The SGO Platform for the Federal Scholarship Tax Credit

The Federal Scholarship Tax Credit (FSTC), also called theEducation Freedom Tax Credit (EFTC), is a federal income tax credit that supports K-12 education scholarships through private donations to state-approved Scholarship Granting Organizations. Donors receive a dollar-for-dollar federal income tax credit of up to $1,700 for contributions. SGOs use the funds to award scholarships for qualified K-12 education expenses. The program begins January 1, 2027.

Preparing for the Education Freedom Tax Credit is significant work for any SGO. It touches governance, donor infrastructure, application design, school relationships, family experience, and operational compliance including the 90 percent allocation rule and audit readiness. The FACTS EFTC Readiness Playbook walks through each of these areas with practical guidance and action-step checklists your leadership team can use to assess readiness and assign ownership.

SGOs evaluating platforms should look at how the platform handles donor contributions and receipting, how family applications and income verification are configured, how award decisions are made and communicated, how scholarship funds are distributed whether to schools or through family-directed models, and how records are retained for audit. Consider how the platform integrates with the systems participating schools already use. Ask vendors what is live today, what is on the roadmap, and how they support SGOs during launch and beyond.

Yes. FACTS Compass is built for SGOs whether or not your participating schools are in the FACTS network. SGOs whose participating schools use FACTS Financial Aid get the added benefit of family information carrying forward when those families apply.

Organizations considering the Education Freedom Tax Credit can participate in three ways: forming a new SGO, operating through an existing state or national SGO, or serving as a participating school within another SGO's network. The right choice depends on your organization's mission, governance capacity, funding scale, and appetite for operating a scholarship program directly. Forming your own SGO gives you control over award criteria, donor relationships, and program identity. Partnering with an existing SGO reduces administrative load but transfers those decisions. FACTS Compass is built for organizations running their own programs, though we work across the SGO ecosystem.