For states electing to participate in the Federal Scholarship Tax Credit (FSTC), opting in is only the beginning. Participating states must also submit a list of the Scholarship Granting Organizations (SGO) that are located in the state and meet federal requirements.
The FSTC has opened a new door to educational freedom for families. The FSTC allows individuals to claim a dollar-for-dollar federal income tax credit of up to $1,700 for cash contributions made to SGOs that support K-12 education. But making that opportunity real requires states to establish a clear process for determining which organizations meet the federal requirements to qualify as SGOs and be included on the list submitted to the IRS. For states taking on that responsibility, the question is straightforward: Where do you begin?
The SGO Guidance Memorandum and SGO Application are designed to answer that question.
The SGO Guidance Memorandum is a practical how-to. It walks states through a step-by-step process for reviewing organizations and determining whether they meet the federal requirements for inclusion on the state’s SGO list. It also clarifies the core requirements in the federal statute, 26 U.S.C. § 25F, and identifies the information states need to evaluate an organization’s eligibility.
The SGO Application puts that guidance into practice. It gives states a clear process for collecting the information necessary to determine whether an organization meets the federal requirements to qualify as an SGO.
Together, these resources are designed to help states move the FSTC from policy to practice.
Existing scholarship and education choice programs offer practical lessons for building processes that work for states and participating organizations. These resources build on those lessons and identify best practices to give states a practical starting point that can be adapted to their unique circumstances.
Good implementation does not require more complexity. It requires a clear workable process that fulfills the state’s responsibility without creating unnecessary barriers for SGOs and ultimately allows more families to access the educational opportunities that work best for their children.
Download the full SGO Guidance Memorandum and SGO Application below.
