January 1, 2027.

Final Thoughts

The OBBBA scholarship provision is not a shortcut to wealth or a dramatic upheaval of the education system. But it is a well-structured opportunity for taxpayers to receive a moderate tax benefit while supporting expanded access to education through eligible nonprofits.

To take advantage of it, participating individuals, organizations, or state governments, will need to follow the rules, stay informed, and prepare thoughtfully. The program offers real benefits, but only to those who meet its reasonable, but clearly defined, requirements.

Common Taxpayer Questions

How much will my credit be if I file jointly—$1,700 or $3,400?
Most likely $1,700 total per return, not per person. When the tax code is silent, it typically means the limit applies per return, not per filer. The IRS is unlikely to double the credit for joint filers.
Can I still deduct my donation if I claim the tax credit?
No. Contributions used to claim the SGO credit cannot also be deducted as charitable donations on your federal return.
What happens if my state doesn’t participate?
If your state doesn’t opt in, it is likely that you can still claim the federal credit, but only if you donate to an SGO in a participating state. Regulations are expected to be released outlining how this will be addressed.

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On July 3, 2025, the House of Representatives narrowly passed President Donald Trump’s sweeping domestic policy package—officially titled the One Big Beautiful Bill Act (H.R. 1)—by a vote of 218–214.

This follows the bill’s passage in the Senate two days earlier, on July 1, by a 51–50 vote, with Vice President JD Vance casting the tie-breaking vote. The legislation overcame strong Democratic opposition and internal Republican dissent in both chambers.

The bill, a cornerstone of President Trump’s second-term agenda, now heads to the president’s desk; he is expected to sign it into law by July 4 at 5PM on July 4th as a part of Independence Day celebrations.

The following are the most notable provisions that we’ve identified:

Business Entities

Research & Development (R&D)

Starting with costs incurred in 2025, anything spent on research performed inside the United States is 100% deductible in the year paid, with no more five-year amortization and no sunset date.
Research work performed abroad must be capitalized and deducted at an equal rate over fifteen years, to encourage domestic labs.
Domestic research expenses forced to capitalize in 2022-24 can be rolled into 2025’s return with a simple method-change election (no income pick-up, no IRS consent required).

Pass-Through Entity Tax (PTET)

PTET workaround survives unchanged. The final bill drops all prior language that would have made the deduction less desirable.
Partnerships or S-corps electing PTET retain the uncapped federal deduction.
Owners still get state credit/refund outside $10,000 SALT limit.
SALT cap lifted to indexed “applicable limitation amount” starting at $40,000/$20,000, but cap applies only to itemized deductions on Schedule A.
PTET credits don’t count toward ceiling.

Employment:

Tips and Overtime

Up to $25,000 of cash tips allowed tax-free annually.
Tips must be from occupations that customarily receive tips, as specified in a future Treasury-provided list.
Up to $12,500 of overtime wages deductible annually ($25,000 for joint filers).
This covers time-and-a-half pay required by Fair Labor Standards Act; straight-time wages and tips don’t count.
Both benefits phase out starting at $150,000 in income.

1099 Reporting

Starting threshold raised to $2,000 annually for payments made after December 31, 2025.

Real Estate

100% bonus depreciation write-off returns permanently, with no phase-down provisions included.
Business Interest Deduction: EBITDA test made permanent for § 163(j) cap, so depreciation and amortization are added back when measuring adjusted taxable income, restoring room for capital-intensive firms.
Opportunity zones program extended seven years forward. Capital gains invested in Qualified Opportunity Fund (QOF) through December 31, 2033, can be deferred to December 31, 2042.

Nonprofit

The final bill swaps the House’s “10 % of AGI or $5 000” formula for a flat dollar-for-dollar credit up to $1,700 per return each year for cash gifts to a state-approved 501(c)(3) SGO; any excess carries forward.
529 plans can now be used to include tuition expenses for K–12 private and religious schools.
Non-itemizers can claim up to a $1,000/$2,000 deduction for cash gifts. This is an increase from $300/$600 in the original version of the bill.
Proposed nonprofit UBTI add-ons for employee parking/transit and name and likeness royalty income in the original bill are now removed from the final bill.
Beginning in 2026, businesses must skip first 1% of taxable-income gifts; individuals must skip first 0.5% of AGI when claiming charitable deductions, with unused amounts carried forward five years.

Other Important Provisions

Starting in 2025, each qualifying child automatically receives a federally-funded “Trump Account” seeded with a one-time $1,000 deposit, operating like a child’s IRA with up to $5,000 annual contributions allowed.
Electric-vehicle credits, home-efficiency incentives, and wind/solar eligibility ending between 2025-2027. Limited window remains to utilize existing rebates.
Child tax credits are permanently increased to $2,200 per child with standard income phaseouts.
Lifetime exemption on estate and gift taxes are permanently raised to $15 million per individual.

As always, we are closely monitoring developments and will be distributing thorough reviews of each of these topics in the coming weeks.

Correction (July 4 2025): An earlier version cited an outdated draft of the bill and stated the Scholarship-Granting-Organization credit was “10 % of AGI or $5,000.” The final bill instead provides a flat $1,700 credit per return.

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Global crises and natural disasters are on the rise and in response, people all over the country are opening their hearts and their wallets to support those in need. But this rise in altruism has its challenges. In the wake of Hurricanes Milton and Helene, the Internal Revenue Service recently warned taxpayers to beware of scammers who exploit public generosity by creating fake charities that gather donations and steal sensitive personal and financial information. According to recent data from the Federal Trade Commission, in 2023, nearly 10,000 reports of charitable solicitation fraud were filed in the United States, resulting in a loss of approximately $22.5 million to donors. Scammers commonly take advantage of peoples’ generosity during the holiday season, and when natural disasters or other tragic events occur; and their victims are often the easier marks – seniors and groups with limited English proficiency.

Scammers are imaginative and don’t limit themselves to pulling on heartstrings only as a response to a natural crisis. In a shameful example of fake charity fraud, in 2023, student Madison Russo, fraudulently raised nearly $40,000 by claiming to have multiple cancers, including stage 2 pancreatic cancer and leukemia. She publicized her story on TikTok and set up a GoFundMe page for donations. Ultimately, she was challenged and, after failing to provide medical records or proof of her diagnosis, was convicted and sentenced to probation and restitution to her donors.

Sham charities can go corporate too. In a March 2024 announcement, the Federal Trade Commission, along with ten other states, brought suit against Cancer Recovery Foundation International, also known as Women’s Cancer Fund, and its operator, Gregory B. Anderson. The suit alleges that from 2017 to 2022, the organization collected more than $18 million from donors to support women cancer patients. It only spent 1.1%, or approximately $196,000, on financial support to patients, while a cool $775,139 went to pay Anderson, its operator.

The FBI warns citizens to avoid making financial contributions to groups that support terrorism. Foreign Terrorist Organizations (FTOs) are foreign organizations that are designated by the Secretary of State in accordance with section 219 of the Immigration and Nationality Act (INA). The US Department of State provides a public list of Designated Foreign Terrorist Organizations and warns donors to keep their distance.

“We all want to help innocent victims and their families,” said IRS Commissioner Danny Werfel. “Knowing we’re trying to aid those who are suffering, criminals crawl out of the woodwork to prey on those most vulnerable – people who simply want to help. Especially during these challenging times, don’t feel pressured to immediately give to a charity you’ve never heard of. Check out the charity first and confirm it is authentic.”

To that end, the IRS offers the Tax-Exempt Organization Search (TEOS) tool, which taxpayers can access on the IRS website to help them find or verify qualified, legitimate charities. Beyond this, how can a donor make sure that his or her charitable donations reach their intended recipients? The wise donor will do their research and will stick with charities they know and trust. It’s best to make targeted donations, designated towards specific purposes instead of to a general fund. Cyber-safety should always be paramount; never click on links or open attachments in unsolicited e-mails, texts, or social media posts. Also know that most legitimate charity websites end in “.org” rather than “.com.” Charities that ask for cash or wire payments raise a red flag. It is always more prudent to pay by credit card or write a check directly to a charity; and never make a charitable donation check out to an individual.

As charitable scams continue to evolve, it is vital for donors to stay vigilant and informed about how to identify potential fraud. Always verify the legitimacy of a charity through reliable resources, such as the Tax-Exempt Organization Search, Better Business Bureau or Charity Navigator, and be wary of unsolicited requests for donations. By staying aware and conducting due diligence, you can ensure that your contributions reach those who genuinely need support, while safeguarding yourself against scammers.

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Most not-for-profit entities are familiar with the hazards of excess benefit transactions, but this brief refresher may enhance vigilance and compliance. The stakes are high. 501(c)(3) organizations determined by the IRS to have violated the rules governing excess benefit transactions can be liable for penalties of 25% to 200% of the value of the benefit in question. They may also risk a revocation of their tax-exempt status — endangering both their donor base and community support.

Private inurement

To understand excess benefit transactions, you also need to comprehend the concept of private inurement. Private inurement refers to the prohibited use of a nonprofit’s income or assets to benefit an individual that has a close connection to the organization, rather than serving the public interest. A private benefit is defined as any payment or transfer of assets made, directly or indirectly, by your nonprofit that is:

• Beyond reasonable compensation for the services provided or goods sold to your organization, or

• For services or products that don’t further your tax-exempt purpose.

If any of your organization’s net earnings privately benefit an individual, the IRS won’t view your nonprofit as operating primarily to further its tax-exempt purpose.

Private inurement rules extend the private benefit prohibition to “insiders” or “disqualified persons” — generally any officer, director, individual or organization (including major donors and donor advised funds) in a position to exert significant influence over your nonprofit’s activities and finances. The rules also cover their family members and organizations they control. A violation occurs when a transaction that ultimately benefits the insider is approved.

Examples of violations could include a nonprofit director receiving an excessive salary, significantly higher than what is typical for similar positions in the industry; a nonprofit purchasing supplies at an inflated cost from a company owned by a trustee, or leasing office space from a board member at an above-market rate.

Be reasonable

The rules don’t prohibit all payments, such as salaries and wages, to an insider. You simply need to make sure that any payment is reasonable relative to the services or goods provided. In other words, the payment must be made with your nonprofit’s tax-exempt purpose in mind.

It is wise for an organization to ensure that, if challenged, it can prove that its transactions were reasonable, and made for valid exempt purposes, by formally documenting all payments made to insiders. Also, ensure that board members understand their duty of care. This refers to a board member’s responsibility to act in good faith; in your organization’s best interest; and with such care that proper inquiry, skill and diligence has been exercised in the performance of duties. One best practice is to ask all board members to review and sign a conflict-of-interest policy.

Appearance matters

Some states prohibit nonprofits from making loans to insiders, such as officers and directors, while others allow it. In general, you’re safer to avoid such transactions, regardless of your state’s law, because they often trigger IRS scrutiny. Contact your accounting professional to learn more about the best ways to avoid excess benefit transactions, or even the appearance of them, within your organization.

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Whole Foods Market is now famous as the upscale supermarket chain that was acquired by Amazon for close to $14 billion. However, Whole Foods Market began with humble beginnings. In 1978, John Mackey and Renee Lawson borrowed money from friends and family to open a small natural food store in Austin, Texas. As the store expanded to open more locations and Mackey and Lawson admitted two additional partners and designated specific tasks to each partner, such as finance, human resources, and sales. This process continues today where, although Whole Foods Market is a multinational food chain with 500 locations, each regional manager has the autonomy and flexibility to decide on suppliers and pricing.

The proverb “too many cooks spoil the broth” applies to the management of a business. Thus, establishing the sequence of control as part of a succession plan ensures that the company continues to operate effectively and efficiently – especially if the business is bequeathed to children who do not work in the family business.

The sequence of control of a business succession plan outlines the decision-making process of a closely-held, family business once the owner is determined to be incapacitated or deceased. Although this can be emotionally tolling, the sequence of control is essential for the continuity of the business. The following are questions that arise when planning the sequence of control.

What is the definition of incapacitated?

You undoubtedly know of instances in which the patriarch of a family suffered from dementia or a form of memory loss. You are probably familiar with cases in which people took advantage of individuals suffering from Alzheimer’s disease. Such undue influence can arise if a business owner can no longer exercise prudent business reasoning and judgment. Accordingly, the business succession plan should define “capacity” and specify who makes the determination, which can be a physician or a member of the clergy.

Who assumes control?

It may seem irresponsible to vest absolute control to the child or children who work(s) in the business; however, it may be imprudent to allow children who do not work in the company to be involved in the decision-making process of the business. A business administrator who requires approval for the day-to-day operational decisions in the ordinary course of business may be unable to perform basic administrative duties of the company, especially if consent is needed from an adverse party. Nevertheless, a proper business plan may require a vote of all members for significant business decisions, or decisions that may alter the business structure or significantly impact the business.

How can I secure oversight over the business administrator?

Proper internal controls are always recommended to promote accountability and prevent fraud, but it is even more critical when one heir controls the family business. The business succession plan can provide for a salary and fringe benefits or performance-based compensation, methods for removing or replacing the administrator, an arbitrator to adjudicate disagreements or disputes among family members, and an exit strategy or process of dissolving the business or partnership.

How can I provide for myself and my spouse while incapacitated?

If you are considered an owner of the business during your lifetime or so long that your spouse is alive, your succession plan can stipulate that you receive periodic distributions. However, a fixed withdrawal may prove to be insufficient for your medical needs or general cost of living. Conversely, the business may be dependent on its working capital that is now being distributed and accumulated in your personal checking account.

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Do you want to control costs and improve delivery of your not-for-profit’s programs and services? It may not be as difficult as you think. First, you need to know how much of your nonprofit’s expenditures go toward programs, as opposed to administrative and fundraising costs. Then you must determine how much you need to fund your budget and weather temporary cash crunches.

4 key numbers

These key ratios can help your organization measure and monitor efficiency:

Percentage spent on program activities. This ratio offers insights into how much of your total budget is used to provide direct services. To calculate this measure, divide your total program service expenses by total expenses. Many watchdog groups are satisfied with 65%.

Percentage spent on fundraising. To calculate this number, divide total fundraising expenses by contributions. The standard benchmark for fundraising and admin expenses is 35%.

Current ratio. This measure represents your nonprofit’s ability to pay its bills. It’s worth monitoring because it provides a snapshot of financial conditions at any given time. To calculate, divide current assets by current liabilities. Generally, this ratio shouldn’t be less than 1:1.

Reserve ratio.Is your organization able to sustain programs and services during temporary revenue and expense fluctuations? The key is having sufficient expendable net assets and related cash or short-term securities.

To calculate the reserve ratio, divide expendable net assets (unrestricted and temporarily restricted net assets less net investment in property and equipment and less any nonexpendable components) by one day’s expenses (total annual expenses divided by 365). For most nonprofits, this number should be between three and six months. Base your target on the nature of your operations, your program commitments and the predictability of funding sources.

Orient toward outcomes

Looking at the right numbers is only the start. To ensure you’re achieving your mission cost-effectively, make sure everyone in your organization is “outcome” focused. This means that you focus on results that relate directly to your mission. Contact us for help calculating financial ratios and using them to evaluate outcomes.

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Your not-for-profit’s ability to pursue its mission depends greatly on its financial health and integrity. If your nonprofit is growing and your executives are struggling to juggle financial responsibilities, it may be time to hire a chief financial officer (CFO).

Core responsibilities

Generally, the nonprofit CFO (also known as the director of finance) is a senior-level position charged with oversight of accounting and finances. He or she works closely with the executive director, finance committee and treasurer and serves as a business partner to your program heads. A CFO reports to the executive director or board of directors on the organization’s finances. He or she analyzes investments and capital, develops budgets and devises financial strategies.

The CFO’s role and responsibilities vary significantly based on the organization’s size, as well as the complexity of its revenue sources. In smaller nonprofits, CFOs often have wide responsibilities — possibly for accounting, human resources, facilities, legal affairs, administration and IT. In larger nonprofits, CFOs usually have a narrower focus. They train their attention on accounting and finance issues, including risk management, investments and financial reporting.

Making the decision

How do you know if you need a CFO? Weigh the following factors:

Size of your organization,
Complexity and types of revenue sources,
Number of programs that require funding, and
Strategic growth plans.

Static organizations are less likely to need a CFO than not-for-profits with evolving programs and long-term plans that rely on investment growth, financing and major capital expenditures.

The right candidate

At a minimum, you want a CFO with in-depth knowledge of the finance, accounting and tax rules particular to nonprofits. Someone who has worked only in the for-profit sector may find the differences difficult to navigate. Nonprofit CFOs also need a familiarity with funding sources, grant management and, if your nonprofit expends $750,000 or more of federal assistance, single audit requirements. The ideal candidate should have a certified public accountant (CPA) designation and, optimally, an MBA.

In addition, the position requires strong communication skills, strategic thinking, financial reporting expertise and the creativity to deal with resource restraints. Finally, you’d probably like the CFO to have a genuine passion for your mission — nothing motivates employees like a belief in the cause.

Consider outsourcing

If your budget is growing and financial matters are becoming more complicated, you may want to add a CFO to the mix. Otherwise, consider outsourcing CFO responsibilities to a CPA firm. Contact us for more information.

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Most not-for-profits are intensely focused on present needs, not the possibility that disaster will strike sometime in the distant future. But because a fire, flood or other natural or man-made disaster could strike at any time, the time to plan for it is now.

You likely already have many of the necessary processes in place — such as evacuating your office. A disaster or continuity plan simply organizes and documents your processes.

Identify specific risks

No organization can anticipate or eliminate all possible risks, but you can limit the damage of potential risks specific to your nonprofit. The first step in creating a disaster plan is to identify the specific threats you face when it comes to your people, processes and technology. For example, if you work with vulnerable populations such as children and the disabled, you may need to take extra precautions to protect your clients.

Also assess what the damages would be if your operations were interrupted. For example, if you had an office fire — or even a long-lasting power outage — what would be the possible outcomes regarding property damage and financial losses?

Make your plan

Designate a lead person to oversee the creation and implementation of your continuity plan. Then assemble teams to handle different duties. For example, a communications team could be responsible for contacting and updating staff, volunteers and other stakeholders, and updating your website and social media accounts. Other teams might focus on:

Safety and evacuation procedures,
IT issues, including backing up data offsite,
Insurance and financial needs, and
Recovery — getting your office and services back up and running.

Planning pays off

All organizations — nonprofit and for-profit alike — need to think about potential disasters. But plans are critical for some nonprofits. If you provide basic human services (such as medical care and food) or are a disaster-related charity, you must be ready to support victims and their families. This could mean mobilizing quickly, perhaps without full staffing, working computers or safe facilities. You don’t want to be caught without a plan. Contact us for more information.

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It’s a well-known truism in the corporate world: Organizations that don’t evolve run the risk of becoming obsolete. But instead of anticipating and reacting to market demands like their for-profit counterparts, many not-for-profits hold on to old ideas about how their organizations should be run. Here are a few things your nonprofit can learn from the business world.

Thinking strategically

The strategic plan — a map of near- and long-term goals and how to reach them — lies at the core of most for-profit companies. If your nonprofit doesn’t have a strategic plan or has been lax about revisiting and revising an existing plan, this should be a top priority.

Although the scope of your plan will be specific to the size and nature of your organization, basic principles apply to most. For example, you should set objectives for several time periods, such as one year, five years and 10 years out. Pay particular attention to each strategic goal’s return on investment. For example, consider the resources required to implement a new contact database relative to the time and money you’ll save in the future.

Spending differently

You probably already develop an annual budget, but how closely does it follow your strategic plan? For-profit businesses use budgets to support strategic priorities, putting greater resources behind higher priority projects.

Businesses also routinely carry debt on their balance sheets in the belief that it takes money to make money. Nonprofits, by contrast, typically avoid operating deficits. Unfortunately, it’s possible to operate so lean that you no longer meet your mission. Applying for a loan or even creating a for-profit subsidiary could provide your nonprofit with the funds to grow. Building up your endowment also may help provide the discretionary cash essential to pursue strategic opportunities.

Promoting transparency

Although nonprofits must disclose financial, operational and governance-related information on their Form 990s, public companies subject to the Sarbanes-Oxley Act and other regulations are held to higher standards. Consider going the extra mile to promote transparency.

If you don’t already, engage an outside expert to perform annual audits, and make your audited financial statements available upon request. Outside audits help assure stakeholders that your financial data is accurate and that you’re following correct accounting practices and internal controls.

We can help with your audit needs and assist you in adopting for-profit business practices that make sense given your organization’s needs. Reach out to learn more.

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Competition is as fierce as it has ever been for private and public grants to not-for-profits. If your funding model depends on receiving adequate grant money, you can’t afford to submit sloppy, unprofessional grant proposals. Here are some tips on writing a winner.

Do your research

Just as you’d research potential employers before applying for a job, you should get to know grant-making organizations before asking for their support. Familiarize yourself with the grant-maker’s primary goals and objectives, the types of projects it has funded in the past, and its grant-making processes and procedures.

Performing research enables you to determine whether your programs are a good fit with the grant-maker’s mission. If they aren’t, you’ll save yourself time and effort in preparing a proposal. If they are, you’ll be better able to tailor your proposal to your audience.

Support your request

Every grant proposal has several essential elements, starting with a single-page executive summary. Your summary should be succinct, using only the number of words necessary to define your organization and its needs. You also should include a short statement of need that provides an overview of the program you’re seeking to fund and explains why you need the money for your program. Other pieces include a detailed project description and budget, an explanation of your organization’s unique ability to run this program, and a conclusion that briefly restates your case.

Support your proposal with facts and figures but don’t forget to include a human touch by telling the story behind the numbers. Augment statistics with a glimpse of the population you serve, including descriptions of typical clients or community testimonials.

Follow the rules

Review the grant-maker’s guidelines as soon as you receive them so that if you have any questions you can contact the organization in advance of the submission deadline. Then, be sure to follow application instructions to the letter. This includes submitting all required documentation on time and error-free. Double-check your proposal for common mistakes such as:

Excessive length,
Math errors,
Overuse of industry jargon, and
Missing signatures.

Take the time

To produce a winning proposal, you need to give yourself a generous time budget. Researching the grant-maker, collecting current facts and statistics about your organization, composing a compelling story about your work and proofreading your proposal all take more time than you probably think they do. Above all, don’t leave grant proposal writing to the last minute.

Beyond the Ask: The Real Science of Fundraising

Donors, Deductions & Dollars: How Will The Big Beautiful Bill Reshape Non-Profits? [Update: Passed Into Law]

From Chaos to Clarity: How Cloud Tools Are Reinventing Bookkeeping

How My Client Almost Landed in Prison—and the Little-Known Tax Rule That Saved Him

The One Big Beautiful Bill SGO Tax Credits: What We Know and Don’t Yet Know

Trump’s “Big Beautiful Bill” Passed: What It Means for You + Key Highlights

When Generosity Gets Hijacked: Charity Scams and How to Avoid Them

Excess Benefit Transactions and How They Can Undermine Your Nonprofit

Business Succession Planning: Sequence of Control

Is your nonprofit monitoring the measures that matter?

Does your nonprofit need a CFO?

Don’t let a disaster defeat your nonprofit

Why you should run your nonprofit like a business

Writing a Winning Grant Proposal