How much does it cost to start an SGO? Startup cost & timeline estimator
Estimate what it costs and how long it takes to launch a Scholarship Granting Organization: incorporation, the IRS 501(c)(3) application (Form 1023 vs 1023-EZ), charitable-solicitation registration per state, and a registered agent, with a low-to-high range and a realistic timeline.
1023-EZ is cheaper & faster but limited to smaller orgs (≈ under $50k/yr projected).
States where you'll fundraise or seek a §25F listing. Most require charitable-solicitation registration.
Estimates of core government filing fees (IRS user fee, typical incorporation, registered agent, and per-state charitable-solicitation registration). Actual fees vary by state and exemptions. To be on a state’s §25F list, an organization must be authorized to do business in that state and follow its charity laws; registering an out-of-state organization to do business there carries its own fee, not included here. Budget separately for a bank account, insurance, the annual financial and programmatic audit in Treasury’s proposed rules (an outside professional when receipts top $500,000; a committee of independent persons at or below that), and software to run donations and disbursement.
How this works
- Choose your IRS path: Form 1023-EZ ($275, faster, for smaller orgs that qualify) or the full Form 1023 ($600, longer review).
- Add state incorporation, a registered agent, and charitable-solicitation registration for each state you'll fundraise in. To appear on a state's §25F list, Treasury's temporary regulations require the organization to be authorized to do business in that state and in compliance with its charity laws.
- We total a low-to-high estimate and show a realistic timeline to operating status.
- These are government-fee estimates; legal and accounting help (optional but common) is shown separately.
- Aiming for 2027? States submit their 2027 SGO lists by February 15, 2027 and may include an organization with a pending exemption only if it will take effect on or before January 1, 2027, so form the organization by then.
Questions, answered
1023-EZ or the full 1023?
The streamlined Form 1023-EZ costs $275 and is approved in weeks, but it's limited to smaller organizations that meet the eligibility checklist (e.g., projected gross receipts under $50,000/year for the first three years). Larger or more complex SGOs must file the full Form 1023 ($600), which typically takes several months.
Why does the number of states matter?
Most states require charitable-solicitation registration before you can fundraise there, each with its own fee and renewal. A single-state SGO is cheap to register; a multistate SGO stacks registration costs (and ongoing compliance) per state.
Is this all I'll spend?
These are the core government filing costs. Budget separately for legal/accounting help, bank setup, insurance, the annual financial and programmatic audit in Treasury's proposed regulations (an outside professional when receipts top $500,000; a committee of independent persons at or below that), and software to actually run donations, applications, and disbursement.
Learn more
- How to start an SGOThe complete, start-from-nothing guide to launching a Scholarship Granting Organization (SGO) for the federal Education Freedom Tax Credit (EFTC / ECCA / §25F): incorporating a nonprofit, getting an EIN, filing for 501(c)(3) (Form 1023 vs 1023-EZ, real fees and timelines), opening the required separate bank accounts, registering to fundraise, meeting every §25F operating rule, getting on your state's list, and a step-by-step checklist, written for founders with zero nonprofit experience.
- Scholarship Granting OrganizationsWhat an SGO is, how organizations get designated by their state, the 90/10 rule, what compliance looks like, and how donors and families choose between SGOs.
- SGO softwareWhat SGO software does and why the federal §25F 90/10 rule makes it essential: donor onboarding and identity verification, payment processing, per-donor §25F receipts, family applications and income verification, an award engine with renewal and sibling priority, separate-account fund accounting, state reporting, and an audit trail. A buyer's checklist, a build-vs-buy guide, and the four buying-decision questions, pricing model, fund custody, disbursement controls, and data portability, to ask any vendor before you sign.
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