Leveraging the Federal Education Tax Credit: The Role of Philanthropy in Catalyzing Scholarship Granting Organizations

September 29, 2026
Leveraging the Federal Education Tax Credit: The Role of Philanthropy in Catalyzing Scholarship Granting Organizations

This session was the fourth in a series on the new federal scholarship tax credit, co-hosted by the Alliance for Youth Thriving and the Campaign for Grade-Level Reading (CGLR). Moderator Ron Fairchild with the Smarter Learning Group and CGLR framed the conversation: 30 states have opted in and scholarship-granting organizations (SGOs) can begin receiving eligible contributions January 1, 2027. He described the opportunity by noting that if 10% of eligible donors take part, contributions could reach about $18.8 billion. Fairchild urged funders to be pragmatic and to make sure children furthest from opportunity are not left out.

Clark Casteel of the Danville Regional Foundation (DRF) gave background about DRF’s place-based focus and outlined the ways the foundation and its board made the determination to support an SGO in the region. DRF partnered with the United Way of Danville and Pittsylvania County, which already anchors the region’s out-of-school-time network. The board approved about $120,000 in initial funding; with a three-year runway once final rules are set.

Angie McPhaul with Gary Community Ventures described a pilot, MySPARK, in Denver that has given more than 3,000 free and reduced-price lunch eligible students $1,000 scholarships to use for afterschool and summer learning and enrichment. McPhaul said they saw increases in students’ sense of belonging, connection, and opportunity to pursue interests. The success of the pilot has compelled Gary to consider how to take advantage of the Educational Freedom Tax Credit (EFTC), bringing people together to learn more about starting an SGO and supporting with legal help SGO staffing, with a focus on public school foundations.

Fred Jones, Jr., with the Southern Education Foundation (SEF) explained that the foundation has long opposed public funding for private schools, citing voucher programs’ segregationist origins and weak academic results. It urged governors not to opt in to the EFTC, but once 15 of its 17 states did, SEF launched a multistate alliance of SGOs that serve only public school students, providing technical assistance and quality support. Jones also flagged possible risks to consider and ways to mitigate some of those risks with, for example, “hold harmless” commitments to protect public school funding.

The panelists then discussed ways that national funders could use their national platforms and influence. They also addressed questions about making the case to blue state governors and how providers who offer services for free may be able to show eligibility.

McPhaul wrapped up the conversation on this positive note, “If this can help make afterschool and summer learning not a nice-to-have but a must-have — and we fund it like that — then we will have done something really remarkable. I’m hopeful we can band together and continue to ensure that’s how these dollars are spent.”

Note: On October 1, 2026, the U.S. Treasury released the proposed regulations for the federal scholarship tax credit.

Watch previous sessions in this series: 
Leveraging the Federal Education Tax Credit: State-Level Decisions That Will Shape Impact
Leveraging the Federal Education Tax Credit: Identifying and Preparing Scholarship-Granting Organizations
Parents as Curators of Their Children’s Education: Opportunities & Implications of a New Federal Education Tax Credit

“This could be an opportunity to have universal high-impact tutoring, universal afterschool programs, and universal summer learning. Our focus is on improving academic growth and achievement, so I think we have to be intentional about growing the capacity of SGOs to target those resources and services to historically underinvested students.”
– Fred A. Jones, Jr., Southern Education Foundation