Become an SGO
Want to become an SGO?
Your path to becoming a §25F Scholarship Granting Organization, in nine steps, with the official source for each one.
Step 01 of 9
Start with the organization
Before becoming an SGO you need an organization capable of qualifying under §501(c)(3).
If you are creating a new nonprofit, that generally starts by forming the organization under state law. If you already run a nonprofit, a school foundation, a diocesan foundation or another charitable organization, this part may already be done.
- A legally organized entity: a nonprofit corporation, a trust, an unincorporated association, or a qualifying LLC structure
- Governing documents limiting the organization to appropriate exempt purposes
- Governing documents dedicating its assets to exempt purposes
An SGO ultimately has to qualify under §501(c)(3) and cannot be a private foundation.
Already have a 501(c)(3)?
You may be able to skip formation and exemption entirely. Step 4 is where the §25F requirements start, and it is the one worth reading first.
Source
- IRS, before applying for tax-exempt statuslast checked 2026-09-02
Beginning in 2027, taxpayers can receive a federal tax credit of up to $1,700 a year for qualified contributions to Scholarship Granting Organizations.
An organization does not become an SGO by accepting scholarship donations. It has to be a qualifying nonprofit, run a compliant scholarship program, meet the requirements of §25F, and appear on the official list a participating state submits to the IRS.
Here is what that takes.
Federal proposed regulations under §25F have not been published. Treasury said on 9 June 2026 that it expected them no later than the end of September 2026, and that states, SGOs and taxpayers would be able to rely on them for tax year 2027. Some state application procedures are also still being written. Anything on this page drawn from Treasury’s preview rather than from published law is labelled as such, and we update this as official guidance is released.
That is a lot. It does not have to be.
Becoming an SGO means running a real scholarship organization. Donations to process, students to qualify, scholarships to award, records to keep, receipts to issue, reports to file, and a set of annual requirements that do not go away. SGO Direct is being built to carry the operating side of that.
- Donations
- Accept §25F contributions directly into your organization's own payment account.
- Donor records
- Contributions, acknowledgments and annual totals in one place.
- Scholarship applications
- Take applications and manage student eligibility.
- Scholarship management
- Track awards, qualified expenses and participating schools.
- 90% compliance
- Track scholarship spending against the §25F requirement.
- IRS reporting
- Prepare the donor and contribution reporting the final rules require.
- Audit trail
- Keep the records your organization, your state and your auditors will want.
Thinking about starting an SGO?
Tell us your state and what you are starting with. We will show you what is known today and what still has to happen before 2027.
01Do you already have an organization?
02Will the scholarship program serve students at more than one school?
03Do you expect to award scholarships to at least ten students?
04Do you already operate a scholarship program?
Answer everything above, including the state.
SGO Direct is an independent technology platform and is not affiliated with the IRS, U.S. Treasury, or any state government.
Tax treatment depends on applicable law and individual circumstances. Consult a qualified tax professional.