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The One Big Beautiful Bill Act (OBBBA) is one of the most sweeping legislative reforms in recent years. The Act reshapes federal tax policy, charitable giving incentives, and public funding mechanisms in ways that can impact nonprofit operations.

While the details are still being explored, one thing is clear: executive leadership teams should consider aligning people strategy with these new realities.

As strategic advisors to the sector for over 25 years, we focus on action, not alarm. Below, we outline key implications of the Act and how CEOs and other C-suite leaders can approach this transition with clarity, adaptability, and a steady focus on their most critical asset, their people.

Key Provisions Affecting Nonprofits

Charitable Giving

Above-the-line deductions for non-itemizers are reinstated, which could broaden participation in giving.

New thresholds for itemized deductions (donors generally need to contribute at least 0.5% of their income) may reduce mid-level giving.

Corporate donors generally must contribute at least 1% of taxable income to qualify for a deduction, which could represent an opportunity if properly engaged.

Taxes and Funding

The 21% excise tax on compensation now applies to any nonprofit employee earning over $1 million annually, rather than just the top five compensated employees. This expands exposure and suggests a need to review executive compensation strategies.

Expanded endowment taxation is expected to impact private universities and large foundations, particularly those with significant investment income.

States will assume greater responsibility for Medicaid and social programs. Many may struggle to maintain current funding levels, which could have a ripple effect on nonprofits delivering health and social services.

Executive Action Plan: First 180 Days

C-suite teams might consider responding with strategic coordination across HR, finance, and operations. Initial steps can include:

Conducting federal funding audits to assess revenue exposure.

Reviewing compensation structures to identify roles potentially triggering the excise tax.

Analyzing donor data to model possible shifts in giving patterns.

Engaging legal and tax counsel to understand compliance requirements and anticipate fiduciary concerns.

But compliance is only the starting point. Long-term sustainability can be strengthened through strategic leadership, especially when it comes to people management.

Workforce Planning

In the face of economic uncertainty and policy shifts, organizational resilience begins and ends with the workforce. The best responses to external volatility often rely on internal systems grounded in clarity, capability, and culture.

Financial Scenario Planning: Developing multi-tiered models (best, moderate, worst) for revenue, programming, and workforce needs can help guide not only cost containment but also strategic investments in mission-critical roles and services.

Compensation Strategy: Organizations can consider redesigning executive compensation to remain competitive while managing potential tax liabilities. This could include performance-based incentives and total rewards approaches that emphasize long-term value over high base salaries. At all levels, revisiting compensation philosophy for equity, market competitiveness, and transparency is advisable, particularly with emerging state-level pay equity laws.

Strategic Talent Acquisition: Expect that new skill sets such as digital fundraising, data analytics, compliance expertise, and community engagement may become essential. Refreshing employer branding to highlight mission, employee experience, career growth, and psychological safety may support recruitment efforts.

Onboarding and Retention: Strong onboarding processes can accelerate productivity and deepen engagement. Retention often depends on clarity around career paths, access to development opportunities, and authentic connection to mission. Using stay interviews and pulse surveys could help identify and address potential dissatisfaction before it leads to turnover.

Benefits and Wellbeing: Stress and burnout continue to challenge the sector. Reviewing benefits for gaps and considering innovative options such as Pooled Employer Plans for retirement or medical captives for healthcare can be helpful. Supporting financial wellness, mental health access, and flexible work arrangements, where feasible, may enhance wellbeing.

Culture and Change

Culture is not a soft issue; it is a strategic one. How people feel during this transition could influence whether organizations emerge stronger or fractured.

Communicate early and often. Even when answers are not yet clear, transparency tends to build trust.

Create feedback loops and forums for collaborative problem-solving.

Reinforce organizational values consistently in policies, programs, and leadership messages.

Empower teams to innovate and address challenges proactively rather than reactively.

If layoffs or restructuring become necessary, responsible offboarding with dignity is essential. How departing employees are treated sends a strong message to remaining staff, boards, funders, and the public.

Leading Into the Future

The OBBBA introduces complexity but also an inflection point. For CEOs and executive teams, this can be a moment to lead with thoughtful balance, considering mission, people, and performance.

Our firm has supported associations and nonprofits through recessions, leadership transitions, and policy overhauls for more than two decades. In every case, organizations that invest in workforce planning, culture, and talent strategy emerge not only intact but more agile, cohesive, and impactful.