TL;DR

  • SGO software is the management platform a Scholarship Granting Organization uses to run donations, scholarships, and §25F compliance end-to-end.
  • The federal 90/10 rule caps administration at 10% of income — so manual operations don’t scale. Software is how SGOs stay inside the cap.
  • It must cover the SGO-specific work generic tools don’t: §25F donor receipts, income verification, separate-account accounting, the renewal/sibling award priority, anti-earmarking controls, and state reporting.
  • Choose it before your first donation — receipting and fund segregation are painful to retrofit.
  • SGO Software is built end-to-end for the §25F program and the 2027 launch.

Why an SGO needs software

A Scholarship Granting Organization is the operational engine of the Education Freedom Tax Credit (EFTC / §25F): donors give, claim the federal credit, and the SGO turns those dollars into K–12 scholarships. If you’re still scoping the model, start with how to start an SGO. This page is about the system that runs it.

The binding constraint is the 90/10 rule: §25F(d)(1)(B) requires at least 90% of income to go to scholarships, leaving no more than 10% for everything else — staff, verification, audits, fundraising, and technology combined. That is one of the strictest pass-through standards in the nonprofit world, and it makes manual, spreadsheet-driven operations a liability the moment you have real volume. SGO software exists to do the repetitive, high-stakes work automatically so your administrative spend stays under the cap.

What SGO software does

Good SGO software runs the full pipeline, with each stage mapped to a §25F requirement:

Donor side

  • Donor onboarding & identity verification — collect cash contributions (the credit is cash-only) and verify who gave.
  • Payment processing into the correct separate account, so qualified contributions never co-mingle (§25F(c)(5)(B)).
  • Per-donor §25F receipts / substantiation donors use to claim the credit on their federal return.
  • No-double-benefit tracking — flag that a credited gift can’t also be deducted under §170, and reduce the federal credit by any state credit for the same contribution.

Family & scholarship side

  • Family applications and document collection.
  • Income verification against 300% of area median gross income (the §42 AMGI figure) and family size.
  • An award engine that enforces the required priority: prior-year recipients first, then their siblings (§25F(d)(1)(D)).
  • Anti-earmarking and self-dealing controls — no donor-designated students, no awards to disqualified persons.
  • Disbursement to schools for qualified K–12 expenses, with records tying credited dollars to scholarships.

Compliance & reporting

  • Separate-account fund accounting and a clean audit trail.
  • State certification reporting — participating states re-list SGOs annually and layer their own reporting on top.
  • 90/10 monitoring so you can see, in real time, whether you’re inside the administrative cap.

Built for exactly this: SGO Software runs the entire pipeline a new SGO needs to stay inside the 10% cap: donor onboarding and identity verification, payment collection, per-donor §25F receipts, family applications and income verification, award decisions with renewal and sibling priority, separate-account accounting, and disbursement to schools — built end-to-end around the federal program and the January 2027 launch.

See sgosoftware.com →

SGO software buyer’s checklist

When you evaluate a platform, hold it against the federal requirements. Ask whether it does all of the following out of the box:

  • Generates per-donor §25F substantiation automatically.
  • Enforces separate accounts and shows credited dollars flowing only to qualifying scholarships.
  • Verifies household income against 300% AMGI and stores the documentation.
  • Applies the renewal-then-sibling award priority without manual tracking.
  • Blocks earmarked donations and awards to disqualified persons.
  • Tracks the no-double-benefit rule with §170 and state credits.
  • Produces your state’s annual report and keeps an audit trail.
  • Surfaces your 90/10 position so you never blow the administrative cap.

Build vs. buy

Some founders consider building in-house or stitching together a generic CRM, a payment processor, and spreadsheets. The math usually doesn’t work for an SGO.

Building burns your 10% cap. Engineering time, payment integrations, receipting logic, and compliance reporting all come out of the same 10% you have for everything non-scholarship. A generic donation tool handles gifts but none of the SGO-specific requirements — §25F receipts, income verification, separate-account segregation, and the award-priority rules — so you end up paying staff to fill the gaps. Purpose-built SGO software is almost always cheaper against the cap than build-it-yourself.

What it should cost

Don’t evaluate price in a vacuum — evaluate it against the cap. The right question is not “what’s the cheapest tool,” it’s “what keeps the most of my income in scholarships while staying compliant.” Software that replaces manual verification, disbursement, and receipting labor typically pays for itself by keeping administrative spend inside the 10% the law allows.

Choosing a platform

  1. Confirm it’s built for §25F, not retrofitted from a generic nonprofit CRM. Walk the checklist above point by point.
  2. Match it to your state. If you operate where a state program already exists, the platform should handle both the state rules and the federal §25F layer. Check your state’s status.
  3. Decide before launch. Adopt during formation so your accounts and workflows are built around it from day one.
  4. Plan for annual re-certification. Participation isn’t one-time; your platform should make yearly reporting routine.

New to the program entirely? Read what an SGO is and how to start one, then come back to choose the system that runs it.

Frequently asked questions

Do I really need SGO software, or can I use spreadsheets?

Spreadsheets work for a pilot of a few students, but they break the moment you have real donor volume, income verification, and §25F receipts to issue — and every manual hour you spend counts against the 10% administrative cap. The §25F 90/10 rule effectively forces automation: organizations that run lean on software keep more of every dollar in scholarships, where the law requires it.

Can I just use a generic CRM or donation tool?

Generic fundraising tools handle donations but not the parts unique to an SGO: per-donor §25F substantiation, the no-double-benefit rule with §170, separate-account fund segregation, 300%-AMGI income verification, and the renewal-then-sibling award priority. Bolting those onto a generic CRM usually costs more in staff time than purpose-built SGO software.

What should SGO software cost?

Think of it against the 10% cap, not in a vacuum. If software replaces manual verification, disbursement, and receipting labor, it pays for itself by keeping your administrative spend inside the cap. The wrong question is 'what's the cheapest tool' — it's 'what keeps the most of my income in scholarships while staying compliant.'

When should a new SGO choose its software?

Before you accept your first donation. Separate accounts, donor identity verification, and receipting are hard to retrofit cleanly after money starts moving. Pick your platform during formation so your workflows and chart of accounts are built around it from day one — well ahead of the January 1, 2027 launch.

Does SGO software handle §25F receipts and state reporting?

Purpose-built SGO software should. The federal credit requires per-donor substantiation donors use to claim §25F, and participating states layer their own annual reporting on top. Your platform should generate both automatically and keep an audit trail, because participation is re-certified every year.