Scholarship granting organization software
What SGO software has to do under the EFTC
The Education Freedom Tax Credit (ECCA, §25F) puts specific rules on how a scholarship granting organization handles money, families, and reporting. This is what SGO software needs to support, and what to ask any vendor.
Why the federal credit changes SGO operations
Many SGOs already run State tax credit scholarship programs. The federal Education Freedom Tax Credit adds its own layer: a separate account for federal contributions, a unique donor number for every donor, income checks against area-specific thresholds, a fixed award priority order, and an annual report to the IRS. Each piece has to agree with the others, because the IRS matches every donor’s Form 8525 against the SGO’s report.
New SGOs face the same rules from day one, often with a small team. That is the job of SGO software: keep one set of records that every deadline and report is drawn from.
Requirements and what software must do
| Requirement | Authority | What the software has to do |
|---|---|---|
| Qualified contributions kept in a separate account, never commingled | §25F(c)(5)(B) | Contributions are recorded against a dedicated account and, for multistate SGOs, tracked by State. |
| At least 90% of income spent on scholarships for eligible students | §25F(d)(1)(B) | The ratio is computed from the ledger continuously, with warnings well before you approach the line. |
| Scholarships to 10 or more students who don’t all attend the same school | §25F(d)(1)(A) | Award review checks student count and school mix before you finalize a cycle. |
| Household income at or below 300% of area median gross income, verified | §25F(c)(2)(A), (d)(1)(F) | Thresholds by area and household size, with the supporting documents attached to each decision. |
| Priority to prior-year recipients, then siblings; no earmarking for a particular student | §25F(d)(1)(D)–(E) | Priority order is applied automatically, and giving can’t be pointed at a named child. |
| No scholarships to disqualified persons | §25F(d)(2) | Board members, major donors, and their families are flagged during award review. |
| Unique donor number on a written acknowledgement by January 31 | Prop. Reg. §1.25F-4(c)(1) | Numbers are issued automatically and acknowledgements are batched and sent on schedule. |
| Contributions reported to the IRS by donor number by February 28 | Prop. Reg. §1.25F-4(c)(2) | The report is assembled from the same ledger, so it always ties out to your books. |
A checklist for choosing SGO software
Whatever you use, it should be able to:
- Keeps qualified contributions in their own account and ledger, separate from everything else
- Issues a unique donor number to every donor, without collecting Social Security numbers
- Sends written acknowledgements with donor numbers by January 31
- Calculates the 300% area median gross income threshold for each family’s area and size
- Stores the income documents behind every eligibility decision
- Applies award priority for returning students, then siblings
- Prevents earmarking gifts for a particular student
- Flags disqualified persons before awards are final
- Tracks the 90% scholarship spending test continuously, not just at year end
- Pays schools and keeps a per-student ledger
- Produces the February 28 IRS report by donor number from the same records
- Tracks which State lists the SGO is on, and contributions by State
- Leaves you owning every donor relationship, with full access to and export of all your data
Also ask who owns the donor relationships and data (it should be you, with full export), who holds donor funds, how the vendor will keep up as the proposed regulations become final, and what the fee costs you against the 10% of income an SGO can spend on things other than scholarships.
Spreadsheets versus SGO software
A spreadsheet can list donors and awards. The trouble is everything that has to stay in sync: the donor number on the acknowledgement must match the IRS report; the 90% test depends on every award and every dollar received; the priority order depends on last year’s recipients and their siblings; and income decisions need documents attached for an audit. Each manual copy between sheets is a chance for the records to disagree.
How SGO Desk handles it
SGO Desk is built around the federal rules, in five parts that share one ledger. Your SGO owns every donor relationship and every record, with full access and export at any time.
- Donations & acknowledgements. Online giving by ACH or card into your segregated account. Every donor gets a unique donor number and a compliant written acknowledgement, without you collecting Social Security numbers.
- Applications & eligibility. One household application with document upload. Area median income thresholds are calculated for the family’s location and size, and every determination is recorded.
- Awards. Rank applicants with the statutory priority built in, keep awards to eligible students only, and screen out disqualified persons before anything is final.
- Disbursements & ledger. Pay schools directly and keep a per-student ledger, so every dollar can be traced from donor to classroom.
- Reporting & calendar. Your scholarship ratio, State list status, January 31 acknowledgements, and February 28 IRS report, tracked on one calendar with nothing left to memory.
Pricing: 1% fee on all transactions. No setup fees. See the full compliance table or read how the EFTC works.
Questions
What is SGO software?
Software that runs the operations of a scholarship granting organization: taking donations, issuing acknowledgements, processing family applications, awarding scholarships, paying schools, and producing the reports regulators require.
Can an SGO run the federal tax credit program on spreadsheets?
Small programs can try, but the federal rules add work that compounds: a separate account for qualified contributions, a unique number for every donor, income checks against area-specific thresholds, priority ordering, a 90% spending test, and an annual IRS report by donor number.
Who owns the donor data in SGO Desk?
The SGO does. You keep full access to every donor and every record, can export all of it at any time, and the donor relationship is always yours.
How much does SGO Desk cost?
A 1% fee on all transactions, with no setup fees.
Sources
- 26 U.S.C. §25F (statute text)
- Proposed regulations REG-117199-25, 91 FR 62818 (Oct. 2, 2026)
- IRS: Federal Scholarship Tax Credit (FSTC)
This guide is general information, not tax or legal advice. The regulations cited are proposed and may change when finalized.