We are currently in a season of economic uncertainty, and associations are bracing for changes that could reshape their financial outlook. With key provisions from the Tax Cuts and Jobs Act (TCJA) set to expire in 2025, and other tax reforms under consideration, it’s crucial for associations to understand how these shifts may affect financial planning, budgeting, and long-term sustainability.
In this blog, we’ll explore how potential tax changes may impact your association, and how you can best prepare your association for the future
Understanding how potential tax law changes can impact your association
To best meet the needs of your staff and members, you’ll need to understand the potential changes to the 2025 tax reforms. Here’s how the changes may impact your association:
1. Expiration of Tax Cuts and Jobs Act (TCJA)
Several components of the TCJA, which brought substantial changes to the U.S. tax code in 2017, are scheduled to sunset by the end of 2025. Notably, the cap on state and local tax (SALT) deductions, individual tax rate reductions, and adjustments to the standard deduction could all revert to pre-2018 levels. This reversal may reduce disposable income for many donors, potentially impacting charitable giving levels and affecting your association.
2. Charitable contribution deductions
The deduction limit for cash donations to public charities, which was increased to 60% of adjusted gross income (AGI) under the TCJA, may return to the previous 50% threshold. This change could discourage high-dollar donations to your organization, unless donors are educated on optimal giving strategies.
3. Increased focus on fixed asset reporting
Tax legislation and IRS guidance are increasingly emphasizing transparency around asset management. This is not only a compliance issue but also a matter of sound financial stewardship. Your association should ensure your fixed assets are well-documented, properly depreciated, and aligned with your operational needs.
How tax changes may impact financial planning and budgeting for associations
With potential changes in tax liability and donor behavior, associations will need to revisit their annual budgets with a more cautious and forward-looking lens. Here are three ways to plan for these potential changes:
1. Budget adjustments
With potential changes in tax liability and donor behavior, associations will need to revisit their annual budgets. It’s wise to run multiple budget scenarios based on various giving levels and operational cost projections, building in flexibility to adapt to shortfalls or unexpected costs.
Consider categorizing budget items into essential, important, and discretionary tiers—this helps in making quick, informed adjustments if funding levels fluctuate. Building contingency plans or “what-if” models can give leadership the ability to pivot quickly and responsibly.
2. Cash flow considerations
Tax reform may introduce new costs—such as additional compliance requirements, changes to fringe benefit taxation, or unexpected liabilities from unrelated business income—that affect cash flow. Additionally, shifts in donation timing due to changes in tax deductibility rules could make revenues more volatile.
Maintaining a rolling cash flow forecast will help your association stay flexible and identify gaps early. Consider establishing a reserve fund if your organization doesn’t already exist.
3. Strategic financial planning
In times of uncertainty, strategic financial planning becomes even more essential. Associations should work closely with finance committees and advisors to stress test different fiscal outcomes, ensuring that financial strategies support both short-term needs and long-term goals.
Strategic planning includes revisiting long-term financial goals and ensuring investment and funding strategies align with both mission and market conditions. Stress test different fiscal outcomes—what happens if giving declines by 10%? Or if new tax rules limit a key revenue stream? These “what-if” scenarios prepare your team to make informed decisions under pressure. Strategic planning should also include reviewing internal controls, updating financial policies, and considering new or diversified revenue streams to increase resilience.
Long-term sustainability challenges for associations
Here are three key areas your association can act now to build resilience for the future:
1. Donor behavior
Tax incentives play a large role in philanthropic behavior. If potential tax reforms reduce the appeal of itemized deductions, your donors may scale back. As you prepare for this shift, it’s important to reframe your development strategy. Start by crafting compelling messaging that emphasizes your organization’s impact, mission, and success stories—elements that resonate emotionally and ethically, not just financially. Cultivate donor relationships based on values and community impact, not solely on tax advantages.
Additionally, explore opportunities to diversify your fundraising portfolio. Consider launching or expanding recurring giving programs, corporate sponsorships, or peer-to-peer fundraising campaigns. By engaging a broader base of donors and encouraging multi-year commitments, your association can reduce its dependency on large, single-source contributions.
2. Rising compliance costs
New reporting obligations or the loss of certain tax exemptions could increase administrative overhead for your association. To remain compliant, your organization should reconsider how your current association management software (AMS) meets your accounting needs. Does your AMS offer upgraded accounting options or staff training to increase compliance? Does your AMS offer automation or reporting to streamline your accounting processes?
Beyond software, consider whether your staff has access to ongoing training and professional development on accounting standards, tax law updates, and best practices for reporting or fund management. Investing in your people and systems now can save time, money, and risk down the line.
3. Mission alignment
Revisiting your financial strategy also presents an opportunity to ensure each dollar you spend supports your core mission. As funds potentially tighten, mission-critical initiatives should take priority in both planning and messaging. Review your current programs, partnerships, and internal processes with a strategic eye. Sunset or scale back initiatives that no longer contribute meaningfully to your goals, and redirect resources toward high-impact, mission-critical efforts. Transparent communication around these decisions is essential—both internally and with stakeholders—so your community understands how and why you’re adapting.
In addition, aligning financial decisions with your mission doesn’t stop at your programs. It also includes your vendor partnerships, investment policies, staff development, and how you measure success. Keeping your mission at the center of every decision helps maintain focus, build trust, and ensure long-term sustainability—even in times of change.
Action steps: what your association can do now to prepare for potential tax reform
Tax reform may still be on the horizon, but the time to prepare is now. Proactive planning can help your association weather financial uncertainty, remain compliant with new regulations, and continue advancing your mission with confidence. By taking deliberate action today, you can reduce future disruptions and build a more resilient financial foundation for the long term.
Here are three steps your association can take now:
1. Conduct a tax readiness audit
Start with a comprehensive review of your financial systems and processes. Assess your current general ledger structure, fixed asset tracking, and tax reporting workflows. Are your income and expense categories aligned with potential tax obligations? Are your systems equipped to distinguish between taxable and non-taxable revenue sources
Also consider whether your team has documented procedures for tracking restricted funds, reporting unrelated business income (UBI), and staying compliant with IRS and state filing requirements. If gaps exist, develop an action plan to update your chart of accounts, enhance documentation, and implement stronger internal controls.
A tax readiness audit isn’t just about preparing for legislation—it’s about building clarity, efficiency, and accountability into your financial operations.
2. Engage with tax and financial advisors
Now is the time to deepen relationships with professionals who understand both tax law and the nonprofit sector. Partner with a CPA or financial advisor who has experience working with associations and can offer tailored insights. They can help you interpret proposed legislation, model its potential financial impact, and develop compliance strategies that align with your goals.
Consider scheduling regular check-ins with your advisor throughout the year—not just at tax time—so you can adjust your planning as new information becomes available. If your association doesn’t have an advisor with industry expertise, this may also be the time to evaluate new partners who can offer the depth of guidance you need.
3. Share your story
Associations are in a unique position to advocate for their members and causes. As tax reform discussions continue, stay engaged with your local, state, and national networks and stay updated on any policy updates.
Internally, communicate with your board, staff, and members about how potential tax changes could impact your work. Externally, share your organization’s impact stories to demonstrate why tax policy matters—not just for your association, but for the communities you serve. Whether it’s through newsletters, social media, or direct outreach, telling your story can inspire support and shape public discourse around tax policy and philanthropy.
Learn more about 2025 tax reform changes
Tax reforms are never just a matter of numbers—they’re a matter of strategy. For associations, these potential changes represent both challenges and opportunities. By staying informed, reevaluating financial plans, and taking proactive steps now, your association can remain resilient and mission-driven in an evolving tax landscape.
Don’t wait until reform becomes reality—start planning today to safeguard your association’s financial health for tomorrow.
