Denver parents form their own §25F scholarship organization for three public schools: East High, Morey Middle and McAuliffe

Parents at three Denver public schools are building a scholarship granting organization (SGO) of their own for the federal Education Freedom Tax Credit (§25F). Chalkbeat Colorado reported on November 11 that families at East High School, Morey Middle School and McAuliffe International School are launching the Denver Neighborhood Education Fund to grant scholarships to students at those three schools. The fund was registered with the Colorado Secretary of State as a nonprofit corporation on September 23, 2026, with East High parent Greg Graeber as its registered agent. “The general concept is as a parent, if I'm going to give a donation, I'd like to see it impact my neighborhood school,” Graeber told Chalkbeat. Most public-school efforts so far work at a much larger scale. The Denver Public Schools Foundation's fund could benefit all 89,000 of the district's students, and the statewide Colorado Public Schools Foundation is building one any district can join (Colorado's public-school SGOs). This one is built around three buildings.

Why three schools. Graeber, an East High alum whose daughter is a senior there, is president of the East Angel Foundation, which raises money for the school. He started looking into the credit after Gov. Jared Polis opted Colorado in. When he saw that an SGO has to serve more than one school, he reached out to parents at McAuliffe and Morey, the two middle schools that feed into East. The statute requires an SGO to provide scholarships to 10 or more students “who do not all attend the same school” (§25F(d)(1)(A)), so one school's foundation can't be an SGO by itself. A high school plus the middle schools that feed it is about the smallest group that clears that test while keeping the money in one neighborhood. Sara Peters, who runs a similar foundation at McAuliffe, was excited about the idea. “My first inclination is that we'll have a stronger high school system if we have a stronger junior high system,” Graeber said.

What the parents want to pay for, and what the expense list covers. The McAuliffe foundation already raises money to cover fees for students to play sports or join after-school clubs, some run by outside organizations and costing up to $200. The parents want the new fund to help more students afford after-school and summer programs, what Peters called “the extras, the after-school things, the weekend things.” Part of that fits the section 530 expense list that §25F borrows, and part is less certain. The list covers tuition, fees, academic tutoring, books, supplies and equipment tied to a student's enrollment at a public, private or religious school, along with transportation and “supplementary items and services (including extended day programs) which are required or provided by” the school. A fee the school itself charges and an after-school program a school provides track that wording most closely. A club run by an outside group and a summer program aren't named, so those wait on Treasury's separate guidance on qualified expenses, which hasn't been published. The payment rules matter too. Under the proposed regulations, scholarship money for anything the school charges goes directly to the school (proposed § 1.25F-3(c)(5)(iii)), and an outside provider can be paid directly only if the SGO has verified it as an appropriate provider and it isn't related to the student (§ 1.25F-3(c)(5)(iv)).

The founders' own children. A parent-run SGO has one rule to design around from day one. An SGO can't award a scholarship to a disqualified person (§25F(d)(2)), and under the proposed regulations that includes its officers, directors and trustees, anyone who takes part in choosing recipients or setting awards, any substantial contributor (more than $5,000 and more than 2 percent of the year's contributions), and the family members of each, children included (proposed § 1.25F-3(d)). So parents who sit on the fund's board or its scholarship committee can't have their own children receive its awards. A parent who gives $1,700 isn't a substantial contributor, and that parent's children can apply like anyone else (the disqualified-person rules). When Treasury wrote the substantial-contributor test, it weighed a stricter version aimed at “small organizations intended to benefit small groups of related people” and decided the private benefit doctrine already covers them: such a group can't properly be recognized as a 501(c)(3), so it can't be an SGO. For any small, parent-founded fund, the safe design is awards open to every eligible student at its schools, decided by people whose own children aren't applying. Donors can be offered a school preference, but no gift can be earmarked for a particular student (what donors can direct).

Who qualifies at schools like these. A student at any of the three schools is eligible if household income is no more than 300 percent of area median gross income, and the SGO has to verify that income for every applicant (how SGOs verify income). Because the proposed rules count only cash income, Treasury and the IRS estimate that about 95 percent of school-age children would qualify (who qualifies). The parents' reason for starting here is school funding. Denver's formula sends more money to schools with more English learners, students with disabilities and students who qualify for subsidized meals, so East, where 30 percent of students qualify for those meals, gets $8,927 per pupil this year against a district average of $11,652, Chalkbeat reported. “Even though we come from wealthier neighborhoods in Denver, our schools are underfunded,” Graeber said. Heather Lamm, an East alum whose youngest daughter is a freshman there, sees the fund as a test case: “it's easier to learn and cheaper to fix with three schools than 30. So let's figure out how this can be replicated to schools that might not be as fortunate.”

Colorado's calendar. Colorado takes applications for its 2027 list through the Department of Revenue's online portal (Form DR 1998) at sgo.colorado.gov, and an organization has to apply by November 30, 2026 to be sure of a place (what the application asks for). An organization whose 501(c)(3) application is still pending can be listed with a copy of its Form 1023 and proof of submission, as long as the exemption, once granted, is effective by January 1, 2027. The application also asks for a Certificate of Good Standing and a charitable solicitations registration from the Secretary of State, both issued within 90 days, and proof of a §25F account for Colorado. Chalkbeat didn't say whether the Denver fund has filed with the IRS or the state yet. The Department plans to send Colorado's list to the IRS by January 1, before Governor-elect Phil Weiser takes office. Weiser has said he's a “firm no” on the program, but Chalkbeat wrote that it's unlikely he can opt Colorado out for 2027: once the list is filed, the year is settled (every governor race that touches a list).

What it means for SGOs. The Denver fund is a model a parent group or school foundation in any participating state can copy: pair a school with the schools that feed it, form a separate nonprofit, and write the federal operating rules into its governing documents. It sits at the small end of a range that runs from Sioux Falls, where the school board backed a district-wide SGO on November 9, to the 41 Kentucky districts that signed with an existing statewide SGO and the Fort Wayne schools foundation. Donors anywhere can give to a Colorado-listed SGO and claim up to $1,700 per taxpayer for gifts made from January 1, 2027, or $3,400 on a joint return when each spouse gives, under the proposed rules, which taxpayers may rely on for 2027. Our guide to §25F for public schools covers what schools and parent groups can do, the free SGO Builder walks a new organization through formation, how to apply in Colorado has the state's form and deadline, and the Colorado page and Colorado SGO page track the process.