How to recruit donors for your SGO under the Education Freedom Tax Credit

This is the companion piece to our 90/10 rule guide and our how-to-start guide. Those cover what an SGO must do to qualify and stay compliant. This one covers a narrower, practical question: once you’re a qualifying Scholarship Granting Organization, how do you actually get people to give?

The pitch just changed

Every SGO that has raised money under a state tax-credit scholarship program already knows the old pitch: give to help a child, and get a state tax credit as a bonus. That pitch works, but it’s built around donors who already itemize and already give to charity. The federal §25F credit opens a different, much larger donor pool because of one mechanical fact: it’s a credit, not a deduction. A donor doesn’t need to itemize to use it. They just need federal tax liability, which almost everyone who works has.

That reframes the ask. Instead of “please make a donation,” the honest, accurate pitch is closer to: “you’re going to pay this money to the federal government either way; redirect up to $1,700 of it to a scholarship fund instead, and get every dollar back dollar-for-dollar.” For a donor who has never itemized in their life, that’s not a marginal improvement on a familiar ask. It’s a new kind of ask they’ve never heard before.

Who your donors actually are

Under the old itemized-deduction model, the addressable donor pool for a scholarship charity skewed toward higher-income households who itemize. §25F’s standard-deduction reach changes who’s worth talking to:

• Working households who take the standard deduction. This is the majority of filers, and under the old pitch they were told, correctly, that a charitable gift wouldn’t change their tax bill. Under §25F it will, up to $1,700, regardless of itemizing.
• Parents at partner schools, whether or not their own child receives a scholarship. A parent with tax liability but no spare cash for tuition can still redirect $1,700 they already owe toward another family’s scholarship, and many will feel the fairness of that immediately.
• Alumni and extended community members who feel connected to a school or mission but have never been asked to write a check, because the old pitch didn’t reach them financially.
• Employees of local businesses, reachable through an employer willing to circulate the message, especially once they understand the paycheck-withholding angle below.

None of this replaces the traditional major-donor relationship. It adds a much wider base of smaller, recurring, credit-driven gifts underneath it.

The message that lands

A few specific, factual points do most of the work in a §25F pitch. Lead with whichever one is most concrete for the audience in front of you.

1. Dollar-for-dollar, up to $1,700

Say the number. A $1,700 cash gift to a qualifying SGO reduces the donor’s federal tax bill by $1,700, not by a fraction of it. For a plain-language version of this explanation you can forward to a parent list or congregation, see our shareable one-pager.

2. You don’t have to itemize

This is the line that surprises people who’ve tuned out every past charitable-giving pitch. It’s worth saying explicitly, because most donors’ mental model of “does a donation help my taxes” was formed under the deduction system and is now out of date for this credit.

3. You can see it in your paycheck, not next year’s refund

A donor who gives in 2027 doesn’t have to wait until they file in 2028 to feel the benefit. Because the credit is earned in the 2027 tax year, a donor who adjusts their federal withholding can recover it across their 2027 paychecks instead of lending the money to the IRS interest-free for over a year. Point donors who ask “when do I actually get this back” to our withholding guide, and loop in their tax preparer for the specific W-4 adjustment.

4. The honest fine print

Credibility matters more than optimism here, and every one of these points is a real constraint, not a technicality to bury:

• The credit is non-refundable, it can reduce tax owed to zero but not generate a refund beyond that, with a 5-year carryforward for any unused amount.
• Gifts must be cash (or cash equivalent). Stock, property, and in-kind gifts don’t qualify for the credit.
• A donor cannot double up: the same contribution can’t be claimed as a §25F credit and a §170 charitable deduction, and the federal credit is reduced by any state credit claimed for the same gift.
• The credit is effective for gifts made on or after January 1, 2027. A gift made before then doesn’t earn it.
• The married-filing-jointly cap (whether it doubles to $3,400 or stays at $1,700 per return) is still unresolved in Treasury guidance. Don’t promise a number you can’t back.

Send anyone who wants to see their own number to our tax credit calculator. Letting a donor plug in their own numbers converts better than telling them a number, and it keeps you from having to promise one.

The 10% cap on finding them

Here’s the constraint that makes SGO fundraising different from ordinary nonprofit development work. Under the 90/10 rule (§25F(d)(1)(B)), a qualifying SGO must spend at least 90% of its income on scholarships. The remaining 10% is a hard ceiling on everything else combined, staff, technology, audits, legal, income verification, reporting, and fundraising. Donor acquisition doesn’t get its own budget outside that 10%; it competes with every other operating cost inside it.

That rules out the acquisition playbook a typical charity can afford: heavy paid advertising, direct-mail campaigns, and large development staff. It doesn’t rule out fundraising, it just means acquisition has to be cheap per donor, not just effective per donor. In practice that pushes SGOs toward three kinds of spend that survive the cap:

1. Relationship channels that cost time, not money (school partnerships, community organizations, word of mouth).
2. Software that automates the paperwork so a small team can process a large donor base without proportional headcount, receipting, donor-number issuance, and record-keeping are exactly the repetitive tasks that blow past the cap when done by hand.
3. Content that answers questions once, at low marginal cost, instead of a staff member answering the same "how does this work" question by phone every time.

Where to find donors first

A realistic first-year donor base for most SGOs comes from a small number of channels, roughly in this order of return on a limited budget:

• Partner schools. The parents, staff, and board of any school you already serve are the warmest possible audience. They have a direct reason to care and a short path to understanding the pitch.
• Current scholarship families. Families who’ve received a scholarship are credible messengers to their own network, and many will want to give once their own situation improves, even a modest gift from someone who’s used the program lands differently than a cold ask.
• Congregations and community organizations. Groups that already circulate school-related information to members are a natural distribution channel for a one-page explainer.
• Local employers. A business owner or HR department willing to mention the credit to staff, especially alongside the paycheck-withholding angle, can reach dozens of potential donors through one conversation.
• Existing donors from any state program you already run. If your SGO already operates a state tax-credit scholarship program, your current donor list is the single fastest audience to tell about the new federal layer, see how the state and federal credits stack for the specifics.

A first-year acquisition plan

A workable sequence for an SGO building its donor base before and through the January 2027 launch:

1. Before 2027: build the list, don’t ask for the gift yet. Collect emails from parents, school contacts, and community members. Explain that the credit takes effect January 1, 2027, and that gifts made earlier don’t qualify for it.
2. Confirm you’re on your state’s list. Donors need to be able to verify that a gift to your organization actually qualifies before they’ll commit. Have that confirmation ready to show, not just claim.
3. Equip your warmest channels first. Give partner schools and current donors a one-page explainer and a direct link to give, rather than starting with cold outreach.
4. Make the paycheck-withholding case to working families. This is the argument that differentiates §25F from every past giving pitch these donors have heard, don’t bury it.
5. Issue donor numbers and receipts immediately and correctly. A donor’s first experience with your SGO needs to be that the paperwork just works, see how the donor number works before your first gift comes in.
6. Track acquisition cost against the 10% cap, not against gift volume alone. A channel that brings in donors but costs too much staff time to process each gift can quietly eat the cap even while the top-line numbers look good.

Frequently asked questions