With the 2024 U.S. presidential election now behind us, the nonprofit sector is focused on the policy shifts that the new administration and Congress will implement in the coming years. Key priorities include revisiting charitable tax incentives, addressing donor-advised funds (DAFs) and private foundation regulations, and overcoming critical staffing shortages – all with the hope that the current leadership will prioritize the needs of nonprofits.

A major policy concern remains the accessibility of charitable tax incentives. Currently, only taxpayers who itemize deductions benefit from tax breaks on donations, which skews incentives toward wealthier donors and reduces small-donor participation. Nonprofit leaders are advocating for the reinstatement of universal charitable deductions, a temporary measure seen during the pandemic that allowed non-itemizers to deduct a portion of their donations. This shift could revive small and mid-level giving, helping to counter a recent trend where high-net-worth donors account for an increasing share of donations.

In addition to tax incentives, there is rising interest in reforming payout regulations for DAFs and private foundations. The 1969 Tax Reform Act mandates a minimum payout requirement for private foundations, but DAFs remain unregulated in this area, with no requirement for funds to be distributed within a specific timeframe. Advocacy groups argue that DAFs sometimes act as financial "warehouses," delaying funds from reaching operational charities. Policymakers and nonprofit advocates are pushing for minimum payout rules to ensure that donations actively support social impact projects rather than sitting unused.

Workforce shortages are a further strain. According to the 2024 State of the Nonprofit Sector Report by Forvis Mazars, 74% of nonprofits report job vacancies and 71% are struggling to meet increased demand for services. Additionally, 68% expect to reduce their programs over the next two years if current financial conditions persist. Nonprofit roles often pay less than comparable positions in other sectors, exacerbating recruitment challenges. To attract qualified talent, many nonprofits are advocating for expanded student loan forgiveness, which could help increase workforce retention in a sector where employees frequently take on high student debt for specialized degrees.

The need for a dedicated federal office to represent nonprofit interests has also gained momentum, led by calls from organizations like Independent Sector and the National Council of Nonprofits. A government office could coordinate policy advocacy and amplify the sector’s voice in national policy discussions. The nonprofit sector contributes nearly $1 trillion to the U.S. economy and employs about 12 million people, making it the third-largest workforce in the country. A dedicated office could spotlight this impact, ensuring nonprofits receive the attention and resources they need.

These policy goals reflect the sector's aspirations for meaningful support from the new administration and Congress, aiming to bolster community-focused initiatives, protect nonprofit funding, and stabilize a workforce essential to meeting social needs. Nonprofits are calling on political leaders to prioritize the sector’s growth, highlighting how strong policy support can empower them to make a larger impact across American communities.