Philanthropy Shifts: Tax Changes, Generational Wealth Fuel Evolving Giving Trends

By Timothy Bell

New research indicates a significant shift in the philanthropic landscape, driven by upcoming tax law changes and the accelerating transfer of wealth to younger generations. While overall giving remains robust, strategic planning is becoming increasingly crucial for both donors and non-profits alike. Data from leading philanthropic advisory firm Foundation Source, combined with the latest findings from the Giving USA 2025 report, paints a complex picture of evolving giving trends.

Navigating the New Tax Landscape

The “Tax Relief for American Families and Workers Act,” slated to impact charitable deductions in 2026, is already prompting strategic adjustments amongst high-net-worth individuals and corporations. The new legislation introduces changes including a 1% floor on corporate deductions and potential limitations on itemized deductions for high earners.

“We’re seeing a surge in pre-funding donor-advised funds (DAFs) this year,” explains a financial advisor specializing in philanthropic planning. “Clients are eager to lock in current deduction levels before the rules change. It’s all about maximizing tax benefits while still achieving their charitable goals.”

This “bunching” of donations, where individuals accelerate several years’ worth of giving into a single year, is a common strategy to circumvent limitations in the new tax code. However, experts caution against simply front-loading donations without careful planning.

“It’s not just about minimizing taxes,” says a philanthropic consultant. “It's about aligning giving with long-term impact goals. Simply accelerating donations without a clear strategy can be counterproductive.”

The ‘Great Wealth Transfer’ Reshapes Giving Priorities

Beyond tax considerations, the generational shift in wealth is profoundly influencing philanthropic priorities. The “Great Wealth Transfer” – an estimated $124 trillion shifting to Millennials and Gen Z over the next 25 years – is giving rise to a new cohort of donors with distinct values and expectations.

“Younger donors are much more focused on impact and transparency,” notes a foundation program officer. “They want to see concrete results and understand exactly how their money is being used. They also prioritize organizations that align with their values and are actively addressing social and environmental issues.”

This shift is reflected in the growing popularity of impact investing and cause-related marketing. Younger donors are less likely to simply write a check and more likely to actively engage with organizations, volunteer their time, and advocate for change.

“They want to be part of the solution, not just a passive donor,” explains a marketing consultant specializing in non-profit engagement. “They’re looking for authentic connections and opportunities to make a difference.”

Sector Spotlight: Where the Money is Flowing

Foundation Source’s recent data, corroborated by the Giving USA 2025 report, highlights specific sectors experiencing significant growth in philanthropic support. Education, public-society benefit organizations, and human services continue to be top priorities for donors.

• Education: Giving to education reached a record $88.32 billion in 2024, driven by increased funding for early learning, literacy programs, and student support services. The rise of online learning and the growing demand for skilled workers are also fueling investment in educational initiatives.
• Public-Society Benefit: This diverse category, which includes donor-advised funds and advocacy organizations, experienced the highest growth rate in 2024, increasing by 19.5%. This surge is partially attributable to the growth of DAFs and increased funding for organizations addressing social justice issues, environmental sustainability, and other pressing concerns.
• Human Services: Giving to human services totaled $91.15 billion in 2024, remaining a critical area of philanthropic support. Increased demand for essential services, exacerbated by economic hardship and social unrest, continues to drive funding for organizations providing food, shelter, healthcare, and other vital resources.

“We're seeing a growing emphasis on holistic approaches to addressing social challenges,” explains a grantmaker focusing on community development. “Funders are increasingly recognizing the interconnectedness of issues like poverty, education, and healthcare, and are supporting programs that address multiple needs simultaneously.”

The Rise of DAFs and the Debate Over Impact

Donor-advised funds (DAFs) continue to grow in popularity, offering donors tax advantages, investment growth potential, and flexibility in their giving. However, the rapid growth of DAFs has also sparked debate over their impact on the philanthropic landscape.

Critics argue that DAFs allow donors to delay charitable distributions indefinitely, reducing the immediate impact of their giving. They also point to the lack of transparency surrounding DAF assets and grantmaking activities.

“There’s a valid concern that DAFs are becoming a ‘parking lot’ for charitable dollars,” says a non-profit watchdog. “We need greater transparency and accountability to ensure that DAF assets are ultimately used to support charitable causes.”

Proponents of DAFs argue that they encourage charitable giving by simplifying the process and offering donors greater control over their philanthropic investments. They also point to the fact that DAFs often provide funding to smaller organizations that may not have the capacity to solicit grants directly.

“DAFs play a crucial role in supporting a diverse range of charitable organizations,” argues a DAF administrator. “They provide flexibility and efficiency, allowing donors to make a greater impact with their giving.”

Looking Ahead: Adapting to a Changing Landscape

The philanthropic landscape is undergoing a period of significant transformation, driven by tax changes, generational shifts, and evolving donor expectations. To thrive in this changing environment, non-profits must adapt their fundraising strategies, embrace transparency, and demonstrate impact.

“It’s no longer enough to simply ask for money,” explains a fundraising consultant. “Organizations must build authentic relationships with donors, communicate their impact effectively, and demonstrate a commitment to transparency and accountability.”

As wealth continues to transfer to younger generations, and the tax landscape evolves, the future of philanthropy will be shaped by a new set of priorities and expectations. Organizations that can adapt to these changes will be best positioned to attract support and make a lasting impact on the world.