Can donors direct an EFTC gift to a specific school? What §25F actually prohibits

What the statute actually prohibits

The question comes up constantly, from donors who care about one school in particular and from schools wondering whether they can tell their community “give through our SGO partner and your gift supports our families.” The answer turns on a single clause of the enacted statute. §25F(d)(1)(E) requires that a Scholarship Granting Organization:

Read it carefully. The prohibition names students, not schools. That word choice does the work: Congress barred donors from buying a scholarship for a person, and it stopped there. Nothing in §25F prohibits an SGO from accepting a donor’s preference that a gift fund scholarships at a particular partner school.

What donors can never do

Start with the hard boundary, because it is genuinely hard. Under §25F(d)(1)(E), no donor can:

• Name a student or family as the intended recipient of a scholarship funded by their donation.
• Fund their own child’s award. A parent cannot route a credited donation to an SGO on the understanding that it comes back as their child’s scholarship. That is earmarking for a particular student, exactly what the clause forbids.
• Condition a gift on any identified student receiving an award, formally or through a wink-and-nod understanding with the SGO.

An SGO that earmarks for particular students fails subsection (d), which means it fails the definition of a scholarship granting organization, which means donations to it generate no §25F credit at all. The stakes are program-wide, not gift-by-gift, so well-run SGOs police this line strictly.

School designation is a different question

School-level designation means a donor directs a gift toward a specific partner school’s scholarship fund: “apply my donation to scholarships for students attending St. Mary’s.” The SGO pools those designated dollars and awards scholarships from them, to eligible students at that school, on the SGO’s own criteria and the statute’s priority rules.

The donor has chosen a destination, not a recipient. Every decision the statute cares about, who is eligible, who has priority, who actually receives an award and for how much, remains entirely with the SGO. That separation is what keeps designation on the right side of §25F(d)(1)(E).

One structural rule bears on this. §25F(d)(1)(A) requires an SGO to provide scholarships to 10 or more students who do not all attend the same school. So an SGO cannot exist as a single-school pass-through, even if every donor designates the same school. A school that wants its community giving through §25F needs an SGO partner that genuinely serves multiple schools, and the designation option lives inside that broader organization.

How state programs handle it

This is not a novel design question. State scholarship tax credit programs have operated for decades, and school designation is common practice in them. Georgia’s GOAL program, one of the largest, lets donors designate the participating school they want their contribution to support, while the scholarship organization retains full control over which students receive awards. Donors expect the option; schools build fundraising campaigns around it; the student-level firewall holds.

That operating history matters for §25F because Congress modeled the federal credit on these state programs. The drafters knew school designation was standard practice and chose language that bars only student earmarking. SGOs setting up for the federal program are largely importing a playbook the states have already tested.

The rules that still apply

Designation changes nothing about the SGO’s statutory duties. Within a designated school’s applicant pool, the SGO must still:

1. Verify household income. Every scholarship recipient must belong to a household at or below 300% of area median gross income, measured for the prior calendar year, and the SGO must verify it (§25F(d)(1)(F)). See who qualifies for an EFTC scholarship for the full eligibility picture.
2. Honor the statutory priority order. §25F(d)(1)(D) requires priority first for students who received a scholarship the previous school year, then for siblings of prior recipients. A donor’s designation cannot jump a new applicant ahead of a renewing student at the same school.
3. Make every award decision itself. Among the designated school’s eligible students, the SGO alone decides who receives an award and how much.
4. Follow the rest of subsection (d). The 90% spending requirement, the qualified-expense limits, the ban on awards to disqualified persons, all of it applies to designated dollars exactly as it does to undesignated ones.

The donor’s side is unchanged too: the credit is worth up to $1,700 per taxpayer per year, cash only, for donations on or after January 1, 2027, whether or not a school is designated. The mechanics are covered in the federal tax credit, explained for donors.

What Treasury hasn’t said

Honesty requires a caveat. Treasury has not expressly addressed school-level designation in its §25F guidance. The case for it rests on the statute’s plain text (a student-only prohibition) and on decades of state-program practice, which is a strong position, but it is not the same as a regulation saying “school designation is permitted.”

Each SGO decides for itself whether to offer designation at all. Some will build their entire donor experience around it, since school-affiliated giving is the strongest fundraising motivator in the state programs. Others may prefer a single general fund. Both models fit the statute.

What this means for donors and SGOs

If you’re a donor

Ask the SGO whether it accepts school designations before you give. If supporting a particular school is the point of your gift, choose an SGO that partners with that school and offers the option. And understand what you are and aren’t getting: your dollars flow toward that school’s scholarship fund, but the SGO picks the recipients, and no arrangement can steer an award to a student you name. Donations qualify regardless of which participating state the SGO operates in; check which states are participating.

If you’re a school

You can tell your community that gifts designated to your school support scholarships for your families, and that framing is accurate as long as the SGO’s award authority stays intact. What you cannot promise is that any specific family’s gift will fund any specific family’s aid.

If you’re an SGO

Decide your designation policy early and write it down: whether you offer it, how firmly you honor it, and what happens to designated dollars a school’s eligible applicants can’t absorb. Keep the student-level firewall visible in your donor-facing materials, because the fastest way to lose the option is to let donors believe it buys more than it does.

Frequently asked questions