Colorado public school foundations set up scholarship nonprofits to tap the federal tax credit
The Colorado Public Schools Foundation, the Denver Public Schools Foundation and RESCHOOL are creating separate scholarship granting organizations so that gifts under the credit of up to $1,700, which starts Jan. 1, can pay for tutoring, test fees and other costs of public school students.
Denver. Three Colorado groups that work with public schools are creating new nonprofits to receive gifts under the federal scholarship tax credit, to pay for public school students' tutoring, test fees and other costs, Chalkbeat Colorado reported on Oct. 6. They are the Colorado Public Schools Foundation, an association of district foundations; the Denver Public Schools Foundation; and RESCHOOL, which has given families “learning dollars” for more than a decade.
The credit, Section 25F of the Internal Revenue Code, starts Jan. 1, 2027: a taxpayer may claim up to $1,700 for cash gifts to a scholarship granting organization on a participating state's list. Colorado is on the IRS list of participating states for 2027. Under temporary rules published Oct. 2, each organization must be a 501(c)(3) public charity, or have its application pending, and register in a new IRS portal.
Tutoring, test fees and a fifth day
Antonio Parés, a consultant helping the groups, told Chalkbeat their planning began with questions such as whether the money could pay for after-school tutoring, Advanced Placement test fees or fifth-day programs in the more than 130 Colorado districts that hold school four days a week. The initial guidance does not say in detail how the money may be spent, but he said the answer seems to be yes.
Only about 20 of the state's more than 170 districts have foundations, said Shannon Hancock, chair of the Colorado Public Schools Foundation. Any district could sign an agreement with its new statewide organization so local taxpayers can send their $1,700 to that district, she told Chalkbeat.
The Denver foundation's website says its DPS Foundation Opportunity Fund, a scholarship granting organization backed by the district, applied to the state in the summer and expects to open for gifts on Jan. 1, 2027, pending state approval. It is to fund academics, activities and emerging needs.
The state's list
After the rules came out, Gov. Jared Polis's office named the Colorado Public Schools Foundation, the Denver Public Schools Foundation Opportunity Fund and the Learn Everywhere Fund among new scholarship organizations tied to public schools, The Colorado Sun reported. The office said the Colorado Department of Revenue will soon open the process for organizations and that it plans to send its list to the Treasury Department before January.
Mr. Polis told Chalkbeat the state has until December to vet the organizations and submit the list. The federal rules let a state electing for 2027 send it as late as Feb. 15, 2027.
Mr. Polis, a Democrat, enrolled Colorado this year. His successor will have to renew the state's participation in 2028 or it will lapse, Chalkbeat reported; Attorney General Phil Weiser, the Democratic nominee, has said he is a “firm no” on the program.
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