10/15/2026
Iowa's new Catholic scholarship fund can raise money from donors who have never set foot in Iowa.
Iowa's four Catholic dioceses have formed the Iowa Catholic Scholarship Granting Organization (SGO) under the new federal Education Freedom Tax Credit, which starts January 1, 2027. Iowa's governor has announced the state is opting in. U.S. citizens and residents anywhere in the country can claim a dollar-for-dollar federal credit of up to $1,700 per person for qualified contributions to SGOs in participating states, even if their own state hasn't opted in.
For scholarship and school-choice leaders, that changes the job. When your donor pool is no longer limited to one state, the question stops being "how do we administer this?" and becomes "who are we actually trying to reach, and why would they choose us?" That's a strategy problem, not a paperwork one.
A few implications we see:
• Every donor now has a choice to make. The credit is capped per taxpayer, so each donor has a limited amount of credit to place, and it can go to an SGO in their own state or one across the country. A donor in Texas or Florida could choose an Iowa SGO as easily as one closer to home. That likely makes competition for mission-aligned donors much less local. Organizations that define their natural out-of-state network early (alumni, former parishioners, families who moved away) could have a real head start.
• The credit may get attention, but it won't build loyalty on its own. Donors who give mainly for the credit could direct it elsewhere next year. The organizations most likely to keep donors are the ones that make the case for their students and schools, not just the tax benefit.
• This is likely to be a volume game. Donors can give more than $1,700, but only up to $1,700 per person earns the credit. If much of the credit-driven giving lands at or below that level, hitting a meaningful scholarship goal could mean reaching a lot of donors. That's why a real campaign calendar, clean donor data, and follow-up systems need to be in place before 2027, not built during it.
This is the kind of challenge Tower K helps mission-driven organizations work through: donor strategy, campaign development, messaging, and the infrastructure that turns a new giving incentive into lasting support.
