What should a donor check before giving to a scholarship granting organization?

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Start with the list, because the list is what makes the credit possible. For the year of your gift, the organization must appear on the official SGO list of a covered state, meaning a state that has elected to participate for that year and submitted its list to the IRS. For 2027 those dates are set by the temporary regulations in force now (T.D. 10057): state advance elections by January 1, 2027 and state SGO lists by February 15, 2027. An organization that is a fine charity but is not on a state list for that year cannot generate a section 25F credit for your gift, so check the state's official list, and the IRS Federal Scholarship Tax Credit page that tracks participating states, before you give rather than after.

Next, check what the organization is. Under section 25F(d), a qualifying SGO must be an organization described in section 501(c)(3) and exempt under section 501(a), and it must not be a private foundation. You can verify tax-exempt status, and whether the IRS classifies the organization as a public charity or a private foundation, in the IRS Tax Exempt Organization Search, searching by its legal name or, more reliably, its employer identification number. The statute also requires an SGO to keep qualified contributions in separate accounts rather than mingling them with other money, to spend at least 90 percent of its income on scholarships for eligible students, and to verify the household income and family size of students who apply.

Finally, check how it awards scholarships and how it will document your gift. By law an SGO must award scholarships to at least ten students who do not all attend the same school, must give priority first to students renewing a scholarship from the year before and then to their siblings, and must not earmark or set aside a contribution for any particular student, including your own child. If an organization offers to direct your gift to one named student, that is a warning sign, not a feature. Before giving, confirm it will take a cash gift designated for section 25F and will give you the written acknowledgment the credit requires, and keep that acknowledgment with your tax records. If any of these checks fails, give elsewhere or give without expecting this credit, and for a large gift confirm your position with a qualified tax professional.