Could you start an SGO?
Consider how your community, organization, or mission could be a starting point.
Watch on YouTubeThe SGO starter checklist
How to Start a Scholarship Granting Organization
Turn an SGO idea into an organized plan. Six practical building blocks take you from mission and formation to scholarship operations and accountable reporting.
Use this as a starting point, not legal advice. Exact requirements vary by state and program and may require legal, accounting, tax, or regulatory guidance.
- STEP 01Form the organizationMission, governance, banking, and foundational controls
- STEP 02Establish federal tax statusOrganizing documents, EIN, recognition, and filings
- STEP 03Qualify under state rulesProgram pathway, approval, listing, and local requirements
- STEP 04Build scholarship operationsApplications, reviews, awards, and supporting records
- STEP 05Build donor operationsCampaigns, contributions, acknowledgements, and history
- STEP 06Prepare compliance & reportingFinancial controls, reporting, documentation, and auditability
A quick introduction
See the idea take shape.
Watch this short overview, then explore the details at your own pace.
Explore all SGOone videosChoose Play to watch on YouTube in a new tab.
Choose your starting point
Understand the model before forming the organization.
Start with your mission and the pathway that can support it. These planning decisions come before a launch date.
Understand what an SGO does
Decide which students and educational needs you hope to serve, who could support the mission, and how scholarships would reach eligible students.
Understand the SGO model and mission examples →Check the state and program
Identify where you will operate. Distinguish an existing state scholarship program from the federal Section 25F pathway, which depends on state participation and an eligible SGO listing.
Find your state's pathway and official sources →New nonprofit or existing organization?
A new organization needs formation and tax-status work. An existing nonprofit should review its governing purpose, public-charity status, leadership capacity and required operational changes before deciding whether to add scholarships.
Explore the existing-nonprofit route →Separate roles. Clear responsibilities.
Who does what?
You build the SGO. SGOone will help. Official approval or listing comes from the applicable state program or government authority. So who does what along the way?
| Role | Who Approves it |
|---|---|
| Form nonprofit corporation | State / organization |
| Grant 501(c)(3) tax-exempt status | IRS |
| Determine organization meets §25F SGO requirements | Participating state |
| Put SGO on official qualifying list | Participating state → IRS |
| Operate donation/application/scholarship workflows | SGO + software platform |
| Help prepare compliance documentation | Software/consultant may assist |
SGOone does not certify or accredit SGOs. “Certification,” “approval,” and “listing” describe different processes depending on the program; not every program uses accreditation. Nonprofit formation, IRS recognition, and a state's §25F determination/list submission are separate steps. Completing a software checklist guarantees none of them.
For the federal pathway, see IRS guidance on state participation and SGO lists and 26 U.S.C. §25F(g), State list of scholarship granting organizations. The October 2026 temporary rules also establish IRS SGO registration and donor-reporting procedures. Read the October 2026 Section 25F regulatory update; confirm applicable dates and current requirements with the relevant authority.
Your idea. Your next steps.
Build a checklist for your SGO.
Create a free account and begin SGOone Verified at no charge. The SGO Prep Survey identifies your starting point and creates a customized Formation Journey checklist. This public guide explains what to do; those account-based tools help you organize and follow through on the work. Sign in or create an account to use them.
Start SGOone VerifiedAn SGOone participation milestone, not legal qualification or government approval.
01
Form the Organization
- Create the nonprofit entity
- Define the organization's mission and charitable purpose
- Appoint a governing board
- Adopt bylaws
- Establish governance policies
- Obtain an EIN
- Establish banking
- Establish accounting and financial controls
- Determine applicable state charitable-registration requirements
Document who governs, who can authorize spending and who checks the records. Open banking in the organization's name and plan approvals, reconciliation and restricted-fund accounting before receiving contributions. Review board selection and governance and Section 25F separate-account requirements.
Where SGOone fits
SGOone helps organize the operational records that follow formation. Entity formation, banking, and legal governance remain outside the platform.
02
Establish Federal Tax Status
- Prepare governing documents
- Determine appropriate federal tax-exempt structure
- Apply for 501(c)(3) status when applicable
- Establish donor acknowledgement procedures
- Establish contribution recordkeeping
- Understand applicable IRS annual filing requirements
State incorporation and federal exemption are separate steps. The Section 25F pathway requires a tax-exempt 501(c)(3) organization that is not a private foundation. Start with the nonprofit and 501(c)(3) formation explanation.
Where SGOone fits
Connected donor and contribution records provide a starting point for your advisers. SGOone does not apply for tax exemption or file IRS returns.
03
Qualify Under State Program Rules
- Identify applicable state scholarship/tax-credit program
- Determine the state's terminology for the organization
- Apply for SGO/STO/scholarship organization/foundation status where required
- Document organization eligibility
- Determine student eligibility requirements
- Determine school/provider eligibility requirements
- Determine scholarship award restrictions
- Identify applicable donation-credit procedures
- Identify required disclosures
- Identify reporting deadlines
- Identify required scholarship distribution percentages
- Identify administrative-expense restrictions
For Section 25F, prepare for state certification/listing and the separate IRS registration procedures in the temporary rules. Check applicable dates and your state's own application instructions; a state election is not your organization's approval. Read state listing and IRS registration.
Where SGOone fits
SGOone connects programs, jurisdictions, manually recorded listings, restricted funds, and versioned templates. Current state references are informational, not executable state law.
04
Build Scholarship Operations
- Create scholarship programs
- Create application workflows
- Establish student and family records
- Establish document collection
- Verify eligibility
- Establish application review procedures
- Establish award approval procedures
- Track scholarships
- Track approved schools/providers
- Track fund disbursements
- Preserve award and eligibility history
Write eligibility, priority, conflict-review, award and permitted-expense policies before opening applications. Plan how families submit information and how schools or providers support payment records. Read how scholarships are awarded and federal student and expense requirements.
Where SGOone fits
Explore the application-to-award workflow today, with manual evidence and preserved decisions. Document uploads and live payments are not connected.
05
Build Donor Operations
- Maintain donor records
- Create donation campaigns
- Record contributions
- Generate appropriate acknowledgements
- Track state tax-credit information where applicable
- Facilitate permitted donation/fund transfers
- Maintain contribution history
- Maintain documentation connecting contributions to applicable program processes
- Build donor communication and awareness efforts
Keep donor communications, contribution types, acknowledgements and payment records consistent. Do not promise credits before confirming qualification. Use the federal credit explanation and temporary donor-reporting procedures.
Where SGOone fits
Start with donor records and contribution intake, review, and recording. Campaigns, automated acknowledgements, and external transfer services remain planned.
06
Compliance & Reporting
- Maintain audit trails
- Track deadlines
- Track scholarship-distribution requirements
- Maintain state reporting data
- Maintain IRS reporting data
- Support Form 990 preparation where applicable
- Maintain record-retention policies
- Maintain financial controls
- Preserve eligibility documentation
- Preserve contribution documentation
- Preserve scholarship and disbursement documentation
- Maintain organizational policies and governing records
Assign owners for filing dates, financial review, scholarship-spending monitoring and record retention. Separate existing obligations from proposed requirements. Review the 90% spending requirement and proposed annual reporting and audits.
Where SGOone fits
Use operational tables, CSV exports, and audit history to help organize reporting work. Statutory forms, filing calendars, and submissions are not automated.
Once you are committed to moving forward, optional SGO Launch Services can help with identity, a website, communications and launch preparation while professional formation work continues. These paid services are not required; start with the free resources above.
Questions about startup costs, timing, or an existing nonprofit? Explore the starting-an-SGO FAQs →
The list describes work an organization may need to perform; it does not claim that every task is required everywhere or automated in SGOone. Federal formation, gift documentation, and filing concepts are linked in Sources / Learn More. State examples illustrate additional program-specific work.
One platform. Every step.
How SGOone Helps at Every Step
SGOone doesn't just record what happened. It helps an organization manage what needs to happen next.
Compliance
Organize program-specific reviews, requirements, and decision history. Comprehensive state rule implementation remains future work.
Organizing
Connect programs, jurisdictions, donors, students, families, and scholarship activity in one system.
Documenting
Preserve evidence references, decisions, approvals, and audit trails. Document and policy file storage is planned.
Awareness & Advertising
Build on organized donor information. Outreach, advertising, and communication tools are planned, not connected services.
PlannedState Reporting
Keep structured program records and export operational data. State-specific forms and submissions are planned.
Submissions plannedIRS Reporting
Organize operational and financial information for your advisers. SGOone does not prepare or submit IRS filings.
Filings plannedDonation Campaigns
Use donor and giving history as a foundation for future campaign management.
Campaign tools plannedDonation Transfers
Track contributions and explore fund/disbursement workflows. Payments are simulated; no real money moves.
SimulatedStudent Records
Follow applications, eligibility evidence, scholarship awards, and student history.
Family Records
Maintain household information and connections between students and families.
Scholarship Grants
Configure programs, review applications, approve scholarships, and track awards.
Eligibility Verification
Record manual verification evidence and preserve the inputs and outputs behind decisions. External verification is not connected.
From purpose to practice
The Path Forward
Building an SGO creates opportunity. Getting there requires the right organizational, regulatory, and operational foundation.
This is a planning roadmap. Requirements, terminology, timing, and recognition processes vary by state and program.
Define your mission
Decide whom you want to serve, what educational opportunity means to your community, and how you will sustain that work.
Your organization leadsYour mission sets the direction.
Form the organization
Establish the entity, governance, and leadership. Address IRS tax-exempt recognition and other applicable formation requirements with qualified advisers.
Organization + government authoritiesFormation and tax-exempt recognition happen outside SGOone.
Build the operational foundation
Plan staffing, accounting, donor records, scholarship processes, and how information will be collected and maintained.
Organize · SGOone helpsConnect staff, programs, records, tasks, and evidence references. Secure document storage is not yet available.
Prepare for SGO requirements
Identify the applicable program, review its organizational requirements, and organize the information needed to demonstrate readiness.
Prepare · SGOone helpsUse informational state guides and optional, manually completed readiness checklists.
Complete state-specific requirements
Work through the applicable approval, governance, financial, reporting, and renewal requirements. Revalidate them for your program year.
Organization leads · SGOone helps trackKeep tasks, deadlines, and supporting references organized; checklist completion is not a legal determination.
Apply for official approval
Submit the required information to the applicable authority. State-program approval and federal §25F listing are distinct processes; follow the pathway that applies to your organization.
State / government authoritySGOone does not approve applications, confer §25F status, or submit official filings on your behalf.
Launch and operate the scholarship program
After meeting applicable requirements, receive contributions, manage applications, review eligibility, award scholarships, and coordinate permitted payments.
Operate · SGO + SGOoneUse connected staff workflows and participant portals. Payments and external communication delivery remain simulated.
Grow the program and demonstrate impact
Maintain records, prepare reports, track participation, renew required approvals, and share the opportunities your organization supports.
Stay Ready · SGOone helpsUse reporting, audit history, and operational processes as your organization grows. Government approval remains separate.
Before launch, confirm the approvals and listing that apply, assign operational responsibilities and test the donor, family, school and reporting processes. Use sample operating budgets for planning and the healthy-SGO operating cycle for ongoing practice.
Explore the Founding Cohort opportunity if you want to learn about potential program support, subject to its conditions. Find the related guides, current updates and videos in the SGO Learning Center.
Go to the source
Sources / Learn More
General operating guidance is not a substitute for the rules of your program. These official resources explain federal concepts and illustrate different state approaches.
- IRS — Before applying for tax-exempt status
Federal tax exemption, organization documents, EINs, and the separate role of state law.
- IRS — Contribution substantiation and disclosure
Charitable contribution records, acknowledgements, and disclosure obligations.
- IRS — Annual exempt-organization returns
Who must file an annual return or notice, including exceptions.
- Arizona Department of Revenue — STO certification
A state-specific example of certification and scholarship allocation requirements.
- Virginia Department of Education — Scholarship tax credits
Education Improvement Scholarships Tax Credits Program and scholarship foundation guidance.
- Virginia Code § 58.1-439.28 — Scholarship foundations
Statutory guidelines. Check the applicable effective version; the page includes future-effective language.
- Pennsylvania DCED — Educational Improvement Tax Credit
Program terminology, organization approval, guidelines, and reporting resources.
Editorial sources reviewed September 8, 2026. Requirements and effective dates can change. Consult current official guidance and qualified legal, accounting, or tax advisers. References do not imply agency endorsement of SGOone.
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Considering a community scholarship mission? Explore whether you could start an SGO and the responsibilities to prepare for. For ongoing operations, explore SGOone’s approach to independent SGO management and sample operating budgets.