Grand Island Public Schools is setting up its own §25F scholarship organization, with staff payroll giving from January

Grand Island's public schools will have a scholarship granting organization (SGO) of their own for the federal Education Freedom Tax Credit (§25F). At the Board of Education's regular meeting on Thursday, November 12, Chief Financial Officer Virgil Harden walked the board through the plan under agenda item 5.6, “FSTC - SGOs”: a new nonprofit, Central Nebraska Public Schools SGO, Inc., working “in concert with GIPS Foundation personnel” and “for the benefit of GIPS students,” according to his 33-slide presentation, which Central Nebraska Today reported on Friday. Grand Island Public Schools is Nebraska's sixth-largest district, with 10,070 students from pre-K through grade 12 in 23 schools in the 2023-24 federal count, after Omaha, Lincoln, Millard, Papillion La Vista and Elkhorn. “Our commitment is to use our SGO to directly and positively impact the day-to-day student experience,” Harden said. The timing fits the state's calendar. Nebraska, which Gov. Jim Pillen made the first state to commit, opens its SGO application at 9:00 a.m. Central on Monday, November 16, and takes filings through January 15, 2027.

A local board, a national charter. Harden's slides put the new organization under the National School Foundation Association (NSFA), labeled the “Nationwide Multistate SGO (Parent),” with Central Nebraska Public Schools SGO as its Nebraska-based “child.” The local organization is registered with the Nebraska Secretary of State, has its EIN from the IRS and is “waiting on 501(c)(3) designation,” the slides say. NSFA, which calls itself the charitable pre-K-12 scholarship partner of the National Association of Education Foundations, is building an affiliate network for public school communities. It says it will charter one SGO per public school district, each with its own name, EIN and local board, and that an affiliate included in NSFA's IRS group exemption is recognized as a 501(c)(3) public charity “without a separate tax exemption application.” NSFA supplies legal templates, software, training and standards; local leaders run fundraising, awards and operations, and each affiliate does its own financial reporting. That puts Grand Island in the same circle as Sioux Falls, whose new district fund the Argus Leader described as a chartered affiliate of the National Association of Education Foundations. One line on Harden's slide still carries a question mark: whether the SGO will also serve students in other Nebraska districts. The next steps include working with other Hall County educational entities on “a unified message” and with other Nebraska districts “to provide funding opportunities to the maximum number of students as possible.”

Filing with Nebraska while the exemption is pending. Nebraska's Department of Revenue takes organizations whose exemption isn't granted yet, but its Application Guide asks for the IRS determination letter or, if the determination is pending, a copy of the Form 1023 the organization filed. An affiliate waiting to be added to a parent's group exemption has neither document of its own yet, so it should ask the department's Policy Section how to show its status before it files. Treasury's temporary regulations, which take effect without a comment period and apply from September 1, 2026, let a state list an organization whose application for recognition of exempt status is pending with the IRS, if the exemption, once granted, reaches back to January 1 of the list year or earlier (§ 1.25F-5T(d)(5)). The rest of Nebraska's package applies to everyone: articles filed with the Secretary of State, a Nebraska Certificate of Good Standing, a §25F segregated account for Nebraska that is already open when you file, and written policies that spell out how you'll meet each §25F rule, not a general promise to comply. The department asks for at least four weeks to review, and the state's list is due to the IRS by February 15, 2027, so filing early is the safe plan.

Who qualifies in Hall County. A student is eligible if household income is no more than 300 percent of area median gross income and the student is eligible to enroll in a public school. Harden's slides use $89,000, a median family income they cite to HUD's 2026 income limits for the Hall County area, which puts the line at $267,000, and estimate that 8,000 students in Hall County may be eligible. The exact figure will come from the IRS: under the proposed rules, area median gross income follows the HUD section 8 method, is adjusted for family size, and is published each year (who qualifies). Parents have to provide income documentation and the SGO has to verify it every year, the slides note (how SGOs verify income).

Payroll giving from the first paycheck of 2027. The district plans a staff campaign to encourage payroll deduction “starting with the January 2027 payroll cycle,” and it will share more with staff, families and the community in the coming weeks. The proposed rules count an after-tax payroll deduction as cash for a qualified contribution (prop. § 1.25F-1(a)(12)(iii)), and Treasury said on November 12 that guidance for employers on payroll giving is coming “very soon” (details). Each donor needs a unique donor number, a written acknowledgment by January 31 and a line in the SGO's February 28 report to the IRS, so the payroll file has to carry every employee's gift through to the SGO. Harden's goal is “a massive number of patrons” giving $1,700 a year: “10,000 * $1,700 = $17,000,000.” Under the proposed rules, which taxpayers may rely on for 2027, the credit is worth up to $1,700 per taxpayer, or $3,400 on a joint return when each spouse gives, and it comes off federal income tax dollar for dollar. The $1,700 caps the credit, not the gift. One slide asks whether the SGO will affect property taxes and answers: “Zero impact on property taxes.” Contributions start January 1, 2027, and Harden expects scholarships to be available from the start of the 2027-28 school year, which fits the rule that an SGO spend 90 percent of a year's income by the end of the following year (the two-year window).

What the scholarships could pay for. Harden's examples come from the Coverdell list in section 530 that §25F borrows: the supplies on a required back-to-school list, a math tutor, band, sports or show choir uniforms the district requires, the district's annual fee for a school bus pass, an after-school extended-day program a school runs on site, and a district technology access fee for one-to-one computers. Those line up with §530(b)(3)(A)'s books and supplies, academic tutoring, computer technology, and the uniforms, transportation and extended-day programs a school requires or provides. Summer programs, which another slide lists, aren't named in section 530, and activity fees are less clear; both wait on Treasury's separate guidance on qualified expenses, which Treasury says will read the statute “as broad as we can.” The slides also carry a planning note other districts can borrow, on narrowing what the scholarships fund: “A point in every direction is a point in no direction.”

Repeal, in the district's own words. The last slide takes up the Democratic repeal bills, S. 4297 and H.R. 9289, and calls them a “Hard Sell”: both are stalled in committee, the credit starts January 1, 2027, two days before the next Congress convenes, and a repeal would face an expected veto and need two-thirds of both chambers to override it. That matches our read. §25F is permanent law with no sunset date, and repeal is still a long shot after the midterms.

What it means for SGOs. Grand Island joins public school systems building a separate 501(c)(3) around their own students, from Sioux Falls in South Dakota to Johnston County and Moore County in North Carolina and the Fort Wayne schools foundation in Indiana, while 41 Kentucky districts signed with an existing statewide SGO instead. A district SGO has to fund at least 10 students who don't all attend the same school, which a 23-school district clears easily, and it can't let a donor earmark a gift for a particular student. Our guide to §25F for public schools covers what a district can do, the free SGO Builder walks a new organization through formation, how to apply in Nebraska has the form, documents and fees, and the Nebraska page and Nebraska SGO page track the process.