Choosing a high quality SGO matters. Beginning January 1, 2027, the Education Freedom Tax Credit (officially the Federal Scholarship Tax Credit) offers a dollar-for-dollar credit of up to $1,700 per taxpayer. Married couples filing jointly can receive up to $3,400. To qualify, donors give cash to a Scholarship Granting Organization (SGO) on a participating state’s list.
WHAT ARE SCHOLARSHIP GRANTING ORGANIZATIONS AND WHY DO THEY MATTER?
For every dollar a donor gives to an SGO, up to the limit, the donor pays one less dollar in federal income tax. This assumes the donor owes at least that much in federal income tax. As a result, tax credits are much more valuable than charitable tax deductions.
In turn, SGOs provide Education Freedom Scholarships to eligible K-12 students. Families can use them for tuition, tutoring, special-needs services, books, supplies, computers and other qualified expenses.
Treasury projects that donors will give billions of dollars to SGOs each year. However, this great opportunity also brings a critical challenge: quality control. The federal regulations issued in October 2026 add registration and reporting requirements for SGOs. Even so, donors and families still need guidance on which SGOs operate with integrity, transparency and impact. Without safeguards, waste, fraud and abuse could undermine the promise of this initiative.
AAA Scholarship Foundation (“AAA”) has been a highly respected and successful SGO since 2010. Over that time, donors, parents and regulators have trusted AAA with hundreds of millions of dollars for educational scholarships. Our mission has always been to make every donated dollar deliver meaningful educational opportunity. AAA’s new SGO Navigator initiative builds on that commitment. It aims to protect families and strengthen the integrity of educational choice nationwide.
HOW TO IDENTIFY A HIGH QUALITY SGO
As you begin to navigate the world of SGOs, we encourage you to work with experienced organizations. Look for SGOs that promote quality choices, share your values and have a proven record of accountability. To help with your due diligence, ask each SGO you are considering these questions:
- Audits: Has the SGO received clean (“unqualified”) audits or reviews for the past three years?
- Fundraising: Has it shown success raising scholarship funds?
- Leadership: How much experience does its staff have running nonprofit organizations?
- Implementation: What is its record of rolling out new scholarship programs?
- Scale: How many scholarships did it award last school year, and for what total amount?
- Ratings: Does an outside party, such as Charity Navigator or GuideStar/Candid, endorse its practices?
- Reputation: What do parents, schools and donors say about their experience with it?
- Operations: Does it outsource technology or customer service to third parties?
- Insurance: What types and levels of insurance does it carry?
HOW AAA MEASURES UP AS A HIGH QUALITY SGO
AAA tax credits are dollar-for-dollar tax reductions that federal and state governments offer to encourage investment in K-12 scholarships. These scholarships provide lasting social and economic benefits. Below are AAA’s answers to each question.
Audits. Yes. Here are our unqualified financial and operational audit reports for the past five years.
Fundraising. Yes. Our IRS Form 990 filings for the past five years show continued success in raising scholarship funds.
Ratings. AAA holds a Platinum rating from GuideStar/Candid and a Four-Star rating from Charity Navigator. The GuideStar Platinum Seal reflects the highest level of nonprofit management practices. Similarly, Charity Navigator’s Four-Star Rating designates AAA as a “Give with Confidence” charity that uses its donations effectively.
Insurance. AAA carries $2 million of general liability coverage. We also carry $1 million of nonprofit directors and officers’ liability and employment practices liability coverage. In addition, we hold $1 million of crime and theft coverage, including computer fraud, and $500,000 of workers’ compensation and employers’ liability coverage.
EXPERIENCE AND SERVICE
Leadership. AAA’s leaders have run education nonprofits since 1998 and administered educational scholarships since 2002.
Implementation. AAA’s staff rolled out the Florida Tax Credit Scholarship Program (2002), the Florida Personal Learning Scholarship Program, now known as FES-UA (2015), and the Nevada Opportunity Scholarship Program (2015).
Scale. During FY23-24, AAA awarded 11,826 scholarships worth $69,605,983, plus $69,850,000 in grants.
Reputation. Outside stakeholders consistently report high to very high satisfaction with AAA.
Operations. No, we do not outsource. Our customer service representatives are our own U.S.-based employees. In addition, we use our own proprietary Scholarship Management Platform to control quality, efficiency, communications and compliance directly. Be wary of SGOs that outsource these critical processes. Doing so carries unique risks that can undermine reliability, security and the trust of regulators and stakeholders.
As a high quality SGO, we look forward to working with you to put your federal tax credits to work for the next generation of Americans.
EXPERIENCE
AAA has administered over $800 million of tax credit scholarships and education savings accounts (“ESAs”) since 2010. As a result, we are one of the most trusted names in education tax credits. Let us help you learn how to invest in education tax credits.
IMPACT
AAA has used tax credit funding to help tens of thousands of economically disadvantaged students access quality K-12 options. These scholars go on to help their families break the cycle of generational poverty, revitalizing communities and local economies.
By investing in AAA tax credits, our donors know their redirected tax dollars help children in underserved communities access a high-quality education. That education can set them on the path to future success, help them contribute back to their communities and allow them to participate more fully in the American dream.