How Nonprofits Can Use Gift Bunching to Navigate the 2026 Charitable Deduction Changes

Fundraisers often refer to the customer relationship management (CRM) system as the “source of truth” for storing and reporting donor data. However, as we navigate the nonprofit tax changes in 2026, simply having a record isn't enough. Now, nonprofits face a hurdle that many donors have not yet noticed: the 0.5% floor on charitable deductions tied to adjusted gross income (AGI).

Effective this year, donors who itemize can only deduct charitable gifts that exceed 0.5% of their adjusted gross income (a separate universal charitable deduction provision applies to donors who take the standard deduction). For example, if someone earns $200,000, the first $1,000 in donations won't reduce their taxes. These nonprofit tax law changes might make some loyal mid-level supporters feel their giving is less tax-effective. 

To handle this shift well, fundraisers should go beyond traditional appeals and consider a smart, tech-friendly approach: gift bunching.

The Logic of Gift Bunching for Nonprofits

Gift bunching means grouping several years of planned donations into one tax year. This strategy helps donors exceed the 0.5% threshold.

Some donors may bunch gifts directly to the nonprofit — making a larger contribution in one year and giving less or skipping a gift in subsequent years.

Returning to the earlier example, a donor earning $200,000 would need to give more than $1,000 before any charitable deduction applies. If that donor typically gave $750 in past years — none of that giving would qualify for a charitable deduction under the new rule. Instead, the donor could “bunch” three years of giving — contributing $2,250 in a single year to exceed the threshold and generate a tax deduction.

Another way for donors to bunch gifts is through a donor-advised fund (DAF), a common tool for strategic, intentional giving. A donor can contribute several years of donations to a donor-advised fund in one year, receive the tax deduction in that same year, and distribute grants to charities over time.

Making the Tech Work for You

Identifying gift bunching candidates requires an integrated tech stack. As I often say, connected systems form the backbone of successful fundraising. Here are three ways to execute this strategy using your existing tools.

1. Use wealth intelligence tools. Identify top donors by cross-referencing gift history with estimated adjusted gross income. Prioritize donors whose annual gifts are around 0.5% of their income, as they will benefit most from targeted discussions about the 2026 nonprofit tax changes.
2. Optimize your donation form for donor-advised funds. Include DAF-specific payment options on your digital platform to make giving quick and easy. Avoid manual paperwork, which can reduce your conversion rate.
3. Automatically send tax-smart content via your CRM. Set up data triggers to share strategies that help donors stay engaged, even with the upcoming 2026 nonprofit tax changes.

The Technical Foundation

The 0.5% adjusted gross income floor is ultimately a data challenge. Nonprofits that smoothly combine their CRM insights with easy giving tools can turn the 2026 nonprofit tax changes into a steady source of major gifts. By acting as a financial partner to donors, you build trust that supports your mission.

As you prepare your system, keep these simple tips in mind:

• Prioritize data hygiene. Make sure your records are accurate and up to date before segmenting your audience with AGI tools.
• Check your payment system. Use a processor that supports DAF-specific payment methods to make high-value donations smooth and hassle-free.
• Plan your multiyear campaigns. Add a "gift bunching" indicator in your CRM to identify donors in their "off" years, so they aren't mistakenly considered lapsed when they’re actually ahead of schedule.

The preceding content was provided by a contributor unaffiliated with NonProfit PRO. The views expressed within may not directly reflect the thoughts or opinions of the staff of NonProfit PRO.