SGO software built for the federal scholarship tax credit
ClearPath runs a Scholarship Granting Organization end to end under Section 25F — donors and receipts, applications and awards, disbursement, and the per-state 90/10 books an annual audit is run against. Below is what any SGO software has to do, as a checklist you can put to us or to anyone else.
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Four jobs, and no ordinary tool does all four
An operating SGO is simultaneously a regulated fundraising operation, a scholarship administrator, a payments business, and a compliance program under annual audit. SGO software is the category that covers all four against one system of record — and the seams between separate tools are exactly where this program’s rules live.
Take the money, correctly
A qualified contribution is not an ordinary donation. It is cash only, capped at $1,700 per donor per year, designated to one state at the moment of giving, and receipted with a unique donor number the IRS uses to match the credit to a return. Get any of those wrong and the donor’s credit is what breaks.
Decide awards at arm’s length
Applications, household income verified against area median gross income for the applicant’s own area, the statutory priority order for returning students and their siblings, and disqualified-person screening — with a decision record complete enough to reconstruct every award.
Move money provably to qualified use
Scholarships have to reach Coverdell-qualified expenses in ways you can evidence. Tuition paid directly to schools; controlled channels for everything else; nothing handed to families in cash.
Prove it, continuously
At least 90 percent of a state account’s income to scholarships, measured per account, monitored in real time rather than discovered at year end — plus the tamper-evident record an annual independent audit is run against.
For how this compares to the tool categories organizations try first — donor CRMs, scholarship application software, or counsel plus spreadsheets — see the category comparison.
What to require of any SGO software
Nineteen questions worth asking every vendor you evaluate, including this one. Each row is a requirement of the program or a consequence of one, with what to listen for in the answer. Ours is marked, and where the honest answer is “that is a separate product,” it says so.
Per-donor $1,700 annual cap enforced at the point of giving
A donor who gives over the cap cannot claim the excess, and finding out in April is not a fix.
General donor CRMs have no concept of a per-donor statutory ceiling.
Receipts carrying an IRS-method unique donor number
It is how the credit is matched to the taxpayer’s return, and it is why no SSN is collected.
A standard §170 acknowledgment letter is not this and will not substitute.
Donor state designation captured at the moment of the gift
The dollar is locked to that state’s segregated account from then on.
Ask whether designation is a field on a form or an accounting boundary. Only the second one holds.
Cash-only gift rails, with §170 operating gifts kept separate
Only cash can be a qualified contribution — no appreciated stock, no donor-advised fund grants.
Software that happily accepts a DAF grant into the scholarship account is creating a problem, not solving one.
Income verified against area median gross income
The 300 percent ceiling is per area. A national table quietly disqualifies eligible families and qualifies ineligible ones.
Ask which table it reads and whether it geocodes the applicant’s address.
Statutory priority order applied automatically
Prior-year recipients first, then their siblings — before any other ranking the committee applies.
Generic scholarship software ranks on rubric score alone.
Ten students across more than one school, tracked
A distribution requirement you can fail without noticing until the annual report.
This is arithmetic nobody does by hand twice.
Disqualified-person and conflict screening on the committee
Awards to disqualified persons are prohibited under rules similar to §4946.
A conflicts register that lives in a board packet is not screening.
Bilingual family intake
Not a statutory requirement. It is the difference between a program families can actually use and one they cannot.
Machine-translating a form is not the same as running the portal in two languages.
Direct-to-school tuition payment
The cleanest evidence of qualified use there is — no receipt collection at all.
Ask whether payouts are gated on the school confirming enrollment.
Controlled channels for non-tuition expenses
Books, tutoring and supplies still have to be provably qualified.
Reimbursing a family by check and filing the receipt later is the weakest version of this.
Nothing disbursed to families as cash
The fastest way to turn an audit into a finding.
If the software can cut a check to a parent, someone eventually will.
90/10 measured per state account, continuously
Treasury’s preview measures the test per account, so a large state cannot carry a thin one.
An organization-wide ratio is the wrong number and will read as compliant while you are not.
Over-cap operating releases blocked, not flagged
A warning nobody reads is not a control.
Ask what happens when someone tries. A dashboard turning red is not an answer.
Tamper-evident audit log
The annual independent financial and programmatic audit is run against your records, whatever state they are in.
An edit history you can edit is not evidence.
State annual reports and board reporting
Furnished to each covered state, every year, per account.
Exporting a CSV and formatting it by hand is a job, and it recurs.
Formation and state listing support
The software is useless until the entity exists and a state has listed it.
Most platforms start at the first gift and leave the previous nine months to you.
Multi-state as one entity, many accounts
One organization, per-state books, per-state committees or one committee over per-state dockets.
Running a second state as a second tenant means reconciling two systems forever.
Fundraising tooling for the schools you serve
The 90 percent only exists if somebody raises it, and schools are the distribution.
Sold separately as ClearPath Advance, and it works with any SGO — including one not on this platform.
Requirements reflect the statute and Treasury’s June 2026 preview; the proposed regulations are due by the end of September 2026 and may settle several of them further.
Four modules, one system of record
Not four purchases. They share one database, which is the only way the 90/10 number can be true at the moment you look at it rather than at the end of a reconciliation.
The compliance view, as it actually looks
Per-state accounts, the operating allowance consumed against each, and releases blocked rather than flagged when a state account would go over. This is the screen that decides whether an audit is a week or a quarter.
Take the full platform tourSoftware is one of three answers
Buying SGO software assumes you have someone to drive it. That is the right answer for plenty of organizations and the wrong one for plenty of others, so we sell all three and have no incentive to push you toward a particular one.
Where the fee comes from, in all three
The operating allowance — no more than 10 percent of a state account’s qualified contributions, shared by the platform, the organization’s own administration or its managed fee, and any partner-school fee. Never from the 90 percent that must reach students. Haven’t formed anything yet? Start with the formation guide.
Common questions
What is SGO software?
Software that runs a Scholarship Granting Organization end to end under Section 25F: taking qualified contributions and issuing the receipts donors need to claim the federal credit, verifying household income, running arm’s-length award decisions, disbursing to qualified expenses in evidenced ways, and proving the 90/10 split per state account to an annual independent audit. It is not a donor CRM, and it is not scholarship application software — those each cover one slice of the job.
Can we run an SGO on a donor CRM and a spreadsheet?
For a short while, and then not. The receipts with unique donor numbers, the per-state segregated accounts, the income verification records, and the 90/10 ratio all have to be right from the first contribution, because the annual audit reviews the whole year and donors’ credits depend on your compliance. The organizations that struggle most are the ones reconstructing records after the fact.
How is SGO software paid for, given the 10 percent cap?
From the operating allowance — the same slice that would otherwise pay staff you did not hire. No more than 10 percent of a state account’s qualified contributions may be released to run the organization, and platform fees, administration, the audit, and any partner-school fee all share that slice. Nothing comes out of the 90 percent that must reach students.
Do we have to buy software, or can someone just run it for us?
Both are available and they produce the identical legal entity. Running your own SGO on the platform means your staff drive it and the administrative share of every gift is your revenue. ClearPath Managed means you still own the organization and your committee still decides every award, and our team does the operating work. The one thing that never moves is the award decision — Section 25F requires that to be made by the organization itself.
Does it handle more than one state?
Yes, as one entity with many state accounts rather than as separate installations. Donors designate a state at the moment of giving, applications route to the student’s resident state, scholarships are funded only from that state’s account, and the 90/10 test runs per account. Committees can be scoped per state or run nationally over per-state dockets with separate priority waterfalls.
What does it cost?
Platform pricing depends on the path and the scale, which is why it starts with a consultation rather than a pricing table — a single-state organization forming now and a multi-state network are not the same engagement. ClearPath Advance, the fundraising suite schools use, is separately and publicly priced.
Talk it through before you decide.
Tell us about your organization and we’ll set up a consultation on your formation path, your state, and the timeline. It costs nothing and there is nothing to sign — and if it’s useful, we’ll walk through the platform on the same call.
What happens next
We read your submission and respond within one business day
A working session, typically 45–60 minutes — your situation, not a sales pitch
Which of the three paths fits, what your state requires, and what the timeline is
You leave with a clear recommendation — including when the answer is to join an SGO rather than form one, or to wait