What If Donors Had a Powerful Financial Reason to Fund Your Scholarships?
A Federal Tax Credit Could Transform SGO Fundraising
Beginning in 2027, qualifying individual taxpayers may be able to receive a federal tax credit of up to $1,700 for qualifying cash contributions to Scholarship Granting Organizations.
Not just a charitable deduction. A tax credit.
And that could create an entirely new opportunity for education fundraising.
Could starting a SGO be in your future? It could be deeply rewarding for your community—and getting started may be easier than you think.
Eligible donors may be able to reduce their federal income tax liability dollar-for-dollar for qualified contributions, up to the applicable federal limit.
For many SGOs, fundraising becomes more compelling when donors understand that qualified contributions may be offset by a dollar-for-dollar federal tax credit.
A stronger tomorrow through education.
A quick introduction
See the idea take shape.
Watch this short overview, then explore the details at your own pace.
A Tax Deduction and a Tax Credit Are Not the Same Thing
Most charitable fundraising conversations involve a deduction. The new federal SGO opportunity involves a credit.
Illustrative Example
Traditional Charitable Gift
Donation
$1,000
Potential charitable deduction
Up to $1,000 if applicable
Illustrative federal tax savings at a 24% marginal rate
≈ $240
Illustrative after-tax cost
≈ $760
Potential Federal Credit
Qualifying SGO Contribution
Qualifying cash contribution
$1,000
Potential federal scholarship tax credit
Up to $1,000
Potential federal tax reduction
Up to $1,000
Illustrative after-credit cost
Potentially $0
Assuming the contribution qualifies and the taxpayer has sufficient federal income tax liability to use the nonrefundable credit.
A deduction reduces taxable income.
A credit can directly reduce tax owed.
A $1,000 deduction does not normally reduce a taxpayer's federal income tax by $1,000. Its benefit depends on the taxpayer's circumstances and applicable tax rules.
A qualifying $1,000 SGO contribution may instead generate up to a $1,000 federal tax credit, subject to the requirements of the program.
Illustrative Giving Comparison
See the Difference
Change the contribution amount to see why a tax credit can create a very different fundraising conversation.
$
Count eligible taxpayers making qualifying contributions, not every household member. The amount above is the household total, not an amount per taxpayer.
Combined potential credit limit: $1,700 ($1,700 per eligible taxpayer).
The October 2026 proposed rules treat spouses filing jointly as separate taxpayers for the credit limit, allowing up to $3,400 combined when eligible. This illustration combines individual credits, not an automatic household credit. It assumes contributions are allocated among eligible taxpayers so each can use their individual credit limit, with sufficient federal tax liability and no reduction for state credits. Unused individual limits cannot be transferred.
Used only to illustrate potential deduction-related federal tax benefits.
Traditional charitable gift
Gift
$1,000
Illustrative deduction-related federal tax reduction
$240
Illustrative after-tax cost
$760
Illustrative tax reduction if the full contribution produces an incremental deductible benefit.
Qualifying SGO contribution
Contribution
$1,000
Potential SGO federal credit
$1,000
Amount above current federal credit ceiling that may qualify for a charitable deduction
$0
Illustrative tax reduction from potentially deductible excess
$0
Illustrative combined federal tax benefit
$1,000
Illustrative after-federal-tax cost
$0
Assumes a qualifying contribution, sufficient federal income tax liability to use the nonrefundable credit, and—when shown—that the full excess produces an incremental deductible benefit. Normal §170 rules and limitations apply.
That's the difference between a deduction and a credit.
Illustration only — not tax advice. Actual tax consequences depend on individual circumstances and applicable law. Charitable deduction rules vary based on factors including the taxpayer's deductions and eligibility. The federal Scholarship Tax Credit is subject to statutory requirements, participating-state requirements, qualifying SGO status, taxpayer eligibility, available federal tax liability, and other applicable rules. The federal credit is nonrefundable and is currently limited to $1,700 per taxpayer. Learn about the federal credit.
Beyond the federal credit ceiling
What If a Donor Wants to Give More Than $1,700?
The $1,700 federal Scholarship Tax Credit limit applies per taxpayer — not necessarily to the amount a donor can contribute.
Under current federal law, and as specifically contemplated in IRS Notice 2025-70, amounts contributed above the federal credit limit may qualify for the normal charitable contribution deduction, subject to applicable tax rules.
Up to $1,700 per taxpayer
Potential Federal Scholarship Tax Credit
A qualifying contribution may reduce federal income tax otherwise owed dollar-for-dollar, up to the applicable §25F credit limit.
Amount Above $1,700 per taxpayer
May Qualify for a Charitable Deduction
The remaining contribution may qualify for the normal federal charitable contribution deduction under §170.
Single-taxpayer example
One Donor's $3,000 Contribution
$1,700potential credit$1,300potential deduction
If the full $1,300 excess is deductible and the donor's illustrative marginal federal tax rate is 24%:
Illustrative after-federal-tax cost of a $3,000 gift
$988
$1,700 per Taxpayer Is the Credit Limit — Not Necessarily the Giving Limit.
Larger contributions can still put more resources toward scholarships. The potential federal tax treatment simply changes after the donor's individual credit limit has been reached.
Illustration only — not tax advice. Actual tax results depend on individual circumstances and applicable law. Normal charitable-deduction eligibility, substantiation, and limitations apply. A contribution for which a federal §25F credit is allowed cannot also be deducted as a charitable contribution. Any applicable state tax credit for the same qualified contribution may reduce the federal §25F credit. Read the October 2026 proposed credit rules.
$1,700
Up to $1,700 per individual taxpayer
That's the current maximum federal Scholarship Tax Credit available to an individual taxpayer for qualifying contributions.
1 donorup to $1,700
100 donorsup to $170,000
1,000 donorsup to $1.7 million
Imagine what that could mean for scholarship fundraising when an entire community understands the opportunity.
Scale illustration only. It does not assume that every person will contribute or receive the maximum credit.
Opportunity needs an organization
Someone Has to Build the Organizations That Make This Possible
Scholarships do not appear automatically. They require organizations capable of:
raising and receiving contributions
developing donor relationships
supporting families
managing scholarship programs
reviewing applications
making awards
managing funds
maintaining financial controls
documenting decisions
meeting state and federal requirements
reporting activity
operating responsibly year after year
That organization is the Scholarship Granting Organization — the SGO.
And many of the people best positioned to build one may not realize it yet.
Could this be you?
Your Experience May Already Be Relevant
No prior SGO experience required to start exploring.
Existing 501(c)(3)
Already run a nonprofit?
Your organization may already have governance, banking, accounting, community relationships and administrative experience that could provide a foundation for SGO operations, subject to applicable requirements.
Fundraiser
Know how to raise money?
Donor relationships, campaigns, community outreach and charitable fundraising experience can translate directly into the SGO environment.
Educator
Work in education?
You may already understand the families, schools and communities scholarship programs are intended to serve.
Community organization
Lead a community organization?
Churches, foundations, local nonprofits and community groups may already have the relationships needed to bring donors and families together.
Charity administrator
Know how to run a charitable program?
Governance, accounting, records, responsible fund administration and organizational discipline are core SGO capabilities.
Entrepreneur / organizer
See the opportunity?
Some SGOs may begin because one capable person recognizes that their community could do this.
Existing nonprofit status alone does not establish SGO qualification. A separate program or organizational changes may be necessary, and qualification must be established through the applicable federal and state processes. SGOone does not certify qualification.
SGO's Built Around a Purpose
There is no single model for what an SGO has to look like. Some may serve a local community, while others focus on a particular group of students, educational need, learning philosophy, or type of opportunity.
The question may not simply be, “Should I start an SGO?”
Who could my SGO help?
Illustrative example
Riverbend Scholars
Opportunity Beyond the Map
Serves
Rural students across small towns and farming communities.
Goal
Expand access to private-school, tutoring, and specialized learning opportunities.
Mission
Riverbend Scholars expands educational opportunity for rural students by helping families access learning environments that best fit their child.
Illustrative example
BrightStart Learning Fund
Strong Starts. Brighter Futures.
Serves
Elementary-age students from lower-income families.
Goal
Support early literacy, foundational math, tutoring, and other qualifying educational opportunities.
Mission
BrightStart helps young students build strong educational foundations by expanding access to high-quality learning opportunities.
Illustrative example
Valor Families Scholarship Fund
Supporting Those Who Serve—And Their Students
Serves
Children of active-duty military personnel, veterans, and National Guard families.
Goal
Improve educational continuity and flexibility for military-connected families.
Mission
Valor Families helps military-connected children access stable, flexible learning environments where they can thrive.
Illustrative example
Ozark Pathways SGO
More Than One Path to Success
Serves
Students interested in career-focused and alternative educational pathways.
Goal
Support career academies, technical programs, specialized schools, and similar opportunities.
Mission
Ozark Pathways helps students pursue educational options aligned with their talents and future goals.
Illustrative example
Beacon Autism Learning Fund
Learning Built Around the Student
Serves
Students with autism and families seeking specialized learning environments.
Goal
Expand access to individualized schools, learning centers, and qualifying programs.
Mission
Beacon Autism Learning Fund supports access to educational environments designed around individual strengths and learning needs.
Illustrative example
Next Chapter Scholars
Every Student Deserves a Strong Next Chapter
Serves
Foster youth, students in kinship care, and children experiencing major family transitions.
Goal
Improve educational stability and continuity.
Mission
Next Chapter Scholars helps students facing major transitions access greater stability, consistency, and educational choice.
Illustrative example
Heritage Language Scholars
Learn Forward. Keep Your Roots.
Serves
Bilingual and multilingual families.
Goal
Expand access to bilingual, immersion, cultural, and language-focused education.
Mission
Heritage Language Scholars helps families preserve language and cultural connections while expanding educational opportunity.
Illustrative example
STEM Reach Scholarship Network
Talent Is Everywhere. Access Should Be Too.
Serves
Students interested in science, technology, engineering, and mathematics.
Goal
Expand access to STEM-focused schools, robotics, coding, advanced programs, and related opportunities.
Mission
STEM Reach connects charitable giving with educational opportunities that help students explore STEM and innovation.
Illustrative example
Heartland Faith & Learning Fund
Helping Families Choose with Confidence
Serves
Families seeking faith-based and values-centered educational opportunities.
Goal
Expand access to qualifying religious and values-based schools.
Mission
Heartland Faith & Learning Fund helps families access values-centered educational environments through scholarship support.
Illustrative example
Open Door Education Fund
A Better Fit Can Change Everything
Serves
Students whose current learning environment is not meeting their needs.
Goal
Support broad educational choice rather than one specific student group or school type.
Mission
Open Door Education Fund helps families pursue learning environments where their children can learn, belong, and succeed.
1 of 10
Your SGO Doesn't Have to Look Like Anyone Else's
A strong SGO starts with a clear purpose. It may begin with a community you care about, students who need more options, or an educational opportunity you believe should be easier to access.
The mission can be specific or broad. What matters is turning that purpose into real educational opportunity.
These examples illustrate possible missions, not program eligibility. Students, expenses, and scholarship policies must meet applicable program requirements.
SGOone shared infrastructure
You Don't Have to Build the Back Office From Scratch
Every SGO needs operational infrastructure. Every SGO should not have to independently reinvent it.
Contributions
Donor and contribution administration.
Scholarships
Applications, eligibility, awards and supporting evidence.
Financial Controls
Funds, expenses, approvals and disbursement workflows.
Compliance
State and federal operational requirements and supporting documentation.
Auditability
Preserve the history behind important decisions and transactions.
Reporting
Transform operating data into meaningful program, financial and compliance information.
Workspace
Arkansas · 2027 program year
GOOD MORNING
Community Education Fund
Program year 2027
Contributions received$428,600252 recorded gifts
Available scholarship funds$286,400Ready for awards
Illustrative demonstration data · not actual customer results
Shared infrastructure for contributions, scholarships, controls, documentation, and reporting.
We're building more than software
SGO Launch Initiative
Our goal is to help capable organizations become operational SGOs while reducing the amount of money they must spend recreating the same administrative infrastructure.
If you operate a nonprofit, know how to raise money, work in education, serve families or students, lead a community organization, have relationships with potential donors, or simply want to explore building an SGO — we want to hear from you.
You do not need to have everything figured out. That's the point of the initiative.
We are also seeking partners interested in reducing the startup and operating barriers facing new Scholarship Granting Organizations.
The [Partner] SGO Launch Initiative Powered by SGOone
Potential support can sponsor a cohort or state, subsidize first-year platform access, reduce startup expenses, fund implementation and training, support technology and professional validation, or help measure program outcomes.
Tax information last verified: October 2, 2026. Treasury and IRS released temporary and proposed regulations October 1. Proposed provisions are not final. Read the October 2026 Section 25F regulatory update. Recheck Treasury and IRS guidance before relying on this information. This page is educational and promotional, not legal, accounting, tax, qualification, or compliance advice.
