A potentially transformative new source of funding for yeshivos and Jewish families is set to become available in 2027, and leading Torah organizations are joining forces to ensure that the community can take maximum advantage of it.
Torah Umesorah and Agudath Israel of America have endorsed the Opportunity Fund for Jewish Education, a newly established national Scholarship Granting Organization, or SGO, designed to channel money from the new Federal Scholarship Tax Credit into scholarships for students attending yeshivos and Jewish day schools.
The endorsement followed extensive deliberations by Torah Umesorah’s Vaad Roshei Hayeshivos and Agudath Israel’s Moetzes Gedolei HaTorah, including a joint meeting at which the new federal program, the options available to the yeshiva community, and its potential impact on families and mosdos were carefully considered.
So how does it actually work?
Beginning January 1, 2027, eligible taxpayers will be able to contribute up to $1,700 annually to a recognized SGO and receive a dollar-for-dollar federal tax credit. In other words, unlike an ordinary charitable deduction that merely reduces taxable income, the credit can directly reduce a taxpayer’s federal tax bill by the amount contributed, subject to the program’s eligibility rules.
Through the Opportunity Fund, donors will be able to designate their contribution to a participating yeshiva or day school of their choice. The Fund has committed that 100% of every dollar designated to a particular school will be used for scholarships for students of that school, with none of the designated money being used to cover the Fund’s operating expenses.
The Opportunity Fund is an independent 501(c)(3) organization and has received broad backing across the Jewish communal spectrum, including Torah Umesorah, Agudath Israel, the Orthodox Union and Teach Coalition, Jewish Federations of North America, Prizmah, Chabad and the Rabbinical Assembly.
Why Create One National Fund?
The central thinking behind the initiative is scale.
An individual yeshiva can encourage its own parents, grandparents, alumni and supporters to participate. But a coordinated national effort can potentially reach hundreds of thousands of taxpayers, including people who have no existing connection to a particular school.
That distinction could be crucial. Rather than merely shifting money that existing donors would have given to yeshivos anyway, the objective is to bring new scholarship dollars into the Torah education system from a vastly larger pool of contributors.
At the same time, individual schools do not lose their ability to mobilize their own supporters. A parent, grandparent, alumnus or donor can still designate the contribution to the participating school he or she wishes to support.
Undesignated contributions, meanwhile, can provide additional opportunities to assist schools and families around the country.
Torah Umesorah says that after considering the alternatives, its Vaad Roshei Hayeshivos concluded that one strong national effort offered the best chance of maximizing the new federal program. Instead of multiple Jewish organizations creating competing systems and pursuing the same contributors, a single national SGO can provide the infrastructure and reach while allowing the actual scholarship dollars to benefit schools locally.
What Happens Now?
Although contributions under the new federal program will not begin until 2027, yeshivos can begin preparing immediately by educating and organizing their parents, grandparents, alumni and supporters.
Potential contributors can also pledge now to make their $1,700 contribution once the program goes into effect.
For the yeshiva world, where tuition costs place an enormous strain on both families and mosdos, the stakes are significant. If participation reaches the scale organizers envision, thousands upon thousands of $1,700 tax-credit contributions could translate into substantial new funding for Jewish education nationwide.
That ultimately drove the decision of the Vaad Roshei Hayeshivos and Moetzes Gedolei HaTorah: use the combined strength of the broader Jewish community to maximize an unprecedented federal opportunity, bring as many new dollars as possible into yeshivos, ease tuition pressures on families, and strengthen Torah education across the country.
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2 Responses
This is a very important tool introduced by Trump administration. Will work for schools in states where governors signed up for the program! Check yours. Also, it allows parents some control: please support schools with good torah, middos and job preparation and that will reduce student tuition based on this new income.
Nonrefundable Credit: The credit can reduce your federal tax bill to zero, but any remaining unused credit cannot be paid out as a cash refund. However, you can carry forward unused amounts for up to five tax years.
Key Restrictions
Cash Only: Only cash contributions qualify; donations of property or other non-cash assets are excluded.
No Double-Dipping: You cannot claim both this federal tax credit and a federal charitable deduction for the exact same contribution.
No Direct Designation: Donors generally cannot direct their money to pay for a specific individual student’s tuition.
No, corporations cannot claim the credit. Under Internal Revenue Code (IRC) Section 25F, the Federal Scholarship Tax Credit (FSTC) is strictly limited to individual taxpayers who are U.S. citizens or residents.
Key Details for Businesses
Entity Exclusion: Corporate entities, partnerships, and other businesses are explicitly prohibited from claiming this dollar-for-dollar credit.
Corporate Foundations: While corporations can still donate to approved Scholarship Granting Organizations (SGOs) through standard corporate giving programs, they are only eligible for traditional charitable tax deductions, not the federal credit.
Pass-Through Entities: Business owners of pass-through entities (like S-Corporations or Partnerships) may still utilize the credit on their personal individual tax returns, subject to the individual cap of $1,700.