Nonprofits Sound Alarm Over Impact of United States “One Big Beautiful Bill Act”

Written by Dana Grayson on July 2, 2025. Posted in Helplines, iCarol clients.

In recent weeks, a number of mental health advocacy and other non-profit organizations, including the National Council of Nonprofits, have vocalized concern over the H.R.1 legislation moving through the United States Congress. This legislation has also been referred to by President Trump as the “One Big Beautiful Bill Act” (OBBBA).

Why Organizations Are Concerned

Organizations are concerned about a number of the provisions of the bill, including:

Cuts to Medicaid and Other Safety Net Programs
Reduced Incentives for Charitable Giving
New and Increased Taxes on Nonprofits
Threats to Nonprofit Tax-exempt Status and Due Process

Non-profits fear extra demand on their own agencies as a result of these provisions against a backdrop of already tough times for their organizations financially. In the following paragraphs we’ll explore the details behind these concerns.

Cuts to Medicaid and Other Safety Net Programs

The bill reduces federal funding for Medicaid, a program that provides health insurance to low-income Americans. Medicaid is the largest source of health coverage for people who qualify as low income in the US and largest payer for mental health and substance use treatment. The scale of the cuts in the bill are large—$863 billion dollars over 10 years. The Congressional Budget Office (CBO) a non-partisan government entity that conducts impartial analysis of legislation impact, reports that these cuts will result in nearly 12 million Americans losing their coverage, and increase the number of uninsured individuals to 16 million people in the next decade.

Along with the cuts to federal funding for Medicaid are changes to the eligibility structure. The bill imposes work mandates for certain adults and will increase the frequency that someone’s eligibility is reviewed. Many individuals on Medicaid are unable to work, but could still have the work mandate imposed on them due to the eligibility structure change. Experts also suspect that the frequency change will result in others losing coverage due to administrative hurdles, including those who remain eligible.

Finally, an expected strain on providers is another concern shared by non-profit and other advocacy organizations. When federal funding for a program like Medicaid is restricted, states will be expected to either make up the shortfall or else be forced to take actions such as cutting benefits, reducing payments to providers, or limit the eligibility of their citizens to access the state Medicaid program. This would disproportionately impact rural and underserved areas where community health providers are a primary place of care, and such places may reduce services or close entirely as a result.

Another safety net program facing cuts under the bill is the Supplemental Nutrition Assistance Program (SNAP) also commonly referred to as “Food Stamps.” SNAP funding would be reduced by $295 Billion over 10 years. Like Medicaid, there would also be changes to eligibility enforcing stricter work requirements and imposing those requirements on some who were formally exempt and may have a difficult time meeting those requirements. Experts project that enrollment in SNAP will drop by an average of 4.7 million people. Those who are able to stay on the program will see reductions in SNAP coverage. Food insecurity is a pervasive problem in the United States and advocates worry the reduced benefit will hurt those already impoverished or on the verge of poverty.

As a result of reductions to both Medicaid and SNAP, non-profit organizations worry they’ll see a rise in the number of people who need their assistance, all while the organizations themselves are facing funding cuts and reductions in financial support from other sources.

Reduced Incentives for Charitable Giving

Americans are historically incentivized to give to non-profits and charities through a number of available federal and state tax deductions and elsewhere in the tax code. One positive element of the bill is an addition of a new universal charitable donation incentive for the roughly 90% of tax payers who take a standard deduction.

Meanwhile, other individuals de-incentivized to give through some provision s of the bill. Those who itemize deductions will now only be able to deduct charitable contributions that are more than 0.5% of their income, meaning that many contributions will be too small for these Americans to deduct and therefore receive a tax incentive. Corporations must now give at least 1% of their taxable income to qualify for a charitable deduction. For high-income individuals, the tax benefit for itemized deductions—including charitable contributions—is capped at 35 cents per dollar, down from the previous 37 cents. There is also a new aggregate limit on all itemized deductions, further restricting the total benefit available to high earners. This is projected to discourage charitable giving and therefore harm non-profit organizations to the tune of an estimated $81 billion over 10 years, which is more than the anticipated $74 billion increase they may see from the universal deduction. Nonprofit leaders warn that these changes will likely reduce large gifts from wealthy donors and corporations, which historically make up a significant share of total charitable giving. Nonprofit leaders warn that these changes will likely reduce large gifts from wealthy donors and corporations, which historically make up a significant share of total charitable giving.

New and Increased Taxes on Nonprofits

The bill introduces new and increased taxes on non-profit organizations which will affect private foundations, large endowments, executive compensation, and employee benefits, raising costs and reducing resources available for charitable missions. It replaces a flat tax with a tiered system based on a foundation’s asset size which means large foundations will face sharply higher tax rates, which could significantly reduce funds available for grants and charitable activities.

Previously, private colleges and universities with large endowments paid a 1.4% excise tax on net investment income, but under the new, tiered system the tax may reach up to 21% for institutions with a “student-adjusted endowment” above $2 million per student, and the definition of “net investment income” is expanded to include interest from student loans.

In summary, the OBBBA’s new and increased taxes on nonprofits represent a substantial shift in the sector’s financial landscape, with the greatest impact on large foundations, universities, and organizations with highly compensated employees. Nonprofits are bracing for higher costs and reduced resources to serve their communities. This could mean reduced resources such as a reduction in funds available for charitable work, scholarships, and community services, and may force difficult choices like cutting programs or reducing staff, all at a time when demand for services is rising

Threats to Nonprofit Tax-exempt Status and Due Process

Not-for-profit and other human services organizations have raised concerns that the bill introduces several provisions that pose significant threats to the operations and legal protections of nonprofit organizations. These changes could affect financial stability, operational capacity, and the due process rights of nonprofits.

An earlier version of the bill included a provision that would allow Executive (Presidential power) to revoke a non-profit’s tax exempt status without due process in the courts. After advocacy from nonprofit organizations and other leaders, this provision did not make it into the final version of the bill. However, non-profits urge everyone to remain vigilant and warn that similar initiatives could be introduced in the future that would allow a President to take away tax exempt status for a non-profit based on political or mission-level disagreements or misalignment, or other reasons, with little or no due process for the non-profit agency to contest or legally challenge the decision.

Quotes and Statements

Non-profits from a wide range of fields have released statements and press releases, and publicly advocated against the passage of the bill as written.

“There is nothing beautiful about stripping millions of Americans of their health coverage, making drastic funding cuts to Medicaid, and shuttering health care providers across the country … After hearing from their constituents for months about why this bill would be so harmful, Congress nonetheless moved forward – passing legislation that will drastically roll back access to mental health care for millions of Americans who rely on Medicaid. The facts are clear: people will lose access to lifesaving services and treatments because of the cuts in this bill. We’re disappointed, but we are resolute in our efforts to continue fighting to protect mental health.”
— NAMI CEO Daniel H. Gillison, Jr.

“At a time when nonprofit organizations face significant financial challenges, this tax bill falls far short of meeting the growing needs of the nonprofit sector to fill gaps unmet by government and the private sector. A provision included in the tax bill to create a universal tax deduction for charitable giving by taxpayers who do not itemize is a welcome development. Unfortunately, this positive provision cannot outweigh the many more negative policies in the bill that will ultimately harm the millions of people in America who rely on their local nonprofit organizations for essential services. While the final bill includes both helpful and harmful provisions, it overall reduces resources available to nonprofit organizations, negatively impacting their ability to provide essential services to their local communities. … Because the tax bill may result in fewer resources for nonprofit organizations, these vital institutions may be forced to cut back on services or serve fewer people.”
— Diane Yentel, President and CEO, National Council of Nonprofits

“[The bill] will fundamentally change health care for the worse … The changes will affect every American, disproportionately harming those most in need. More than 11.8 million Americans will become uninsured by 2034. The new law will reduce federal spending on Medicaid by more than $1 trillion over a decade, increase medical costs for individuals and put up even more barriers to care by creating a jungle of red tape that will likely result in them losing coverage for the mental health and substance use care they need.”
— The National Council for Mental Wellbeing

“The bill headed to the President’s desk will cause irreparable harm for generations to come and every community will feel its impact … At a time when families are struggling to put food on the table, grappling with health care costs, dealing with high costs of college and dwindling options for student loan repayment, and other financial hardships in an increasingly volatile economy, Congress worked overtime to ram their bill through an expedited process that will harm individuals, families, and communities.”
— Anthony Estreet PhD, MBA, LCSW-C., CEO National Association of Social Workers

“The ‘One Big Beautiful Bill Act’ will have a devastating impact on America’s healthcare system, stripping health insurance from more than 17 million people Americans by cutting Medicaid and driving up the cost of health plans for working families, forcing many to go without. For millions of Americans, Medicaid is mental health … These cuts will exacerbate America’s existing mental health crisis by stripping people of health coverage, putting many rural hospitals over the brink, reducing the healthcare workforce, and further imperiling community mental health programs. The cuts will overwhelm emergency rooms, jails and prisons, and exacerbate homelessness. Every single American will feel the impact of these cuts. Every family knows someone or is directly affected by mental health challenges, and we know that mental health conditions are treatable with appropriate access to care. Without coverage, millions of Americans will not have the care they need to live happy, healthy, fulfilling lives.”
— Mental Health America (via joint social media statement with other organizations)

“Today is an extremely disappointing and very difficult day for health care in America. Despite months of clearly demonstrating the implications that these Medicaid proposals will have on the patients and communities we serve, especially the most vulnerable populations, Congress has enacted cuts of nearly a trillion dollars to the Medicaid program. No matter how often repeated, the magnitude of these reductions — and the number of individuals who will lose health coverage — cannot be simply dismissed as waste, fraud, and abuse. The faces of Medicaid include our children, our disabled, our seniors, our veterans, our neighbors, and friends. The real-life consequences of these reductions will negatively impact access to care for all Americans.”
— Rick Pollack, President and CEO, American Hospital Association

“The American Foundation for Suicide Prevention (AFSP), the nation’s largest suicide prevention organization strongly denounces today’s action by Congress to enact deep cuts to Medicaid, jeopardizing access to mental health and substance use care for millions of Americans. At a time of rising depression, anxiety, addiction, and suicidal crises, reducing access to care is dangerous and shortsighted. Medicaid is a lifeline for vulnerable populations, including youth, older adults, veterans, and low-income individuals, who rely on it for essential mental health and substance use services. Roughly 40% of adults on Medicaid live with a mental health condition or substance use disorder. Research shows that access to services under Medicaid reduces suicide rates; cutting it will have the opposite effect. In 2023 alone, the Centers for Disease Control and Prevention’s (CDC) estimates that among the U.S. population 12.8 million people seriously considered suicide, and 1.5 million attempted. We cannot afford to limit access to care … AFSP urges lawmakers to reverse course and protect Medicaid access. Suicide prevention depends on robust, equitable access to mental and behavioral health care. We call on Congress to prioritize policies that expand – not restrict – lifesaving support.”
— The American Foundation for Suicide Prevention

“The One Big Beautiful Bill Act will make life much more difficult for the average older adult, especially vulnerable older Americans. About 27 million households with adults age 60+ cannot afford their basic living needs. The act’s drastic cuts to the programs they rely on to make ends meet means more older Americans fall into poverty. One in five older adults gets their health insurance through Medicaid, including 5 million who are enrolled in Medicaid expansion under the Affordable Care Act. Ending that coverage means these struggling older adults will lose access to afford doctor visits, medicine, and more. The Act also extends work requirements for individuals age 50-64 in order to qualify for Medicaid. The Medicaid cuts also directly impact Medicare, specifically the programs Congress enacted to help low-income older Americans afford their Medicare premiums and copayments. Many paid and unpaid caregivers for older adults also rely on Medicaid for their own health coverage. Cuts to the Supplemental Nutrition Assistance Program (SNAP) through time limits, stricter eligibility requirements, and shifting the cost to states will leave millions of older Americans at risk of hunger. Seven million older adults already lack access to sufficient healthy food. We believe every American deserves to age with dignity—and that requires affordable access to the basics of life such as food and health care. This act would put that further out of reach for millions of older Americans in need.”
— Ramsey Alwin, President and CEO of the National Council on Aging (NCOA)

Summary

A wide range of nonprofits are united in warning that the One Big Beautiful Bill Act will undermine their ability to serve communities, particularly those most in need and most vulnerable. The combination of funding cuts, reduced charitable giving, and new taxes threatens the stability and reach of the nonprofit sector at a time when demand for their services is rising

Nonprofits Sound Alarm Over Impact of United States “One Big Beautiful Bill Act”

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