What Is a Scholarship Granting Organization (SGO)?
Both are federal tax credits. Both involve children. But they work very differently — and understanding the distinction could change how you think about your federal tax bill starting in 2027.
What Is a Scholarship Granting Organization — and What Is It Not?
When most people think about education funding, they picture tax dollars flowing directly to public schools. That model has dominated for decades—but it has left many students behind.
Today, education funding is evolving toward a student-centered approach. For many families, that shift is opening doors they never thought were possible. One of the most important drivers of this change is something called a Scholarship Granting Organization (SGO).
A scholarship granting organization (SGO) is a nonprofit organization that connects private donations to education scholarships for K–12 students.
An SGO is:
- A nonprofit organization that stewards funds donated for K–12 scholarships
- A provider of scholarships to eligible K–12 students
- A trusted bridge between donors and families
An SGO is not:
- A school or school operator
- A government-run entity
- A for-profit organization
- A distributor of scholarships based on politics or favoritism
- An authority over how schools teach
How Scholarship Granting Organizations Work
At a high level, the process looks like this:
- A donor—individual or organization—contributes to an SGO
- The SGO manages and safeguards those funds
- Scholarships are awarded to eligible K–12 students
- Families use scholarships for approved educational expenses
Who Benefits from a Scholarship Granting Organization?
Scholarships distributed through SGOs can fundamentally change the trajectory of a student’s life.
- Families gain access to school options they otherwise could not afford
- Students can enroll in schools that meet their unique needs
- Educational services once out of reach become attainable
For many parents, SGO scholarships mean the difference between being assigned to a failing district school and actively choosing the best educational path for their child.
Why SGOs Matter Right Now
Families across the country are asking for more choice, more transparency, and more say in their children’s education. SGOs are meeting that moment.
- Expand access to educational opportunities
- Empower parents without expanding government bureaucracy
- Encourage private generosity for the public good
- Ensure education funding follows students—not systems
- Provide focused accountability and transparency
The SGO’s role is to ensure every donation is stewarded responsibly, transparently, and ultimately returned to students in the form of life-changing scholarships.
What is the AFC Scholarship Fund?
The AFC Scholarship Fund is a national scholarship granting organization dedicated to expanding school choice and opportunity for families.
- Expanding school choice where options are limited
- Partnering with trusted K–12 scholarship providers
- Stepping in where no school choice programs exist
- Building a national fund ready to deliver impact at scale
Our goal is simple: empower families, educate donors, and serve as a trusted source for the latest news and opportunities in school choice.
Frequently Asked Questions
Disclaimer: This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are subject to change. Please consult a qualified tax professional regarding your individual circumstances. The Education Freedom Tax Credit is effective January 1, 2027. Contribution limits and program details are subject to IRS guidance and final program rules.
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.
What's Next
Stay informed with our latest articles, news, and scholarship stories.
Tax Credit vs. Tax Deduction: What Donors Need to Know
Tax Credit vs. Tax Deduction: What EFTC Donors Need to Know – AFC Scholarship Fund EFTC Basics | Educational Guide Tax Credit vs. Tax Deduction:
She Almost Didn’t Go: How School Choice Helped Mya Reach a Top School
She almost didn’t go—but school choice changed everything. See how K–12 scholarships helped Mya find her voice and reach a top school.
What Happens After I Donate? Your EFTC Timeline From Gift to Tax Filing
Contributions to a qualified scholarship granting organization (SGO) can be made at any point during the 2027 calendar year. When your 2027 federal return is filed, you will claim the Education Freedom Tax Credit and it will be applied directly against your federal tax liability.