On July 4, 2025, House Resolution 1 (known as the “One Big Beautiful Bill Act” ,“Big Beautiful Bill,” or BBB) was signed into law.
H.R. 1 imposes sweeping cuts to Medicaid, Medicare, Affordable Care Act subsidies, and social supports like the Supplemental Nutrition Assistance Program (SNAP)—actions that collectively strip health coverage and essential assistance from a projected 10.9M–16M Americans over the next decade.
Reduced federal funding is expected to bring a surge in uncompensated care, higher uninsured rates, and intensifying financial pressure on non-profit healthcare systems, particularly rural and Medicaid-reliant organizations.
Analysis from Bloomberg Law outlines a looming $31B in increased costs for hospitals due to uncompensated care and expanded IRS penalties. The 32% increase for non-profit hospitals which operate on thin margins is likely to be impossible to absorb.
How Hospitals and Health Systems are Responding
Thus far, in 2025, over 52 hospitals and health systems have announced cuts to headcount staff. Across the nation, hospitals have reduced workforce, eliminated vacant positions, implemented cost-cutting measures, reduced services, restructured, and more. Various systems explained the causes for these changes, including mounting financial pressures, federal spending cuts to research, low patient census, and concerns for long-term financial stability.
Many healthcare foundations, particularly University-affiliated organizations, have frozen their hiring for open positions and have not been able to move forward with new hires.
Most healthcare delivery organizations (86%) have contingencies in place — some are scaling back services and restructuring their workforce, while others are expanding high-reimbursement lines, according to a KLAS Research survey. The bill’s significant cuts to federal healthcare spending, particularly Medicaid, represent the greatest future threat to non-profit hospital operations and cash flows.
How Can Philanthropy Offices Respond
The law’s tax overhaul brings complex challenges, and opportunities, for advancement teams:
- An analysis by Candid found that 37% of foundations expect to increase their giving in 2025. Additionally, 53.9% of foundations reported they committed to giving at the same level as 2024. Only 8.8% of foundations expected to decrease their giving. These findings predate the necessity created by this law’s passing. Time will tell if more foundations increase their philanthropic commitments for the remainder of 2025 or for 2026 as the law begins to take effect, however, advancement teams should feel encouraged to ask for sustaining or increased funding from their foundation partners.
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Starting in 2026, H.R. 1 will allow taxpayers who don’t itemize to claim a universal charitable deduction of up to $1,000 for individuals and $2,000 for couples filing jointly. This policy shift could boost participation in annual giving programs and influence how organizations approach their year-end campaigns. That said, donors who consistently give may already be hitting their deduction limits. Instead, an outreach earlier in the year might resonate more with donors who make multiple gifts throughout the year.
- Philanthropy can be part of the solution to address the anticipated challenges presented by the new law, however, it is not a complete solution. Donors will be unable to meet every need and both donors aiming to help and hospital colleagues will need to understand how philanthropic funds can contribute to a solution while understanding that philanthropy cannot make up for governmental funding.
- Philanthropic partners should review their current fundraising strategies and priorities in light of the anticipated changes to patient care and services available. New needs are likely to arise, funding opportunities are likely to be eliminated along with service line reductions, and education surrounding the complexity of non-profit hospital funding will need to increase. By remaining a resource for hospital executives during these unprecedented challenges, philanthropy can support solutions.
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