Every serious donor eventually asks the same question: where will my gift make the biggest difference?
With the Education Freedom Tax Credit (EFTC), that question matters more than ever.
Starting January 1, 2027, millions of Americans will be able to fund K-12 scholarships for the first time. Much of the conversation so far has centered on one number, $1,700. For donors who can give well beyond it, the more useful question is what’s standing between a child and the right school, and how a gift can help clear the way.
Here’s how to apply it to the EFTC.
What Strategic Giving Looks Like With the EFTC
Start with the basics. Give to a qualified Scholarship Granting Organization (SGO), like AFC Scholarship Fund, and receive a dollar-for-dollar federal tax credit: up to $1,700 for individuals, or up to $3,400 for married couples filing jointly. You give first; the credit reduces your federal tax bill when you file.
Give more, and you receive the same credit. The amount above it is treated like any other charitable contribution under the usual tax rules.
For major donors, that’s the point. The credit brings new donors in. Strategic giving is about what you do beyond it: putting larger gifts where they solve a real problem for students and families. Some people call it venture philanthropy or effective philanthropy. Whatever you call it, the idea is the same. Find the constraint, then fund the fix.
Four Bottlenecks Your Gift Can Help Remove
1. Not Enough Scholarship Dollars Where Families Need Them
Some communities have had scholarship options for years. Many have had almost none. A gift to a general fund, such as the American Promise Scholarship Fund, directs dollars to eligible students in any participating state where the need is greatest.
2. Students Whose Needs Cost More
A student with a disability may need specialized instruction, therapy or a school built for how they learn, and those costs add up. Gifts to the Special Education Scholarship Fund go toward students whose families often face the biggest gap between what they can pay and what their child needs.
3. Families Need to Know the Scholarship Will Be There Next Year
A one-year scholarship helps. A scholarship a family can count on changes how they plan. Federal rules give priority to students who received a scholarship the year before and to their siblings. That means steady giving year after year helps keep students in the school that’s working for them. A multi-year commitment is one of the most strategic gifts you can make.
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.
4. Not Enough Donors Know the Credit Exists
The biggest constraint may be awareness. Most taxpayers have never heard of the EFTC. A challenge gift, where you pledge to match what others give, can bring new donors in and multiply your impact. So can talking about it with your family, your employer or your congregation.
Matching Your Gift to the Need
Scholarship amounts vary by student, school and need. Using our illustrative scholarship of $5,000, and knowing SGOs must spend at least 90% of their income on scholarships:
- $5,000 comes close to one student’s full school year.
- $50,000 can help about nine students, enough to make a real difference for a community or a fund.
- $100,000 can help about 18 students for a full school year.
- $100,000 a year for several years gives those families something even more valuable: a scholarship they can plan around.
You can see more examples in The Education Freedom Tax Credit Starts at $1,700. Your Impact Doesn’t Stop There.
Questions to Ask Before You Give
Before you make a major gift, ask your SGO:
- Is it on a participating state’s list? The IRS publishes the list of eligible SGOs.
- How much goes to scholarships? Federal law requires at least 90% of income.
- How are tax-credit gifts tracked? Under the October 2026 Treasury rules, SGOs must keep qualified contributions separate from other funds.
- Is it audited? SGOs are subject to annual reporting and audits.
- Can I choose a fund or a community? You can. Federal law doesn’t allow a gift to be directed to a specific child. Our article on what the law allows when you want to support a specific school covers the details.
- How will I hear about results? A good SGO should be able to show you what your gift made possible.
How to Plan a Major Gift
- Name the problem you want to solve. Pick the bottleneck that matters most to you, then choose the fund that addresses it.
- Use the credit every year. Make a cash gift each year to capture the credit, up to $1,700, or up to $3,400 for married couples filing jointly.
- Plan the rest with your advisor. Larger gifts can involve appreciated assets, donor-advised funds or giving over several years. Your tax advisor can help you decide what fits your situation.
- Think in years, not just gifts. A multi-year commitment gives families stability and gives you a clearer view of your impact.
- Talk with us. If you’re considering $50,000 or more, our team can help you plan a gift around the students and communities you care about most.
The EFTC will bring millions of new donors into K-12 scholarship giving. That’s the start. For donors who can give more, the bigger opportunity is to look past the credit, find the bottleneck that’s holding students back and put a gift right there. The credit stays the same. The impact doesn’t have to.
Explore the funds to find the need you want to meet.
It's giving with a clear goal: finding the biggest obstacle to the outcome you care about and putting your gift there. With the EFTC, that often means funding students where scholarships are scarce, students with higher needs or families who need support for more than one year.
No. Your credit is the same whether you give $1,700 or $100,000. The amount above the credit is treated like any other charitable contribution under the usual tax rules.
Yes. You can give every year, and you can claim the credit each year you give, up to the credit amount.
No. You can choose a fund or a community, but federal law doesn't allow a gift to be directed to a specific child.
You can use a donor-advised fund for giving beyond the credit. The simplest approach is to claim the credit on cash gifts you make directly to an SGO. Talk with your tax advisor about your specific situation.
