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Section 25F SGO Compliance Checklist

What the federal statute and the October 2026 regulations require of scholarship granting organizations, with each item tied to its source. Educational only; not legal advice.

Published October 23, 2026 · Updated October 23, 2026 · American Scholarship Network

Short answer

To accept federal credit gifts, an SGO must be a 501(c)(3) public charity located in a participating state and on that state's list, keep qualified contributions in segregated accounts, meet the statute's scholarship rules, document each donor's gifts with a unique donor number, report to the IRS by February 28, and undergo an annual audit.[source][source][source]

How to read the tags: "Statute" items are enacted law. "Temporary regs" items are in effect now (T.D. 10057). "Proposed regs" items come from REG-117199-25, which may change before it is final; comments were due December 1, 2026.

1. Qualify and get listed

  • Be a 501(c)(3) public charity exempt under 501(a), not a private foundation.[source]

    Statute

  • Be located in the state: authorized to do business there and in compliance with its general charitable-organization rules.[source]

    Temporary regs

  • Be included on the participating state's SGO list for the calendar year.[source]

    Statute

  • Register in the IRS SGO portal, preferably before appearing on a state list, to get the donor-number instructions and authorize publication on the IRS SGO list.[source]

    Proposed regs

  • Keep qualified contributions in one or more separate accounts used only for them (one per state for a multistate SGO).[source]

    Statute

2. Operate the scholarship program

  • Provide scholarships to 10 or more students who don't all attend the same school.[source]

    Statute

  • Spend at least 90 percent of income on scholarships for eligible students (the proposed regulations define income and timing, including a safe harbor for SGOs whose activities are at least 85 percent scholarship granting).[source]

    Proposed regs

  • Fund only qualified elementary or secondary education expenses (IRC 530(b)(3)(A)), and verify scholarships are used for them.[source]

    Statute

  • Give priority to prior-year recipients, then to their siblings.[source]

    Statute

  • Never earmark or set aside contributions for a particular student.[source]

    Statute

  • Verify household income and family size, and award only to students at or below 300 percent of area median gross income.[source]

    Statute

  • Award qualified-contribution scholarships only to students who reside in the state where the SGO is listed.[source]

    Proposed regs

  • Don't award scholarships to disqualified persons (rules similar to IRC 4946).[source]

    Statute

3. Document donor contributions

  • Accept the donor's designation of a qualified contribution at the time of the gift; it is irrevocable. Count only cash, and subtract any goods or services provided.[source]

    Temporary regs

  • Create a unique donor number in the IRS uniform format for each donor who designates a qualified contribution.[source]

    Temporary regs

  • By January 31, send each donor a written acknowledgment with the SGO's EIN, the year's designated total, the donor number, and a goods-or-services statement.[source]

    Temporary regs

4. Report and get audited

  • By February 28, report each donor number with the donor's name, address, and annual qualified contributions through the IRS SGO portal.[source]

    Temporary regs

  • File the annual certification and information report with the IRS, and give a copy to each listing state.[source]

    Proposed regs

  • Commission an annual financial and programmatic audit by a qualified independent third party and give the results to each listing state.[source]

    Proposed regs

5. Ohio's state credit (separate program)

  • Hold Ohio Attorney General certification: a 501(c)(3) organization that primarily awards academic scholarships for primary and secondary students and prioritizes low-income students.[source]

    Ohio law

  • Issue receipts that acknowledge the donor's contribution and its amount; Ohio's tax department asks for the donor's name, amount, and date.[source]

    Ohio guidance

Working through these requirements?

Schools can partner with ASN instead of building an SGO, and advisors can find calculation rules and client talking points in the advisor guide.
School partnershipsAdvisor guide

Sources

  1. 26 U.S.C. § 25F, Qualified elementary and secondary education scholarshipsU.S. Code (via Cornell Legal Information Institute) · Enacted federal law · Checked October 23, 2026
  2. T.D. 10057, Federal Scholarship Tax Credit (temporary regulations), 91 FR 62655Federal Register, October 2, 2026 · Temporary regulations · Checked October 23, 2026
  3. REG-117199-25, Federal Scholarship Tax Credit (proposed regulations)Federal Register, October 2, 2026 · Proposed regulations · Checked October 23, 2026
  4. Ohio Revised Code 5747.73, Credit for donations to scholarship organizationsOhio Laws (Legislative Service Commission) · Ohio law · Checked October 23, 2026
  5. Ohio Tax Credits and Their Required DocumentationOhio Department of Taxation · Ohio guidance · Checked October 23, 2026

General educational information, not individualized tax or legal advice. See the educational and tax disclaimer.