Plain answers about running an SGO on software.
The Education Freedom Tax Credit is new, and most SGOs forming for it are doing this for the first time. Here are the questions we hear most, answered plainly: who holds the money, how eligibility and the 10% cap work, and how to be ready on day one.
What is SGO Software?
SGO Software is the only platform built from the ground up for the §25F Education Freedom Tax Credit. One system runs four surfaces: Donors (Collect), Families (Award), Schools (Disburse), and Admin (Operate). Most teams would stitch together a donor CRM, a scholarship database, and spreadsheets to do this, but the statute bars commingling §25F funds, so those tools cannot legally hold the money. We replace them, with federal compliance built in as the default.
What is a Scholarship Granting Organization (SGO)?
An SGO is a 501(c)(3) nonprofit that receives tax-credit-eligible donations and awards K-12 scholarships to eligible families, then disburses those funds to the schools the students attend. Awards must reach 10 or more students who do not all attend the same school, and they can cover the broad Coverdell §530(b)(3) expense list, not just tuition. SGOs are also called STOs, SSOs, or SFOs depending on the state.
What is the Education Freedom Tax Credit (§25F)?
The Education Freedom Tax Credit (EFTC) is a federal, dollar-for-dollar tax credit of up to $1,700 per taxpayer per year for donations to Scholarship Granting Organizations, with a 5-year carryforward. It was enacted as 26 U.S.C. §25F (OBBBA Section 70411), is effective January 1, 2027, and is detailed in IRS Notice 2025-70. Treasury's final regulations are still being written. SGO Software is built around these requirements rather than retrofitted to them.
Do I really need software to run an SGO?
Running an SGO means collecting donor money, issuing per-donor receipts, verifying family income, awarding scholarships, disbursing to schools, and reporting to state and federal authorities. Every one of those tasks has to fit inside the 10% administrative cap. Done by hand on forms and spreadsheets, the labor breaks the cap and the audit trail is hard to keep. Software built for §25F is what lets a small or forming SGO operate legally under the cap, without standing up four separate systems.
Can it collect donations and issue tax receipts?
Yes. The donor surface accepts ACH and card, and generates the per-donor §25F receipt each donor needs to claim the federal credit. The receipt issues automatically as the donation settles, so it is a compliance artifact with a recorded trail, not a document someone has to chase down later. It also helps you raise the money, not just count it: each school in your network becomes a branded donor channel, so one click pushes a campaign to its parents and every donation rolls up to your SGO tagged to the school it came from.
How does it determine family eligibility?
Families upload income and residency documents, reviewed and income-verified to a bank-grade bar. On the verified figures, the platform runs the 300% of area median gross income (AMGI) test, using the AMGI measure defined in IRC §42, and returns a preliminary eligibility and award estimate. Every decision keeps a document-backed trail, because eligibility is where awards get challenged at audit.
What is the 90/10 rule, and does the software track it?
The 90/10 rule requires that at least 90% of donations go to scholarships, leaving no more than 10% for administration. SGO Software tracks every dollar against the cap from one reconciling ledger, so your standing under the cap is continuous and correct by construction, not reconstructed at audit time.
Does it produce state and federal reports?
Yes. Because donors, families, and schools all post to one reconciling ledger, the platform generates state-specific reports and federal §25F reports from the same underlying records. The numbers reconcile by construction, and the same trail shows the program reached 10 or more students who do not all attend the same school, as the statute requires.
Do you hold our money?
No. SGO Software never custodies your funds. Money moves on regulated rails through our chartered banking partners, with bank-grade income verification, never through us. Your SGO receives the donations and chooses the scholarships. The platform records, reconciles, and reports on every movement. The founders, Joseph Friedman and Dovi Geretz, are ex-Google and fintech security and compliance engineers, so the people who built it are people you can trust with the money.
We are a forming SGO. When should we get started before the 2027 launch?
As early as possible, and forming SGOs preparing for launch are exactly who the platform is built for. §25F opens January 1, 2027, and every SGO starts from zero on the same day. Pre-registration banks your donors, their payment method, and their chosen school before launch, so day one is a charge, not a scramble. It is far easier to build on the platform from the start than to migrate onto it after stitching together a patchwork of tools.
How is SGO Software priced?
Pricing is around a 3% transaction fee on donations, which sits inside the federal 10% administrative cap. There is no setup fee and no per-seat pricing. The value is not the number: the software is what keeps your whole operation inside the 10% in the first place. A quote is scoped to your program, so contact us and we will size it.
Be ready the day §25F donations open
January 1, 2027 is the same starting line for every SGO. See the platform built from the ground up for §25F: it turns every school you serve into a donor channel, then handles eligibility, disbursement, and reporting in one compliant system. You receive donations and choose scholarships, the platform does the rest.