New Tax Rules, New FASB Guidance, New Board Questions: Is Your Nonprofit's Budget Ready?

I've come to believe that uncertainty, handled well, can be a gift. Not because it's easy, but because it forces you to plan for more than one outcome. I shared this same sentiment with a room full of nonprofit finance leaders when the Uniform Guidance changes hit: the discomfort of not knowing exactly what's coming is also an opportunity to build something more resilient than what you had before.

• 2026 is another one of those windows for nonprofits: Donor behavior may get less predictable. The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, will hit revenue as new charitable giving tax rules change donor incentives mid-year.

• Documentation expectations will go up. Uniform Guidance can impact costs and compliance with new FASB guidance and increased Form 990 and IRS scrutiny.

• Boards are asking smarter questions. Clear board reporting can proactively and accurately communicate variances and impacts to donor behavior. This is essential to educating the board on potential scenarios and maintaining donor transparency.

Martus was built for this moment. Static, single-number spreadsheet-based budgets can’t absorb a revenue surprise nor a compliance "prove it" moment, but a scenario-based, real-time budget can flex for both.

To be clear: We're not tax advisors, and nothing here is tax guidance. Talk to your tax advisor about how these rules may apply to your organization.

1. Donor behavior is about to get less predictable

The OBBBA’s new charitable giving tax rules mean some donors get a new incentive to give, and others lose part of a benefit they used to count on.

Key takeaway : Donation timing and volume are likely to shift in ways that don't match last year's assumptions.

You might see more small-dollar gifts from donors responding to a new incentive, or a pullback from larger donors affected by a new limit. Some of it may show up as bunching, or through Donor-Advised Funds, rather than a clean year-over-year change. A single-number revenue forecast can't absorb that kind of variability, and neither can a team that's manually rebuilding a spreadsheet model every time an assumption changes.

How to prepare: Build best-case, worst-case, and blended donation scenarios side by side instead of one static number. In Martus, nonprofit finance leaders can layer new assumptions onto an existing historical or prior-year budget rather than starting from zero. The forecast updates; the underlying model doesn't have to be rebuilt from scratch.

2. Documentation expectations just went up

Donor behavior isn't the only thing shifting. New FASB guidance on receivables and crypto assets means updated policies and disclosures are due before year-end close. The IRS is revising Form 990 requirements and increasing scrutiny of tax-exempt organizations.

Key takeaway: Boards and funders are asking more pointed questions about functional expense allocation and financial transparency.

Nonprofit finance teams that are prepared don’t have to spend time reconstructing records after the fact. They already have the answer on hand. If the budgeting and actuals still live in spreadsheets, a "prove it" moment turns into a fire drill.

How to prepare: Leverage real-time budget-vs-actuals reporting so that the data, approvals, and history already exist when someone comes asking, rather than getting rebuilt under deadline pressure. For nonprofits with multiple grants or funding sources, tracking personnel cost allocation directly in the budget instead of in a side spreadsheet gives you a clean, defensible paper trail from day one.

3. The board is going to ask "why," and "the tax law changed" isn't an answer

Put the first two shifts together and you get a predictable board-meeting moment. A board member sees donations come in differently than budgeted and asks why. "The tax law changed" doesn't land without numbers behind it. At the same time, the board wants to:

• Hear the organization is on solid footing
• See transparent stewardship details
• Know that the financial records will hold up to scrutiny

Key Takeaway: This is where finance teams without a real-time view of their own numbers end up building the narrative piecemeal, and often after the board meeting, instead of walking in with one already in hand.

How to prepare: When functional expense allocation and financial transparency reporting live in the same system as the budget, "where did the money go" and "how did we do this quarter" get answered in the same conversation. Finance can point to exactly where donation timing shifted, whether that's bunching, DAF activity, or a slower quarter, instead of getting caught off guard by a variance they can't explain.

That's what turns a defensive update into a report a board member can repeat with confidence to funders and stakeholders.

Budgeting in an ever-changing world

For nearly 20 years, Martus has worked alongside nonprofits and other mission-driven finance teams to help them navigate change with confidence.

If you’re a nonprofit finance leader, this calls for three concrete moves this budget cycle:

• Build scenario-based forecasts. Model best-case, worst-case, and blended donation scenarios so a shift in donor behavior updates the forecast instead of breaking it.
• Use real-time budget-vs-actuals and cost allocation in the budget itself. Keep documentation and personnel cost allocation live in the same place as the budget, not in a side spreadsheet, so it's ready before anyone asks.
• Make board-ready reporting available on demand. Walk into board meetings able to explain a variance immediately instead of reconstructing the story under pressure.

Keep your ERP and upgrade your budgeting. Martus can integrate with it. what's already there, so your finance team gets the scenario planning, real-time reporting, and audit-ready documentation this year calls for, without changing how you operate day to day. Discover how Martus helps nonprofits or take a tour to learn more.

If you're a CAS firm or an outsourced accounting team, none of this is a reason to add a new system to your clients' plate. It's a reason to layer better budgeting on top of what you're already running. Whether your clients are on QuickBooks Online, Sage Intacct, Sage 100, 200, or 300, Acumatica, Xero, Microsoft Dynamics, or nearly any other accounting or ERP system, Martus integrates with your clients' existing accounting system, so you can bring scenario planning, real-time reporting, and audit-ready documentation to the table this year — without asking a single client to change ERPs. If you're already helping clients navigate a year like this one, we'd welcome the chance to do more of it together. Learn more about partnering with us to support more nonprofits in accomplishing their mission.