Moore County's school board approves its own SGO foundation to raise §25F scholarships for North Carolina public school students

A North Carolina school board has voted to build its own scholarship granting organization. At its October 12 meeting, the Moore County Board of Education took up “Foundation Setup” as a board action item and approved two new foundations recommended by its Foundation Committee, The Pilot reported. One aims to acquire and manage housing for teachers and staff. The other is an SGO, meant to turn §25F donations into support for Moore County Schools students. Board member David Hensley, who chairs the committee, proposed an annual fundraising goal of $20 million and named the federal credit as the main way to get there.

“If you get 10,000 people to donate $1,700 each via this tax credit, then the foundation has $17 million a year,” Hensley said. “So this is the urgency here: The tax credit becomes effective on Jan. 1, 2027.” Those donors don't have to live in Moore County, or even in North Carolina: under Treasury's proposed rules, a taxpayer anywhere can give to an SGO on any participating state's list.

The district plans to front the start-up costs. Hensley put the paperwork and fees for both foundations at about $15,000, which could be booked as a loan the foundations pay back, and Superintendent Jenny Purvis said the district could hire a development director first and hand the position to the foundation later. “I did check that with our attorney, just to ensure that was acceptable for us to front-load those costs,” Purvis said. “It is certainly legal. And it's encouraged for us to do so for a bigger return on investment.”

Neither foundation exists yet. The committee said it will apply to the IRS for nonprofit status, incorporate and adopt bylaws with guidance from Schell Bray attorney Edward Chaney, and appoint the foundation boards before the school board's November 9 work session, where it will ask for more direction. Hensley proposed starting with five directors and wants “people who bring expertise, especially when the board's young.” The district's existing Public Education Foundation of Moore County, founded in 1984, continues separately.

Moore County is the first North Carolina school board we know of to vote an SGO into being. Earlier this month, Columbus County educators formed one for their district's students, and the Carteret Education Foundation's board is reviewing the credit. It's the approach Gov. Josh Stein pointed to in June, when he said he wanted to make it easy to direct §25F donations to SGOs that benefit public school students, and it puts Moore County alongside the public school districts, foundations and administrators' groups in Colorado, Nevada, Kentucky, Florida and Iowa that are treating the credit as money for their own students.

Why two foundations. A school district is a unit of government, not a 501(c)(3) public charity, so it can't be an SGO itself; a separate foundation can. Keeping the housing work out of that foundation matters too. Under Treasury's proposed rules, an SGO must spend at least 90% of its income on scholarships, and income means the organization's total gross receipts from all sources, unless at least 85% of its activities are scholarship granting, in which case the test runs on its §25F account (how the 85% safe harbor works). Rent from homes and condos leased to staff would have landed in that income base. In a foundation of its own, it doesn't touch the SGO's 90% math.

What the scholarships can pay for. A §25F scholarship follows the student: a child qualifies if household income is at or below 300% of area median gross income and the child is eligible to enroll in a public school. The money goes to qualified expenses on the Coverdell list in section 530, which includes academic tutoring, special needs services, books, supplies, transportation and computer technology; Treasury's detailed guidance on the expense list is still to come. The SGO, not the district, awards the scholarships. It must fund at least 10 students who don't all attend the same school, and it can never earmark a gift for a particular child. If school board members or district staff sit on the foundation's board or help pick recipients, their family members become disqualified persons who can't receive scholarships, so that's worth weighing as the five seats are filled.

The date that matters is January 1. Under Treasury's temporary rules, a state can list an SGO whose tax-exemption application is still pending only if the exemption, once granted, will be effective on or before January 1 of the list year. For a new foundation aiming at North Carolina's 2027 list, that means forming by January 1, 2027 and filing for exemption on time (the full calendar). Hensley's sense of urgency is well placed.

The North Carolina clock. The state's opt-in law makes the North Carolina State Education Assistance Authority the office that certifies SGOs and submits the list, with 120 days from the federal regulations to write its rules, which runs to about late January 2027. Its SGO page still says it is reviewing the federal materials and “will begin developing its guidance on the program in the upcoming weeks.” There is no application yet, and questions go to SGO_NC@ncseaa.edu. The 2027 list is due to the IRS by February 15, 2027, and every SGO will also need to register on the IRS SGO portal, which hasn't opened. Donations can start January 1, 2027, at up to $1,700 per taxpayer, or $3,400 for a married couple when each spouse gives.

Track the state's process on our North Carolina SGO page and the North Carolina state page, and see what §25F allows for public school students. A district foundation working toward the same list can take formation and compliance step by step with the free SGO Builder.