The Education Freedom Tax Credit only works if the SGO qualifies. Not every organization that claims to support school choice actually generates the credit — and the difference matters.
Finding a federally qualified Scholarship Granting Organization requires a little due diligence. This guide walks through exactly what to look for, what questions to ask, and what answers should raise flags.
Start With Qualification Documentation
The most important question you can ask any potential SGO: Can you provide documentation of your federal qualification status?
A qualified SGO should be able to tell you clearly whether it meets the federal criteria to generate the Education Freedom Tax Credit for donors — and should be able to support that claim with documentation. Vagueness about qualification status, or an inability to produce verifiable evidence, is a red flag.
“If an organization can’t answer ‘Are you federally qualified?’ with documentation, that’s your answer.”
Questions to Ask Before You Give
Donor Due Diligence Checklist
- Are you federally qualified to generate the EFTC? Can you provide documentation of that qualification status?
- What percentage of contributions do you distribute as scholarships? Federal requirements mandate at least 90%. Ask for audited financials if you want to verify.
- What is your scholarship distribution timeline? How quickly do donor contributions reach students, and on what cycle are scholarships awarded?
- How do you verify student eligibility? A qualified SGO has documented processes for confirming that scholarship recipients meet federal criteria.
- What is your compliance infrastructure? Ask about oversight, auditing practices, and how the organization ensures donor documentation is accurate and timely.
- What is your track record? How many students have received scholarships? In which states? Can you provide outcome data?
Be the First to Know
Get notified when the Education Freedom Tax Credit launches so you don’t miss the opportunity to support K–12 students while benefiting from a federal tax credit.
Why Track Record Matters
The EFTC is a new federal program, but some organizations have been operating in the school choice scholarship space for years. AFC Scholarship Fund has invested more than $11 million since 2021 and supported 157,000 students across 12 states. That track record is evidence of operational capability, compliance discipline, and genuine commitment to the mission.
Why AFC Scholarship Fund
AFC Scholarship Fund is the scholarship arm of the American Federation for Children — the nation’s largest school choice advocacy organization. It is built specifically to operate as a federally qualified SGO under the EFTC framework, with the compliance infrastructure, donor documentation processes, and scholarship distribution systems that a federal credit requires.
Donors receive written confirmation of their contribution, documentation of the SGO’s qualification status, and the information needed to claim the EFTC on their federal return. That’s not a promise — it’s the infrastructure AFC has been building since 2021.
Look for nonprofits that claim EFTC qualification status and can provide documentation. Ask about their federal qualification, distribution rate, and track record. AFC Scholarship Fund is designed to be a trusted, compliant option.
Ask about federal qualification documentation, the percentage distributed as scholarships, distribution timelines, student eligibility verification processes, and the organization’s compliance infrastructure.
Ask the SGO directly for documentation. You can also consult a tax advisor who is tracking EFTC implementation. Be cautious of organizations that claim eligibility without providing verifiable evidence.
A qualified SGO meets specific federal criteria — including the 90% distribution requirement — that enable donors to claim the EFTC. Not every education-related nonprofit meets these requirements.
