Rich mega-donors like Mackenzie Scott have Keep smoking Hundreds of millions of dollars poured into philanthropy—but Trump’s new tax policy could put the billionaire’s philanthropy in jeopardy. America’s middle class will not be able to pick up the pieces.
President Donald Trump’sA big, beautiful banknoteThe bill signed into law in July would limit tax benefits for wealthy donors starting in 2026. The new cap cuts the effective tax benefit from 37% to 35%. The legislation also prohibits itemized tax deductions—they can only deduct donations that exceed 0.5% of their adjusted gross income.
Now, philanthropic organizations and research organizations are warning: It is estimated that the 35% limit will reduce donations by at least $4.1 billion and as much as $6.1 billion. according to Indiana University Lilly Family School of Philanthropy. This is a huge blow to philanthropy, as only a handful of billionaires donate in proportions that middle-class voters cannot match. Under the new bill, about 140 million regular taxpayers who don’t itemize can still deduct cash donations of up to $1,000; about 90% have taken the standard deduction since it was introduced in 2017 during Trump’s first administration.
“The nonprofit sector says every dollar counts, so incentivizing small donations per family could have a meaningful impact for certain types of organizations,” said Elena Patel, co-director of the Urban Brookings Tax Policy Center, Tell CNBC. “But the reality is that these types of donations are not the majority of charitable giving in the philanthropic world.”
“A 2 percentage point reduction (for high earners) may not seem like a big deal, but you have to remember the size of the gifts given by the nation’s highest net worth individuals.”
Big-money donors hit by new tax policy — and why the middle class can’t pick up the slack
The United States has the most billionaires in the world, some of whom have put their vast sums of cash to good use through huge donations.
Billionaire philanthropist MacKenzie Scott has donated $19.25 billion through her foundation since 2020, benefit giving. There is also the former Amazon Jeff Bezos’ employees and ex-wives are worth a look $40.3 billionhas been making crazy donations recently. Over the past few months, She was gutted Regarding major gifts to different causes; Scott donated $80 million to Howard University, $50 million to Virginia State University, $40 million to the African American Heritage Action Fund, $60 million to the Center for Disaster Philanthropy, and many more.
Melinda French Gatesworth $17.1 billionThere are also be a beacon In the world of billionaire philanthropy. She and her ex-husband Bill Gates founded Gates Foundation In 2000, its goal was to end poverty, disease and inequality through donations and sunset organization 2045. Last year, the organization provided $8.01 billion Philanthropic support in areas such as global health, gender equality and world development.
and then hundreds more Billionaire signedGiving Pledge,Depend on Berkshire Hathaway Hedge fund tycoon Warren Buffett. The movement requires signers to donate at least half of their fortune during their lifetime or engrave it in their wills, and 250 participants have collectively raised more than $600 billion. But so far, aside from Wall Street billionaires John and Laura Arnold, few have actually stayed the course. With a net worth of $2.9 billion, They have already donated That’s $2 billion to date, with more than $204 million reallocated in 2024 alone.
While billionaires will enjoy their accumulated wealth through the bill’s tax breaks, they may abandon donating these huge sums of money in the wake of Trump’s new philanthropic policies.
But don’t expect the middle class to bridge the philanthropic divide; simply put, rising costs of living are straining the pool of ordinary donors. According to the Lilly School of Philanthropy, in the two decades from 2000 to 2020, the proportion of Americans giving fell from 66.2% to 45.8%. While total giving from the typical U.S. donor increased from $3,131 in 2018 to $3,651 in 2020—a 16.6% increase in just over two years—the trend reflects the involvement of high-income philanthropists.
“We have a general problem of dollars going up but donors going down,” said Amir Pasic, dean of the Lilly School of Philanthropy. Tell CNBC. However, he added that new incentives aimed at middle-class philanthropists could “increase the number of donors.”