Who Can Start an SGO

Any organization that meets the federal structural requirements and receives approval from a qualifying state can operate as an SGO. In practice, five types of organizations are driving most SGO formation activity.

Diocese and Catholic school networks

A diocese that wants to fund scholarships across its school network is the canonical SGO use case. The organizational structure is favorable — a diocese typically has 501(c)(3) status, an established donor base built through decades of parish giving, and a clear scholarship mission. The compliance challenges relate to scale: managing income verification, award decisions, and earmarking compliance across a large, distributed network of schools.

Faith-based nonprofits and churches

Evangelical churches and faith-based nonprofits often want to fund scholarships for students at schools aligned with their mission, or for students in qualifying educational enrichment programs. The formation path depends heavily on the organization's existing 501(c)(3) status and primary mission language.

Private school consortiums

Groups of independent schools that would each be too small to justify standalone SGO infrastructure sometimes form consortium SGOs — a shared organization that serves multiple schools' scholarship populations while splitting administrative costs. The governance design of a consortium SGO is complex, particularly around how award decisions are made independently of the competing schools' preferences.

Community foundations and civic organizations

Community-based organizations serving income-eligible students in specific neighborhoods are well-positioned for the SGO model if they can develop the individual donor relationships the program requires. Many have existing family trust and community outreach infrastructure — what they lack is the donor development and regulatory compliance infrastructure.

Public school–adjacent nonprofits

Organizations that want to fund tutoring, enrichment, and supplemental academic services for public school students face the most structurally complex SGO use case. Most compliance frameworks assume private school context; public school applications require careful expense categorization and strict governance independence from the district.

The organizations that should not rush

Not every organization that can start an SGO should start one immediately. Organizations whose state has not yet opted in, organizations with very limited individual donor bases, and organizations that underestimate the ongoing operational requirements of a compliant SGO sometimes start the formation process before they are ready. This leads to either incomplete compliance or abandoned programs — both of which are costly outcomes.