The recently passed One Big Beautiful Bill Act has sparked headlines for tax cuts and incentives, but for nonprofits the deeper story is about funding cuts and financial resilience. This legislation reduces billions from social programs like Medicaid and SNAP, creating ripple effects that extend far beyond direct government grantees.
In this Q&A, we share our perspectives on how nonprofits can navigate these challenges and turn uncertainty into opportunity.
Q: What are the most direct consequences nonprofit organizations should be aware of?
A: The biggest issue is the scale of federal funding reductions. Even nonprofits not directly tied to Medicaid or SNAP will feel the pressure. The cuts could equate to: Increased demand for nonprofit services … More uncompensated care for providers … Shrinking public-private partnership dollars. For nonprofit leaders, the key is to ask yourself: What percentage of our revenue depends on government funding? And could we continue operating if those reimbursements slow or disappear? This bill should be treated as a wake-up call for organizations to reassess funding dependencies and strengthen operational flexibility.
Q: Many nonprofits are focused on survival this year. How should they widen their lens?
A: By thinking like long-term stewards of capital, leaders should ask: Is our portfolio designed to support our mission 10 to 20 years out? … Do allocations reflect spending goals, risk tolerance, and time horizon? … Are our investments aligned with our mission and values—something increasingly important to donors and stakeholders? This is about more than surviving the annual budget cycle. It is about building institutional resilience—through updated Investment Policy Statements, disciplined spending policies, and mission-aligned portfolios built for both growth and purpose.
Q: With public funding under pressure, what opportunities should nonprofits seize with donors?
A: There is a silver lining here. The bill expands certain tax benefits for individuals—higher SALT caps, extended deductions, and favorable treatment of tips and overtime. That creates opportunities for nonprofits to strengthen donor engagement.
Here’s where to start: Promote gifts of appreciated stock as tax-efficient giving … Encourage Qualified Charitable Distributions (QCDs) from IRA owners over age 70½ … Update gift-acceptance policies to include real estate, crypto, or other assets … Highlight Donor Advised Funds and bunching strategies to maximize deductions. This is within the nonprofit’s control. By educating donors, organizations can offset lost funding and build stronger donor pipelines and relationships.
Q: How can your board of directors and committee members help rise to this moment?
A: Governance is critical. Funders increasingly look for organizations that are financially sound, transparent, and deeply aligned with their mission. Boards can add value by: Raising their own financial literacy … Reviewing investment portfolios for mission alignment … Using dashboards to communicate financial health and impact … Updating strategic plans to reflect the new funding environment. Strong governance isn’t just operational—it is a big trust signal to donors, foundations, and partners.
The One Big Beautiful Bill Act presents both risks and opportunities. For nonprofits, the challenge is to act now—reassess funding, strengthen donor strategies, and embrace long-term stewardship. Those who prepare today will be better positioned not just to weather uncertainty, but to thrive and grow their mission for decades to come.
The Nonprofit Advisors team at Fragasso is here to help. Contact us to initiate this conversation. Investment advice offered by investment advisor representatives through Fragasso Financial Advisors, a registered investment advisor.