SGO Frequently
Asked Questions

There is no single fixed startup cost. A new organization generally has state nonprofit formation costs plus an IRS tax-exemption application fee: $600 for Form 1023 or $275 for Form 1023-EZ, if eligible. State filing fees vary; IRS fees can change.

Other expenses may include insurance, banking, accounting, legal assistance, technology, fundraising and compliance services. Organizations do not need to hire professionals for every step; careful planning and capable volunteers can significantly control costs.

Think of several steps, not one approval:

1. Form under state law and obtain an EIN.
2. Establish the board, bylaws and governance structure.
3. Obtain recognition as a 501(c)(3) public charity.
4. Meet applicable SGO requirements.
5. Complete the participating state's recognition or listing process for §25F and the separate IRS SGO portal registration under the temporary regulations.

The IRS recognizes federal tax-exempt status; participating states certify qualifying SGOs for §25F. The October 2026 temporary regulations establish IRS registration and state-list procedures, including conditional rules for pending exemption applications. Formation, listing and registration remain separate steps; timelines vary.

The IRS processing page checked in September 2026 reports that approximately 80% of Form 1023-EZ determinations are issued within 22 days, and 80% of full Form 1023 determinations within 191 days. These are published estimates, not promises; additional review can take longer. Check the current IRS page before planning around a deadline.

A typical formation journey includes:

• An eligible nonprofit organization formed under state law.
• Organizing documents with a charitable purpose and appropriate dissolution provisions.
• An EIN, a governing board, bylaws and basic governance policies.
• An IRS application using Form 1023 or, when eligible, Form 1023-EZ.

For federal §25F purposes, the SGO must be a tax-exempt 501(c)(3) organization and cannot be a private foundation. An existing nonprofit can review its current structure and activities against these requirements rather than assuming it must start over.

Not necessarily. Federal law does not require hiring a lawyer simply to form a nonprofit or submit a 501(c)(3) application. Many organizations can handle much of formation and routine administration themselves; state-specific obligations still need review.

Professional help may be valuable for:

• Complex organizational structures or compensation arrangements.
• Unusual governance, significant legal questions or multi-state operations.
• Complex accounting and tax questions.

SGOone helps separate tasks an organization can confidently manage itself from decisions that warrant qualified professional advice.

Yes, potentially. An organization does not necessarily need to create an entirely new nonprofit to become a Scholarship Granting Organization.

An existing organization may be able to participate if it:

• Qualifies as a 501(c)(3) organization and is not a private foundation.
• Has an organizational purpose and structure compatible with SGO activities.
• Meets the federal §25F SGO requirements.
• Meets the requirements of the participating state in which it intends to operate, including applicable SGO listing.

Existing organizations should review their governing documents, charitable purposes, policies and public-charity status before adding SGO activities.

Choose people capable of independent, responsible oversight. Education, finance, accounting, community leadership, fundraising, business, nonprofit governance, law and technology are all useful perspectives.

State law sets specific board requirements. A board should actively govern—not exist only on paper or be controlled entirely by people with personal financial interests in the organization.

Board compensation may be permitted, subject to applicable law, reasonable amounts and properly managed conflicts. Many charities use volunteer directors while paying employees or contractors for daily operations.

Yes. Nonprofit does not mean everyone must work for free. An SGO may employ people, including a founder, and pay reasonable compensation for real services.

Compensation should be:

• Reasonable for the work performed.
• Properly approved and documented.
• Reviewed without improper conflicts of interest.

Excessive compensation or payments primarily benefiting insiders can create 501(c)(3) problems. The operating budget must also remain compatible with applicable scholarship-spending requirements. The October 2026 proposal details cash-basis income, paid scholarships and the following-tax-year spending window. These proposed measurement rules are not final, and compensation is not itself scholarship spending.

The SGO establishes application, review, award and payment processes within federal and applicable state requirements. Under §25F, students must be eligible to enroll in public elementary or secondary school and meet the household-income standard.

The income threshold is no more than 300% of applicable area median gross income, using household income for the calendar year before application. The SGO verifies household income and family size.

Priority goes first to students awarded a scholarship in the previous school year, then to eligible students whose sibling received a scholarship from that SGO. Qualified contributions cannot be earmarked for a particular student. Scholarships to disqualified persons are prohibited.

Qualified K–12 expenses can include tuition, fees, academic tutoring, certain special-needs services, books, supplies and equipment. Each expense must meet §530's applicable conditions; not every education-related purchase qualifies.

Federal law does not prescribe one universal payment method. Keep the chain documented: Student → Eligibility → Award → Qualified Expense → Payment. Qualified §25F contributions support students within the state where the SGO is listed.

An SGO can define the geographic area, schools, educational providers and communities it is prepared to serve, subject to federal and applicable state requirements. Qualifying schools can include public, private and religious K–12 schools recognized under state law.

A tutoring or learning center does not necessarily have to be a school for every expense to qualify: educational-expense rules contemplate certain tutoring and special-needs services. Eligibility depends on the student, expense, provider and applicable law.

An SGO must provide scholarships to at least 10 students who do not all attend the same school.

Section 25F sets no specific federal dollar minimum or maximum per student or school. The SGO can set reasonable award amounts in its scholarship policies, using funds for qualified expenses of eligible students.

That allows meaningful flexibility: one student may need tuition assistance, another tutoring, books, supplies or special-needs services. Transportation can qualify when it meets §530's school-related conditions; it is not an unrestricted travel allowance.

The organization must still serve at least 10 students who do not all attend the same school. State-specific restrictions may apply.

Section 25F sets no federal fundraising dollar minimum or maximum. Practical funding needs come from serving at least 10 eligible students across more than one school and meeting the scholarship-spending requirement.

Build a budget that covers qualified scholarships and responsible operations, with clear records for contributions and spending.

Yes. An SGO can potentially receive charitable contributions separate from the federal §25F scholarship tax-credit program. Clearly distinguish between the two types of contributions.

§25F Qualified Scholarship Contributions

Qualified §25F contributions must be kept separate from other funds. The October 2026 temporary rules define the segregated account for qualified contributions and their earnings; the proposed rules detail its operational treatment.

General Charitable Contributions

General charitable contributions may support other lawful charitable activities, subject to the organization's governing documents, tax-exempt purpose, accounting policies, and applicable state and federal law.

SGOone's goal is to help organizations clearly identify and account for different contribution types so donor intent and applicable rules are preserved.

Not when the donor is making a qualified §25F contribution. A donor cannot earmark or set aside a qualified contribution for a particular student.

The donor supports the scholarship mission, while the SGO independently applies its eligibility, priority and scholarship-award process to determine which students receive assistance.

This separation helps keep scholarship decisions charitable decisions of the SGO rather than private gifts directed from one individual to another.

Potentially, yes. The October 2026 proposed regulations set out a framework for SGOs listed in more than one participating state.

Section 25F activity must remain tied to the applicable state's program. Qualified contributions associated with a state's SGO listing must fund qualifying scholarships within that state. Under the proposal, multistate organizations would maintain a separate §25F account and books for each covered state, accept donor state-allocation designations, and test operational requirements separately for each account.

SGOone's longer-term goal is to help multistate organizations keep funds, scholarship activity, requirements and reporting clearly separated by jurisdiction.

Ordinary nonprofit reporting

A 501(c)(3) generally files an annual Form 990-series return or notice. Depending on size and circumstances, this may be Form 990-N, 990-EZ or 990; exceptions and other filings can apply.

State reporting

State duties may include nonprofit corporate reports, charitable-solicitation filings, state tax filings, SGO-specific reports and information needed to remain on the state's SGO list. Check the actual state and program requirements.

§25F reporting

The October 2026 temporary rules require IRS SGO registration, donor-number procedures, annual donor acknowledgements by January 31 and qualified-contribution reporting by February 28 after the contribution year. The separate proposal adds annual operational certifications and financial/programmatic audits. Smaller organizations are not automatically exempt from the proposed audit; current forms, portal instructions and applicable dates still need review.

There is no universal minimum dollar distribution. Instead, §25F requires an SGO to:

• Provide scholarships to at least 10 eligible students who do not all attend the same school.
• Spend at least 90% of the organization's income on scholarships for eligible students.
• Keep qualified §25F contributions in one or more dedicated accounts, separate from other amounts.

The 90% standard is not a rule that 90% of every individual donation must immediately pass through. The October 2026 proposal uses gross cash-basis income and amounts paid on scholarships, with spending through the end of the following taxable year. A qualifying single-state 85%-activity safe harbor and the multistate framework would use specified segregated-account measurements. The 85% activity test does not replace the 90% spending requirement. These calculation rules are proposed, not final.

Failing SGO qualification requirements could jeopardize qualifying §25F status and state-list inclusion. That does not automatically eliminate underlying 501(c)(3) status.

The October 2026 proposal generally permits donors to rely on an organization's inclusion on the IRS SGO list, subject to exceptions for knowledge of or responsibility for a deficiency. It is a proposed reliance rule, not a blanket guarantee of donor tax eligibility.

SGOone serves people exploring an SGO, founders preparing to launch and established organizations seeking more connected operations.

Parents, educators, nonprofit leaders and community organizers can begin with free educational resources. Existing SGOs can explore tools for their staff, board and invited donors, families and educational providers. The organization remains independent at every stage.

SGOone connects organizational preparation, donor and family records, scholarship workflows and reporting preparation in one platform.

Running Your SGO follows five stages: get ready, care for donors, serve families, manage scholarship payments and stay organized through year-end. Connected records help reduce repeated entry and make handoffs easier to follow; availability varies by capability.

Formation tools, core records, review workflows and operational reports are available; some connected services are still being implemented.

The Workbench includes donor-number records, household and student records, scholarship review, activity history and exports. Payments and unconnected communication, verification and regulatory workflows remain explicitly simulated; no real money moves through the Workbench. Use fictional information where preview or confidential-data restrictions require it.

Live payment integrations, connected communications, Secure Documents, Document Intelligence and automated annual acknowledgment/reporting workflows require further implementation. Published plan inclusions describe the intended offering, not activation of every listed service. Check the current product scope before depending on a workflow.

Yes—program, student and provider records help keep different scholarship activities organized without combining their decisions.

School and learning-center profiles connect contacts and related records. SGOone will help coordinate distinct rules, deadlines and payment preparation across programs; that fuller automation is planned. Your team controls program policies and reviews provider eligibility under the applicable requirements.

SGOone stores and retrieves staff-entered donor numbers alongside donor records, contribution history and correction history.

The temporary rules require the SGO to obtain the prescribed number-creation instructions through IRS registration. A donor number is not a taxpayer identification number. The current registry does not generate an IRS-approved number or retrieve one from the IRS.

Keeping repeat contributions connected to the same donor supports annual totals and future acknowledgment preparation. Automated annual acknowledgments and IRS submission are not live; an immediate payment receipt is distinct from the required annual acknowledgment.

Household, student and application records keep each child’s review distinct while giving staff a connected view of the family.

Evidence requests and review tasks help track missing information. Secure Documents is the planned add-on for sensitive-file collection and controlled access. Document Intelligence will assist with classification, extraction, completeness checks and exceptions; it requires Secure Documents and will not independently determine eligibility.

Follow the current preview restrictions and do not upload confidential documents to simulated or unconnected services. Staff retain the eligibility and award decisions.

The SGO owns its funds and retains financial authorization and its own payment processor relationship.

SGOone will connect payment integrations with contribution, award and reconciliation records so staff can follow settlements, fees, refunds and exceptions. An approved award or commitment is not an actual expenditure; records need to preserve that distinction.

Payments currently remain simulated, and no real money moves through the Workbench. Third-party processing fees will be separate from SGOone platform fees.

Communications, Hosted Campaign Pages, Secure Documents and Document Intelligence are intended to extend the core workflows as those services become available.

Communications will support reminders and follow-ups; Hosted Campaign Pages will support branded outreach and shareable campaign links. Both are included in the proposed Premium plan and offered separately for Standard. Secure Documents adds controlled document handling, and Document Intelligence enhances it with extraction and review assistance.

These services are still being implemented; unconnected workflows are simulated. Review Pricing for current planned inclusions, SMS allowances, additional usage and document-service costs.

No. These are optional hands-on services for organizations that want help moving a committed plan forward.

SGO Launch Services focus on identity, branding, websites, email and organizational readiness. If you are still exploring, use the free formation resources first rather than buying a package.

Premium Program Setup is listed at $299.00 per program for help configuring and testing a program. Launch packages have separate scopes and prices. Neither service includes legal or tax advice, incorporation, 501(c)(3) approval or state SGO approval; purchasing a service does not guarantee approval.

Yes—an existing SGO can explore SGOone while retaining its mission, governance, donor relationships and scholarship decisions.

Begin by reviewing programs, users, record formats, retention obligations and required integrations. Agree on field mapping, access, validation and reconciliation before moving operational records; do not assume a one-click migration or a connector for every existing system.

Current operational exports can support review with advisers. Confirm import scope and service availability before replacing a working system, and retain your original records during any transition.

The board and authorized leadership remain responsible for:

• Governance and policies.
• Scholarship decisions and financial decisions.
• Fundraising and compliance.
• Required filings and reporting.

SGOone provides tools to help the organization:

• Understand requirements and organize its work.
• Manage scholarship workflows and track funds.
• Maintain records and document decisions.
• Monitor compliance and prepare required reporting.

SGOone supports the people responsible for operating the organization. It does not replace the board, become the SGO, act as a government regulator, or make independent legal or scholarship decisions on the organization's behalf.

SGOone's proposed revenue model combines software subscriptions, fixed-dollar money-moving transaction fees and optional services—not a percentage-based SGOone platform fee.

Scholarship donations belong to the independent SGO. Payment processor charges are separate from SGOone fees; additional users, selected add-ons and hands-on services have their own published terms. Pricing remains preliminary, and no charges will be made without advance notice.

SGOone supplies technology and organizational support. It does not provide legal or tax advice, approve organizations or determine donor tax eligibility.

Start with a free Basic account, then choose the plan and optional services that fit your organization.

Proposed Standard pricing is $10.00/month for the first year, then $20.00/month; Premium is $49.00/month, then $98.00/month. The proposed fee is $1.00 per qualifying incoming donation or outgoing scholarship disbursement transaction—not a percentage of its dollar value. Processing charges, extra users and optional services are separate.

Pricing is preliminary and subject to change. Paid plans will be available only once the applicable rules are finalized, with advance notice before charges. Payments remain simulated today. Use the pricing examples to compare the complete modeled costs and assumptions.

The 99% Efficiency Goal aims to leave at least 99% of donations with the organization after standard SGOone platform fees under representative operating scenarios—not as a guaranteed result.

Fixed-dollar transaction fees can become a smaller percentage when average gifts increase or subscription costs are spread over more fundraising. More funds alone do not guarantee a lower percentage: transaction counts, plans, users and add-ons matter. The pricing examples show their assumptions and actual fees.

The statutory 90% scholarship-expenditure requirement is a separate measure governed by applicable income and expenditure rules; the October operational calculation rules are proposed, not final. The 99% goal excludes processing, staffing, legal, accounting and other operating costs and optional services outside the model. It does not mean 99% reaches scholarships or that 99% of work is automated.

Yes—create a free Basic account, or begin with the public Learning Center and SGO Prep Survey before opening an account.

My SGO Formation Journey helps organize your mission, preparation tasks and documents for next steps with professional advisers. SGOone Verified is a program designation for participation and preparation, not legal qualification, certification or government approval. Neither an account nor a completed journey requires purchasing Launch Services.

Prospective and developing SGOs can express interest in the Founding Cohort; participation and funding are not guaranteed.

Subject to selection, funding, final program structure and applicable requirements, support may include platform access, onboarding, training, implementation assistance and certain approved startup or operational expenses. Participants may share feedback and take part in program reviews.

Expressions of interest are nonbinding. SGOone Verified profiles may be considered for future cohort or sponsorship initiatives, but neither designation guarantees selection. Your organization remains independent.