How Individuals and Charities Can Benefit from Changes to Charitable Deductions Before and After OBBA
The One Big Beautiful Bill Act (“OBBA”) was signed into law on July 4, 2025, which includes many striking changes to charitable deductions that start on January 1, 2026. Donors and donees of charitable gifts must be aware of the new rules to maximize their philanthropic goals. Find out the impact the changes will have on donations and how donors and nonprofits can prepare and respond before and after the changes. If you have questions about charitable giving in New York, please consider scheduling a consultation with the experienced New York philanthropy attorneys at Abelaj Law, P.C. by calling 212-328-9568.
Good: Boost in Charitable Deductions
1) Individual taxpayers who take the standard deduction are allowed an additional charitable deduction of up to $1000 for single filers or up to $2000 for joint filers.
Recipient limitations: Donations to Donor Advised Funds (“DAF”), supporting organizations, or non-operating private foundations are not eligible for the standard charitable deduction.
2) Donations to charities that provide scholarships to K-12 students.
Deduction: Starting in 2027, nonrefundable credit of up to $1700 for gift of cash or marketable securities. Available to both standard and itemized filers, the credit will reduce the other charitable deductions allowed to the taxpayer.
Bad: Reduction in Charitable Deductions
1 – Taxpayers who itemize deductions will only be allowed to deduct charitable contributions exceeding of 0.5% of taxpayer’s AGI.
- For example, if a donor’s AGI is $500,000, they will be allowed to take a charitable deduction on the excess over $2,500. Donations must be to a 501(c)(3) organizations and deductions for gifts to DAFs, private foundations or supporting organizations are allowed.
2 – Corporations will only be allowed to deduct charitable gifts exceeding of 1% of taxable income up to a maximum of 10%.
- Impact to Matching Gifts Programs. Corporations either reduce or increase the number of available charities that may receive a matching gift. It will be a year or two until we see the outcome.
Take Action: Maximizing the Rules for Your Benefit
1) Standard Filers. Consider whether waiting until 2026 to make a charitable contribution will significantly improve your taxable income or if the result would be nominal as compared to the charity’s loss. Keep in mind that your favorite charities rely on your donations, and they may be more negatively impacted than you can imagine. If you skip the 2025 contribution, increase it in 2026.
2) Itemized Filers. Make your charitable contributions NOW before 12-31-2025 in order to receive the maximum charitable deduction. For 2026, make a larger contribution in one year to front-load the gifts that would have been made over several years (sometimes called “bunching gifts”). Bunching will allow you to receive a charitable deduction while providing the cumulative gift to the charity “in advance.”
3) Charities. Contact donors now to make contributions before 12-31-2025, expressing the benefits of receiving a full charitable deduction this year without being subject to the floor. Coordinate with your fundraising team to identify and segment donors who might fit into the standard deduction filing or the itemized filing.
- Identify donors who make smaller, annual gifts and tailor a fundraising message to highlight the benefit of charitable contributions starting in 2026 that were not previously available.
- For large recurring donors or those at the borderline of the 0.5% floor, communicate with them NOW Before 12-31-2025 and share the benefits of making a charitable contribution before December 31, 2025. For 2026, tailor fundraising messaging to the benefits of “bunching gifts” in one year.
4) Supporting Organizations and Private Foundations. Focus your fundraising efforts on itemized filers who can receive a charitable deduction when making large donations or bunching gifts. If you have a website, consider updating the donation page to provide information and direct the donor to discuss with their tax adviser.
Additional Limitations
- Deduction for cash donations to public charities is capped at 60% of AGI (30% of AGI for appreciated assets). OBBA made the 60% cap permanent.
- Carry-forward for 5 years is still allowed, subject to the same limitations.
Consult with a Philanthropy and Charity Attorney Today
Being aware of the tax changes is critical when making charitable gifts. Whether you are a donor or a donee; an individual giver or a charitable recipient, the new laws will impact your strategy to maximize tax benefits. Discussing the tax changes with a philanthropy attorney may ensure that you take steps to fit your philanthropic goals. If you want to learn more about philanthropy planning in New York, please consider scheduling a consultation with the Abelaj Law, P.C. by calling 212-328-9568 to discuss how we can assist you in this process, including developing policies and procedures to receive large donations in order to avoid jeopardizing tax-exempt status.
How Your Estate Planning Can Help Charities You Care About
Making a gift to a charitable organization is a meaningful and impactful decision – one that can benefit both the causes you care about and your financial and estate planning goals. While the decision of how and when to give is personal, it can play a significant role in shaping your legacy. Below are some common ways your estate plan can help support the charitable organizations you care you.
Common Ways of Giving to Charities
There are numerous ways to give to charity, both during life and after your death. The approach that works best for you will be unique to your needs, including the value of the intended gift, the type of asset being donated and your tax situation. It’s important to work with an attorney experienced in charitable estate planning to determine the approach that works best for you. The attorneys at Abelaj Law, P.C. have helped many individuals incorporate charitable planning in their estate legacy and we can assist you in this process. Contact us today to get started.
Testamentary Gifts in a Will or Trust
A common way to support a charitable organization in estate planning is through a bequest in a will a trust. This is also known as planned giving. A person can specify a dollar amount, percent of estate, or specific asset (such as stock or real estate) to a charity. There is no federal limit on the number of charitable bequests an estate plan can have, which can allow for a donor to support multiple organizations.
The bequest can be outright or have restrictions on how the funds are used. A Trust or endowment can include instructions on how the funds are to be used by the charity over a long period of time.
Name a Charity as Beneficiary
Charities can be named as beneficiaries of your retirement assets, annuities or insurance policies. This can allow the donor to support specific organizations while also reducing estate taxes. A benefit of this approach is that it avoids probate and allows the charity to receive the bequest promptly.
Create a Donor Advised Fund
While a Donor Advised Fund, commonly known as a “DAF”, is not technically part of an estate plan, it allows a donor to contribute assets during their lifetime, take an immediate tax deduction, and recommend grants to charities over time. Donors can contribute to the funds as frequently as they like and then recommend grants to charities at a later date. This approach works well for donors who would benefit from a large charitable deduction in one year without immediately having to choose a specific charity to receive the funds.
Charitable Remainder Trust
A charitable remainder trust (“CRT”) is an irrevocable trust that allows a person to donate assets to charity and draw annual income for life or for a specific time. A CRT can offer financial benefits such as allowing a donor to plan major donations to charities, allow a donor to defer income taxes on the sale of assets transferred to the trust, and may allow a donor a partial charitable deduction based on the value of the charitable interest in the trust.
How to Get Started
As you consider including charitable donations in your estate planning, start by reflecting on the types of charities you have supported in the past, the types of assets you have contributed, whether you want to make an unrestricted gift or include certain parameters, and when you want the charity to receive the gift.
Identify the Causes You Care About
Think about the issues or organizations that have had a meaningful impact on your life. These could be nonprofits you’ve supported in the past or causes that reflect your values. There are many organizations out there doing meaningful work that would appreciate your donation.
Review accounts and documents
Review your estate documents every 3-4 years to ensure these documents reflect your intentions. If there is a charity you want to add as part of your estate documents or want to look at more robust options to support causes you care about, reviewing your documents is a great way to start.
Talk With an Experienced Estate Planning Attorney
For many families considering charitable giving as part of their estate plan, legal guidance may be beneficial. An experienced estate planning lawyer can make sure all documents are in order and help families determine the types of charitable giving that would best fit their needs. Consider visiting with the estate planning lawyers at Abelaj Law, P.C. at 212-328-9568 to learn more about how to integrate charitable giving into your estate plan.
Naming Rights for Charitable Endowments: Legacy, Leverage, and Legal Precision
In the world of philanthropy, recognition is often as enduring as the gifts themselves. For many donors, attaching their name—or that of a loved one—to a charitable cause is not merely about prestige; it’s about expressing values, shaping legacy, and ensuring the memory of one’s contribution endures through time. Naming rights, particularly those attached to charitable endowments, offer a compelling intersection between generosity and identity. Yet as simple as it may seem to see one’s name on a building or scholarship, the legal and tax frameworks underlying these rights are far from straightforward.
At Abelaj Law PC, we have worked closely with both donors and nonprofit institutions to structure charitable gift agreements that reflect intention, promote trust, and withstand the passage of time. This article explores the deeper dynamics at play when naming rights accompany charitable endowments, and the considerations—practical, legal, and emotional—that must be navigated with care. If you have questions about planned giving, naming rights and gift agreement or would like to begin the process, call a knowledgeable attorney at Abelaj Law, P.C. at 212-328-9568.
The Endowment as a Vehicle of Permanence
A charitable endowment is, by design, a long-term commitment. The principal gift is preserved, invested, and only a portion of the returns are used annually to support a cause or organization. For the donor, this structure represents a form of permanence: a commitment that outlives them and continues to express their values for generations.
Establishing such an endowment can be achieved through various giving vehicles. Some donors prefer outright cash donations during life; others may contribute appreciated securities for favorable tax treatment. More complex instruments like charitable remainder trusts or pooled income funds offer the donor an income stream during life, with the remainder ultimately benefiting the nonprofit. Endowments can also be created at death through bequests, often tied to an estate plan designed to achieve both philanthropic and tax-saving goals.
Regardless of the vehicle, what binds all successful endowments is a well-drafted agreement—one that does more than document the gift amount. It must articulate purpose, address contingencies, and—when naming rights are involved—reconcile recognition with accountability.
Recognition in Exchange for Generosity
Naming rights are a form of recognition that straddle a legal and emotional line. For charities, they are a valuable tool to inspire generosity. For donors, they symbolize trust in the institution and a desire to be visibly linked to a cause. The challenge is ensuring that the recognition is appropriate, enduring, and governed by clear expectations.
From a legal perspective, naming rights are typically conferred via a charitable gift agreement. This agreement must detail not only the timing and scope of recognition—such as when signage goes up, or which portion of a building will bear the donor’s name—but also the conditions under which those rights might change or even be revoked.
For instance, a donor might provide a gift to fund a medical research center, with the understanding that a particular laboratory will carry their name. But what happens if, decades later, that lab is closed or repurposed? Does the donor’s name transfer to another facility? Is it removed altogether? Should naming rights expire after a set number of years, or continue in perpetuity? These are not merely procedural questions; they strike at the heart of donor intent and institutional integrity.
Balancing Donor Control with Institutional Autonomy
Donors, particularly those contributing significant sums, often wish to maintain some form of control over how their gift is used. They want assurances that their intentions will be honored—not just at the time of the gift, but long into the future. However, the law generally treats completed gifts as irrevocable, with ownership and control passing fully to the nonprofit.
That said, thoughtful drafting can give donors a measure of ongoing influence. For example, gift agreements may include reporting obligations, requiring the nonprofit to provide annual updates on how funds are invested or disbursed. Some donors choose to appoint a family member or representative to receive these reports and serve as a watchdog over the gift’s implementation.
Legal standing is another important concern. Traditionally, donors did not have the right to sue a charity for failing to uphold the terms of a gift. That authority rested solely with the state attorney general, acting in the public interest. But the law is evolving. More recent cases have acknowledged the legitimacy of donor standing—particularly when the gift agreement explicitly confers that right. Donors seeking such enforcement authority should ensure that the agreement grants them, their heirs, or their designated agents the ability to pursue legal remedies if the gift terms are breached.
The Charity’s Perspective: Naming Rights with Guardrails
While recognition can incentivize philanthropy, it also exposes nonprofits to reputational and operational risks. Charities must consider what happens if a donor’s reputation is later tarnished. We’ve seen an example of this backlash against institutions bearing the Sackler family name after the Oxycodone crisis. In such cases, the ability to remove or alter naming rights becomes crucial. A carefully crafted agreement can include “morals clauses” or reputation-based revocation provisions, preserving the charity’s discretion to dissociate when necessary.
Similarly, institutions should be wary of gifts that come with overly restrictive conditions or impractical requirements. While it is reasonable for a donor to earmark funds for scholarships in a specific field or for research into a particular disease, attempts to influence operational decisions—such as admissions, faculty hiring, or curriculum—can encroach on academic or organizational autonomy and may even threaten a nonprofit’s tax-exempt status.
To avoid these issues, charities should ensure that gift agreements clearly state that the nonprofit retains ultimate control over the use of funds. The IRS has long held that for a gift to be deductible, the recipient organization must have full discretion over its application. Language such as “this contribution is made with the understanding that the donee has complete control and administration over the use of the donated funds” helps ensure the gift qualifies as a charitable contribution.
Naming Rights and Tax Deductibility
Recognition through naming is considered an incidental benefit by the Internal Revenue Service, meaning it generally does not reduce or eliminate a donor’s tax deduction. However, if naming rights are tied to performance conditions or reversion clauses—such as the donor regaining ownership if certain criteria aren’t met—the gift may be deemed incomplete or non-deductible.
For instance, a gift that reverts back to the donor’s estate if a building isn’t completed, or if matching funds aren’t raised, may not qualify for a deduction unless the conditions are considered “so remote as to be negligible.” Tax compliance is especially critical when dealing with large or complex gifts, and both parties should work with experienced counsel to structure agreements accordingly.
Vehicles for Setting Up Endowments
Donors can establish endowments through various giving vehicles, including:
- Direct cash gifts to a public charity, donor-advised fund (DAF), or community foundation.
- Gifts of appreciated securities, which may offer favorable tax treatment.
- Charitable remainder trusts (CRATs/CRUTs) or pooled income funds, which provide income to the donor or others during life with the remainder going to charity.
- Bequests and other planned giving arrangements at death, which can yield estate tax benefits.
Each structure has unique tax implications under IRC §170. For example, cash gifts to public charities are deductible up to 60% of adjusted gross income (AGI), while gifts of appreciated securities may be limited to 30%.
A Thoughtful Partnership
At its best, a naming rights arrangement is not a transaction—it is a relationship. One built on mutual respect, shared vision, and a commitment to honoring both donor legacy and institutional mission. But like any enduring relationship, it requires clarity, communication, and sometimes, the humility to plan for the unexpected.
At Abelaj Law PC, we understand the legal and human dimensions of charitable giving. Our work is not just about drafting agreements—it’s about helping donors express their values and helping organizations steward those values with integrity. Whether you are considering a major philanthropic gift or managing one, we are here to ensure that the generosity behind it is protected, honored, and made lasting.
Call an Experienced Attorney About Naming Rights in Charitable Agreements Today
For individuals or non-profit organizations who are considering naming rights as part of a charitable gift agreement, complying with tax laws while providing protection and reasonable control to both the givers and getters is necessary. By considering the rights and restrictions in naming a charitable asset in recognition of a generous donor, the parties can focus on the details that are most relevant in achieving the gift’s goals. An attorney experienced with planned giving and relevant laws applicable to endowment agreements can help you through the detailed and rewarding process. They could ensure that you do not include a provision in the gift agreement that might jeopardize your taxable deductions. To hear more about naming rights in endowment agreements, call a seasoned lawyer at Abelaj Law, P.C. You can reach them at 212-328-9568.