A statewide education nonprofit is setting up a new scholarship organization so that North Carolina public school students can benefit from the Trump administration’s new federal school choice tax credit.
NC Education Corps, a statewide tutoring nonprofit, is creating a scholarship-granting organization that school districts and other groups could partner with when donations begin flowing next year, executive director John-Paul Smith told Carolina Journal.
“Yes, NC Education Corps is launching a statewide scholarship-granting organization to help North Carolinians make the most of it,” Smith said in an email.
The Education Freedom Tax Credit (EFTC) gives donors a dollar-for-dollar federal tax break — up to $1,700 apiece — for gifts to scholarship groups, known as Scholarship Granting Organizations (SGOs). About 93% of North Carolina students qualify under the program’s income limits, and the funds can pay for tutoring, summer programs, and other services for public school students, not just private school tuition. Donations begin Jan. 1, 2027.
School systems in Denver and Las Vegas are already moving to capture those dollars for their students. In North Carolina, as Carolina Journal reported earlier this month, no district or education nonprofit had announced plans to do the same.
Smith said there’s a reason for that. “Federal regulations and other operational realities will make it hard for many public schools and public education foundations to launch and manage their own SGO,” he said. “That could be a major roadblock to ensuring students benefit from EFTC funds. So, we’re creating an SGO that schools and others can partner with to benefit from the EFTC program without having to deal with the administrative burden of running their own.”
The barrier is written into the federal law: a scholarship-granting organization must spend at least 90% of its income on scholarships. The CMS Foundation, Charlotte-Mecklenburg’s district-affiliated nonprofit, told Carolina Journal that meeting the threshold “means completely restructuring our organization to make scholarships the primary focus.”
NC Education Corps is sidestepping that problem by building its scholarship arm as a separate nonprofit. “Separate nonprofit. Stay tuned for details,” Smith said.
The organization is not alone. A group in Columbus County told Carolina Journal it has formed a 501(c)(3) “with the purpose of providing tax credit benefits to the children of Columbus County” and is waiting for the state’s application process to be announced, calling the program “an amazing opportunity” for students in one of North Carolina’s poorest counties.
That application process doesn’t exist yet. The NC State Education Assistance Authority (NCSEAA) will approve and publish the state’s list of participating scholarship groups. So far, the agency’s only public guidance is a page posted Sept. 3 acknowledging that “federal regulations have not been finalized, and limited information regarding program requirements and administration is available.”
State law gives NCSEAA 120 days after federal regulations come out to finish its rules — and donations start counting Jan. 1. Depending on when Treasury acts, the state could still be writing rules when the money starts moving.
Smith said NC Education Corps met with NCSEAA executive director Mary Shuping and Bryan Jenkins, the agency’s director of audit services and government affairs, over the summer. “We’ll follow NCSEAA’s process once it’s posted and seek approval as soon as possible,” he said. “We are waiting to see the final rules from the US Treasury Department before making final design decisions for 2027.”
The money can also cross state lines. Under Treasury’s preview guidance, donors anywhere in the country can direct up to $1,700 to any approved scholarship group in a state that has opted in.
“Anyone — a grandmother, for example — living outside of NC could donate to an SGO providing scholarships to NC students,” Smith said. The catch is that this only applies if organizations exist in North Carolina to receive the funds.
“We are very fortunate to have a strong track record of managing public funds, partnering with schools, directing funds toward research-backed endeavors that improve student outcomes, and benefiting from bipartisan support,” Smith said. “All of this will be mighty helpful as we seek to keep EFTC funds in NC.”