5 Changes Driving Fundraising in 2025 and Beyond

Nonprofit leaders are navigating one of the most volatile — and opportunity-filled — fundraising environments the sector has ever seen. But it can be hard to step back from day-to-day demands and see the bigger forces driving change.

In Monday’s opening keynote for NonProfit POWER, Erik J. Daubert, a nonprofit management specialist with the Indiana University Lilly Family School of Philanthropy, drew on current research and tax policy changes to explain what’s shaping philanthropy right now and what it means for nonprofit leaders.

From the explosive rise of artificial intelligence (AI) to new tax policy and evolving generational giving patterns, his message was clear: Fundraisers will need to adapt quickly — and strategically. Here are five major forces he highlighted and what they mean for your organization.

1. The Economy Is Rewriting Donor Behavior

Philanthropy tends to move with the broader economy. Analyses of recent decades show that charitable giving patterns track closely with the S&P 500. Stock market surges typically drive increased charitable contributions, while downturns trigger immediate and often significant declines.

Today’s economic picture, however, is more complicated. Daubert described a K-shaped economy in which one segment of Americans is living paycheck to paycheck while wealthier individuals are thriving.

That divergence matters for fundraising. Households at the top of the “K” have experienced dramatic asset growth through rising home values and stock portfolios. Private foundations alone now hold about $1.7 trillion in assets, positioning them for increased grantmaking due to 12-quarter rolling averages that dictate payout levels. Meanwhile, lower- and middle-income households face financial stress that can limit their capacity to give.

Despite this unevenness, Daubert shared that working-class Americans give a higher percentage of their income than wealthy individuals. So, ensure an understanding of both parts of the “K” and cultivate donors across the spectrum.

“This is why your cause matters so much,” he said. “This is why telling your story matters so much. This is why getting your message out in the community is so important. This is why sharing about the good work that you're doing and making your donors the hero and center of that story is so important.”

2. A New Era for Small-Dollar Donors

One of Daubert’s biggest points of enthusiasm centered on universal charitable deduction, now set to return and become permanent under the federal “One Big Beautiful Bill” tax package. Beginning in 2026, taxpayers who take the standard deduction will be able to deduct up to $1,000 (individuals) or $2,000 (married couples filing jointly) in charitable contributions. 

Previously, only itemizers could claim a tax benefit for their giving. Daubert believes this new tax deduction will help usher in “the year of the small donor.”

“I’m thrilled about this, because for the first time in American history, outside of a couple years during COVID for emergency measures, every American gets a tax deduction for their giving,” he said. “So if you think about the little old lady who gives $40 in the church collection plate, she's never gotten a tax deduction before.”

So, why does this matter so much? Small donors are often the pipeline to major gifts. Daubert cited research showing that many million-dollar donors begin their giving journey with contributions of $500 or less, often a decade before they make transformative gifts.

Additionally, during the pandemic-era temporary universal charitable deduction, IRS data show the volume of small gifts surged. As a result, Daubert estimates the new tax law could add approximately $20 billion to the sector in the first year alone. But this will only happen if nonprofits are ready to meet and cultivate these small donors. That means reinvesting in community-based fundraising, making it easy for everyday supporters to give recurring gifts, and stewarding small-gift donors to build the long-term loyalty that sustains organizations.

3. Generational Giving Is Shifting Fast

While baby boomers still represent the largest share of total giving, Daubert emphasized that millennials are now “adulting” — and quickly becoming a powerhouse donor class. They give an average of more than $1,600 per household, surpassing Generation X and trailing only baby boomers.

He also dispelled several persistent myths:

• Millennials are not universally financially stagnant. In fact, many have rising incomes and growing asset bases.
• Millennials do respond strongly to direct mail — in part because they receive less of it than older generations.
• Generation Z donors are already contributing meaningfully, averaging $867 per household.

Across every generation, one finding remains consistent: Personal stories drive giving. For digital fundraising, Daubert underscored a simple but powerful formula for improving engagement.

“Basically, if you want to raise more money online, get more followers,” Daubert said. “If you want to get more reactions to your posts, post more. If you want to raise more money, ask for more money. Digital fundraising is a powerful tool for relationship-building and not just raising money.”

4. Donor-Advised Funds Continue to Surge

Donor-advised funds (DAFs), though often misunderstood, remain one of the fastest-growing vehicles in philanthropy. While they’ve existed since the 1930s, over the past several years there has been explosive growth.

He shared some key insights:

• Many DAFs can be substantial. About 7% of accounts hold more than $1 million, according to the “The 2024 National Study on Donor Advised Funds.”
• Most are active. Roughly three out of five donor-advised funds make at least one grant annually, according to the “The 2024 National Study on Donor Advised Funds.”
• DAFs “punch above their weight.” They hold a relatively small share of overall charitable assets but account for a disproportionately large share of grant dollars flowing to nonprofits each year.
• Most DAF grants are unrestricted. This offers nonprofits valuable operational flexibility.

Used wisely, DAFs represent a reliable revenue source even in economic downturns, because the funds have already left the donor’s hands and are designated to charitable purposes.

“This is money you can get in good times and bad times,” Daubert said. “Bad times being key there because if we get bad times ahead, donor-advised funders are a great place to ask people for money.”

5. AI Is Reshaping Fundraising

AI adoption among consumers has accelerated dramatically, and nonprofits are increasingly experimenting with AI-powered tools for copy, prospecting, analytics and more.

But what Daubert wants nonprofit leaders to understand is that AI isn’t a replacement — it’s just another tool in our toolbox. The opportunity lies in using AI to deepen personalization and reduce administrative burden so staff can focus on what humans do best — building relationships with donors.  

He joked that he is “nice to AI” both for pragmatic and precautionary reasons, but he warned if nonprofits fail to adopt AI thoughtfully, the sector risks automating bad fundraising, not better fundraising.

“The thing I'm concerned about with AI is, if we're not careful, they'll do more bad fundraising with it and not use it to do more good. So I'm encouraging nonprofits to leverage it for good,” Daubert said. “I’m also encouraging nonprofits to use AI as the ‘and.’ The humans are the ‘yes,’ AI is the ‘and.’”

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