With the “One Big Beautiful Bill Act” (OBBBA) now in the rearview mirror, Congress has turned its attention to a fresh set of legislative priorities, and that shift will present novel opportunities and risks for the nonprofit sector on the government reopens. If the sector continues to apply the lessons learned during OBBBA’s crafting, it could be in good shape.
As you might recall, nonprofits dodged billions of dollars of new taxes when Senate Republicans stripped tax hikes on private foundations and employee parking benefits, thanks in large part to the sector’s targeted engagement on the Hill. Nuanced storytelling helped lawmakers understand how taxing nonprofit resources ultimately saps the sector’s ability to meet constituent needs, leading to an improved final product that also included a boosted permanent charitable deduction available to the 9 in 10 taxpayers who don’t itemize.
Legislative threats are still looming, however. Congress’s tax writing committee leaders have signaled an openness to resurfacing tax provisions that didn’t make it into this summer’s sweeping budget bill. The potential that tax writers revisit the OBBBA provisions targeting nonprofits for federal revenue should give sector advocates pause, especially if they’re tied to the ongoing scrutiny of the tax-exempt sector coming from Congress and the White House.
Nonprofits can expect both chambers to take up other priorities beyond an OBBBA redux. A legislative package that reforms Internal Revenue Service (IRS) processes seems to be on the table, and lawmakers might also begin discussing proposals to enhance retirement security.
An IRS reform package could be a double-edged sword for charities. There is an opportunity for the sector to advocate for policies that simplify tax filings for 501(c)(3)s, help nonprofit taxpayers resolve IRS issues more quickly, and boost donor privacy. On the other hand, sector critics could seek to attach proposals that require tax-exempts to report additional information to Uncle Sam, like data on donations from foreign sources or overseas grantmaking. Influential lawmakers have also indicated interest in reforming Form 990, which could manifest into helpful or harmful proposals.
Finally, possible bipartisan retirement legislation likely presents the biggest opportunity for lawmakers to enact policies that support the nonprofit workforce and charitable giving. Proposals to enhance options for employees with 403(b) retirement accounts and streamline certain IRA holders’ ability to use donor-advised funds as a charitable giving tool could gain traction with persistent engagement, though it is a bit unclear whether bipartisan tax work will ramp up later this year.
When advocating on these issues and educating lawmakers, nonprofits engaging on federal policy should continue to be sensitive to the political environment facing the sector. A handful of influential policymakers, including taxwriters, have expressed deep skepticism about how certain organizations or portions of the nonprofit sector are allegedly operating, and charitable organizations face an uphill battle in many cases when telling their story.
Still, we saw how consistent and constructive messaging can make a difference when the Senate removed or softened a handful of tax hikes on nonprofits while also permanently enacting a sizeable non-itemizer charitable deduction. So, while government funding negotiations have dominated headlines in recent weeks, the budget stalemate will not crowd out other policy work forever. Nonprofits must engage early, offer constructive solutions, and remain proactive to ensure their voices aren’t drowned out amid the beltway noise.
Article originally published in The NonProfit Times.
October 21, 2025