Section 25F's primary mission requirement is one of the most practically important — and most frequently underestimated — compliance requirements in the formation process. Understanding what it requires, and what it does not require, is essential for any organization evaluating whether they need to amend their existing governing documents.
What the requirement says
The statute requires that the SGO's primary mission be to provide scholarships to eligible students. This is a narrower statement of purpose than the general 501(c)(3) "educational purposes" qualification. An organization that is a 501(c)(3) for educational purposes generally is not automatically an SGO with the required primary mission — those are different standards.
How the IRS reads "primary mission"
The IRS looks at primary mission through two lenses: what the governing documents say and what the organization actually does. An organization whose articles of incorporation describe a broad educational mission but whose operations are primarily scholarship-focused may satisfy the primary mission test in practice. But having governing documents that clearly state the SGO scholarship mission is the more defensible approach, and most states will look for mission language in governing documents as part of the approval review.
The amendment question for existing 501(c)(3)s
Organizations with existing 501(c)(3) status need to review their current articles and bylaws against the primary mission requirement. The question is not just whether the existing language could be read to support SGO operations — it is whether the language unambiguously establishes SGO scholarship as the primary mission.
If the existing primary mission language is: - "To provide scholarships to income-eligible students for qualified educational expenses" — this likely satisfies the test without amendment. - "To promote educational opportunities in our community" — this probably needs clarification. - "To support the educational, cultural, and social programs of [Diocese]" — this almost certainly needs amendment.
The amendment process for existing 501(c)(3)s typically involves a board resolution, an amendment to the articles of incorporation (which may require a state filing), and potentially notification to the IRS. This is a routine process but it takes time — it should be assessed early in the formation timeline.
New organizations
If you are forming a new 501(c)(3) specifically as an SGO, the primary mission question is simply a drafting issue — your attorneys will include the appropriate language in the founding documents. The formation and IRS review process for a new 501(c)(3) takes three to twelve months depending on the complexity of the application and IRS processing timelines. This timing interacts directly with your state approval timeline.
Church organizations
Churches and integrated auxiliaries that are automatically exempt from income tax under Section 501(c)(3) (without requiring an IRS determination letter) may be able to operate an SGO without the standard 501(c)(3) review process. The interaction between automatic church exemption and the Section 25F primary mission requirement is one of the regulatory questions that IRS guidance will need to address. Organizations in this situation should work carefully with qualified counsel.
Course outline
Module 02