Philanthropy Roundtable’s Free to Give campaign elevates the voices of everyday Americans who have dedicated their careers to supporting those in need. Their work is made possible by the freedom of all Americans to give to the causes and communities they care about most.
In 2025, the U.S. House Ways and Means Committee proposed increasing the excise tax on private foundations in the One Big Beautiful Bill that would have diverted roughly $16 billion from charities to government over the next decade. Philanthropy Roundtable was proud to partner with a number of organizations, including the National Taxpayers Union (NTU), to get this tax hike stripped from the final bill. Still, new threats to the freedom to give can surface at any time as pressure to close gaps in federal and state budgets intensifies.
Keeping a watchful eye on potential tax threats from Congress and the states is central to the work of the National Taxpayers Union Foundation (NTUF) and NTU. Joe Bishop-Henchman, executive vice president of NTUF, and Al Canata, vice president of strategic partnerships at NTU, said that while the excise tax victory is worth celebrating, there’s a risk in “moving on” too quickly, especially for donors.
As Bishop-Henchman says, “Expansion of the endowment tax and changes to taxes on investment income are bad ideas that are lying dormant but could reappear. Republican populists and Democrats both find these ideas appealing.
“We are running $2 trillion annual deficits. We also have mounting health care programs and defense needs. It will take a lot of hard work and leadership to restrain spending to solve that. For some members of Congress, it’s an easy solution to just say ‘tax the rich.’ It’s a very appealing message for them,” Bishop-Henchman added.
While those lawmakers may view private foundations as elite keepers of wealth, the truth is their resources fund effective, local solutions to big societal problems. Charitable giving supports educational opportunities for low-income students, groups focused on preventing veteran suicide, foster care organizations that help keep families together, food banks, homeless shelters, disaster relief organizations, faith-based charities and many other critical programs and services in communities big and small. And policies that move resources from charitable giving vehicles to the government have an outsized impact on Americans who need help the most.
The absence of an immediate federal threat does not signal stability. Rather, it reflects a policy environment in which familiar ideas continue to circulate, adapt and resurface across jurisdictions – and donors must stay engaged.
State tax policy is an area of increasing concern. As COVID-era federal aid and revenue growth from previous tax reforms fade, many states are facing significant budget constraints. In response, policymakers are revisiting proposals to raise taxes on wealth, capital gains and investment income.
We already see it playing out. In Philanthropy Roundtable’s 2026 legislative tracking, just under 40 bills in states including California, Washington and Hawaii propose higher taxes on the wealthy and increased capital gains taxes. These proposals can have broad downstream effects on charitable giving and nonprofit sustainability, despite being framed as narrow and targeted. This broader impact is laid out in our 2024 research paper, How Tax Policy Affects Charitable Giving.
Among NTUF’s priorities this year are addressing emerging risks that could quietly constrain charitable activity.
As states face mounting budget pressures, some have turned to policies that shift tax burdens onto out-of-state residents, tourists, remote workers and businesses with only limited in-state activity. These approaches can create complex compliance requirements and uncertainty that reduce resources available for charitable giving.
NTUF works to defend clear rules around interstate taxation and federalism, helping prevent state overreach that can indirectly limit philanthropic activity.
Bishop-Henchman said, “‘It’s politically popular to tax tourists, business travelers, and multistate businesses. This is terrible for the long-term expansion of businesses and jobs in a state. We’ve seen that with the champions of these policies, California and New York. But the states that avoided this, like Texas and Florida, have been doing very well.”
NTUF’s Taxpayer Defense Center works to establish strong legal precedents protecting taxpayer rights, focusing on abuse by tax authorities, unconstitutional burdens on interstate commerce, and retroactive taxation on the federal and state level. For donors and charitable organizations, unpredictable or aggressive tax enforcement can divert time, capital and attention away from mission-driven work.
“One day, you think you are doing everything right, and then suddenly you learn that you weren’t and are sent a letter from the IRS or state tax administrator. There’s no such thing as an innocent mistake or math error to them,” said Bishop-Henchman. “Everything is willful evasion that requires the full power of the government to bring the hammer down and make it as difficult as possible to prove your innocence. It’s a big problem, has a terrible cumulative effect on how people view their rights. … Clarity is bad for a tax administrator.”
Last year, NTUF vindicated taxpayers in northeastern Colorado, who faced a doubling of their property taxes without their approval. They successfully argued this was a violation of the Colorado Taxpayer Bill of Rights (TABOR), which required an affirmative vote of the people before a tax increase. Their efforts put $3 million back into the pockets of taxpayers.
As NTU board member and Kreible Foundations leader Shari Williams said, “As a proud National Taxpayers Union board member and donor, I’ve seen how investing in NTU protects taxpayers and America’s vibrant charitable sector from tax hikes and abusive tax authorities.”
NTUF’s work reflects a broader principle that resonates with donors: protecting the freedom to give requires more than reacting to high-profile legislative proposals. As Bishop-Henchman and Canata said, sustained monitoring and coordination are essential to ensure progress is not quietly reversed over time.
The 2025 victory over the proposed excise tax demonstrated what sustained engagement can accomplish. But the most significant threats to charitable giving often develop outside the spotlight, in technical tax provisions, enforcement practices and state-level budget responses to fiscal pressure. For donors committed to effective philanthropy, understanding these dynamics is not optional. The policy environment that makes giving possible requires the same level of strategic attention that donors bring to their charitable work itself.
To learn more about NTUF, please contact Senior Director of American Values and Policy Philanthropy Clarice Smith.
