The complete operating system for Scholarship Granting Organizations
The OBBBA created the most generous individual education giving tax credit in American history. The platform to run it — donors, scholarships, disbursements, compliance — is built, tested, and audit-ready. And with pledge campaigns, your donors can start committing today, months before the credit goes live.
Six products. One complete platform.
Built for the audit
you hope never comes.
Every SGO eventually answers to a state regulator, an IRS examiner, or its own board. ClearPath is engineered so the answer is a download, not a scramble — every record provable, every decision documented, every dollar reconciled.
Tamper-evident audit log
Every donation, award, and disbursement is hash-chained. Alter one record — even with database access — and the chain breaks visibly. The platform verifies it on demand.
One-click evidence package
A date-ranged PDF bundle for any inquiry: donations and receipts, awards with board votes, disbursements, the 90/10 worksheet, and a cryptographic integrity attestation.
Anonymized board voting
Board members vote on applicant pools without names, schools, or donor information — each vote e-signed and attached permanently to the award record.
Conflict-of-interest enforcement
Annual e-signed disclosures from every board member, with automatic recusal when a disclosed relationship touches a vote.
Dual-control disbursements
Above your threshold, money moves only with a second approver. Segregation of duties is enforced by the platform, not a policy memo.
Methodology vault
Every compliance judgment call — AMI sources, expense interpretations — versioned with rationale and effective dates. When you're asked “why,” the answer is on file.
Built like financial software — because it is.
A new federal tax credit.
A real compliance infrastructure requirement.
Section 25F of the Internal Revenue Code — created by the One Big Beautiful Bill Act and effective January 1, 2027 — allows individual taxpayers to claim a dollar-for-dollar federal tax credit for donations to qualifying Scholarship Granting Organizations. This is not a deduction. It is a full credit against federal tax liability, one of the most powerful individual giving incentives ever enacted.
Dollar-for-dollar federal tax credit per individual donor, per year
Maximum credit for married couples filing jointly
Minimum portion of all donations that must fund student scholarships directly
Carry-forward period for unused credits
Maximum area median gross income for student household eligibility
What is an SGO?
A Scholarship Granting Organization is a 501(c)(3) nonprofit whose primary mission is to collect donations and distribute them as scholarships to income-eligible K–12 students for qualified educational expenses. Qualified expenses mirror Coverdell ESA definitions: tuition, fees, books, supplies, equipment, tutoring, special needs services, and technology — at both private and public schools.
Any qualifying 501(c)(3) may form an SGO — churches, school networks, dioceses, educational foundations, and community organizations. States must voluntarily opt in to the program and submit lists of approved SGOs to the IRS, which means regulatory requirements vary significantly by state.
The market moment
There is no federal cap on total tax credits claimed or total donors. If millions of taxpayers participate, tens of billions of dollars could flow through SGOs annually — and the organizations with compliant infrastructure in place on day one will define the program in their states.
The IRS is finalizing Section 25F regulations through 2026 and states are establishing their opt-in frameworks in parallel. With roughly six months until activation, the organizations in formation now are the ones that will be accepting donations on January 1 — and collecting donor pledges well before it.
Know the moment your state moves.
Opt-in legislation is moving through statehouses right now. Tell us your state and we’ll send a short email when its status changes — plus formation deadlines and program guidance as January 1, 2027 approaches.
Running a compliant SGO is more complex than it looks
Most organizations that can launch an SGO — churches, school networks, dioceses, community foundations — have no existing infrastructure for any of what federal law requires. The stakes of getting it wrong are significant: donors can lose their tax credits, and organizations can lose their approved SGO status.
Federal Requirements
- 501(c)(3) status with primary mission aligned to SGO purpose
- Full compliance with Section 25F of the Internal Revenue Code
- No scholarship earmarking — arm's-length award decisions legally required
- Priority system enforcement: returning recipients first, then siblings of current recipients
- Continuous 90/10 spending ratio monitoring — a hard federal floor
- Qualified expense verification for every individual scholarship disbursement
- Precise IRS-compliant tax credit receipts for every donor (errors cost donors their full credit)
- Multi-school distribution: awards must reach 10+ students across multiple schools
State-Level Requirements
- State opt-in and SGO approval process — procedures vary dramatically
- Additional eligibility rules layered on top of federal minimums
- Annual state compliance reporting, format varies by state
- State-specific income verification standards
- Approval timelines vary: some states approve in weeks, others in months
- Some states require additional auditing or financial reporting
- Rules still being established in many states through 2026
- Ongoing regulatory monitoring as state frameworks evolve
Operational Requirements
- Income verification using 300% of area median gross income by county or metro
- Scholarship application portal accessible to all eligible families
- Eligibility screening and documentation collection for each applicant
- Award decision support tools for SGO board governance
- Scholarship disbursement processing directly to families
- Donor CRM with per-donor $1,700 credit limit enforcement
- Recurring giving management, renewal campaigns, and married couple optimization
- Complete audit trail maintenance for IRS documentation and state reporting
The organizations best positioned to run an SGO — churches, school networks, dioceses — typically have no dedicated compliance staff for any of these functions. Attempting to build this infrastructure internally while managing ministry, academics, or community work creates significant regulatory and operational risk.
This is what we handle →Organizations building SGOs from the ground up
Full use case detailCatholic diocese or multi-school Christian network
The Challenge
A diocese with 15 schools across a metro area wants to create an SGO to fund scholarships for low and middle-income families. Coordinating scholarship distribution across 15 campuses, managing thousands of applicants, ensuring no earmarking violations when parish families donate expecting to help "their" school, navigating the state's SGO approval process, and building donor management infrastructure from scratch — each of these is a significant compliance challenge on its own.
How SGO Guide Helps
SGO Guide handles the entire operational backend for the diocesan SGO: state registration, branded donor portal, applicant screening and income verification, award decision support, multi-school compliance tracking, and 90/10 monitoring across the full network. Diocese administrators focus on ministry, not compliance.
Where does your state stand?
25 states have opted in, 6 have legislation pending, and 4 are studying it. We track every statehouse and update this map as legislation moves — hover a state for its status, click through for the full guide.
The program activates January 1, 2027.
Formation takes 14–20 weeks. Do the math.
It is mid-2026. States are finalizing approvals and the IRS is finishing Section 25F rules. An organization that starts formation this month can still be accepting donations on January 1 — and with pledge campaigns, your donors don’t have to wait for launch day to commit.
Formation Window Opened
- IRS public comment period on Section 25F regulations closed
- State opt-in processes opened and approval frameworks established
- First wave of SGO formations and state applications filed
- Platform infrastructure built, tested, and deployed
The Last Full Formation Window
- Formation plus state approval still completes before January 1 for organizations starting now
- Pledge campaigns open — donors commit today, convert at launch
- Platform configuration runs in parallel with state approval
- Compliance stress-testing before the first live donation
Section 25F Activates
- Dollar-for-dollar federal tax credit becomes available to donors
- Collected pledges convert to donations automatically
- Tax credit receipts must be generated correctly from day one
- Organizations without compliant infrastructure cannot operate
First Full Program Cycle
- First annual scholarship cycle runs
- State reporting requirements commence
- IRS documentation for donor tax credit claims due
- Program scaling — organizations positioned early capture the most
Starting this month still gets you to January 1. Waiting until fall doesn’t.
Formation takes 14–20 weeks including state approval. And you don’t have to wait for launch to build your donor base — pledge campaigns collect commitments now and convert automatically on day one.
Don’t launch to an empty room.
Until January 1, 2027, no SGO can take a qualifying gift — but every SGO can collect commitments. ClearPath Pledge, part of ClearPath Donors, runs your pre-launch pledge drive: supporters commit today — from just an email address to a pledge secured with a saved payment method — and every gift processes automatically the moment Section 25F activates.
Your first tax year starts with a charge queue, not a call list.
Explore ClearPath PledgeSecured pledges
A card or bank account saved at pledge time — nothing charged until launch day, then processed automatically with a same-day receipt.
Multi-year ladders
The $1,700 credit resets every tax year. One pledge schedules an annual gift each January — each year earning its own full credit.
State-conditional pledges
Supporters in undecided states pledge anyway: their gift only processes if their state opts in. Objection, converted to pipeline.
A real forecast
Secured vs. soft vs. conditional dollars, live on your Growth dashboard — your pledge book is your January revenue forecast.
See the platform live. Then decide.
Tell us about your organization and we’ll set up a live demo — the real product, loaded with sample data — alongside a consultation on your formation path, state, and timeline.
What happens next
We review your submission and respond within one business day
Live platform demo — the actual product on sample data, typically 45–60 minutes
Diagnostic consultation on your formation path, state requirements, and timeline
You leave with a clear scope and recommendation — even if the answer is to partner rather than form