CEO Notebook

When I first joined NBOA more than 15 years ago, accepting funding from state or federal entities was simply not done among the vast majority of independent schools, with the exception of learning difference schools and a few others with particular missions and contexts. Today, the policy landscape has shifted significantly, with legislation supporting school choice increasing at the state level over a number of years, and in 2025 at the federal level.

Last July, the passage of the One Big Beautiful Bill Act (OBBBA) created the federal scholarship tax credit (FSTC), which allows independent schools to receive funds for student tuition through Scholarship Granting Organizations (SGOs). This law is slated to go into effect in 2027, and while it promises some opportunities for independent schools, clarification of the law in various areas will maximize positive impact.

NAIS led the effort to develop a comment letter to the IRS, signed by NBOA as well as AISAP, CASE, E3n (EMA/ERB) and TABS. Here are a handful of the different areas we are collectively drawing attention to:

• As currently worded, SGOs funds can be used “solely within the state” they are received. This poses a problem for boarding schools, where students travel across state lines to learn, as well as for day schools in areas where state lines are densely populated, such as the Tri-State area or DC, Maryland and Virginia.
• The coalition is asking that lawmakers clarify that states opting into the FSTC program must share a complete list of all SGOs that meet statutory requirements. States should not selectively accept or exclude SGOs based on policy or political preferences.
• The coalition is asking lawmakers to ensure families can use scholarship funds for all qualified expenses. The law references a wide range of expenses, including tuition at private and religious schools, and excluding religious schools or restricting expense categories would violate statutory language and Supreme Court precedent.
• Regulations should clarify that no government entity may direct, control or influence the operations of SGOs or private/religious schools. Autonomy is essential to the mission and diversity of independent schools.
• The coalition is advocating for flexibility in SGO adoption, so long as structures do not conflict with statutory requirements, to improve use of funds and donor satisfaction. Flexibility could include:
  • setting scholarship minimums/ maximums
  • prioritizing lower-income families
  • allowing donor designation of schools when criteria are met

These are just some of the various matters addressed in the letter.

The goal is to preserve school independence while keeping student impact at the center.

Jennifer Osland, NBOA’s chief learning officer, who has been closely involved in this effort, notes: “School leaders, donors and recipient families should approach this new funding vehicle with equal parts optimism and rigor. SGOs may expand access and affordability, yet they raise questions about eligibility, allowable expenses, compliance, equity and long-term sustainability.”

Business leaders should also consider “donor incentives, funding flows and realities for recipient families and tuition payers” as they make “informed, mission-aligned decisions anchored in clear rules and transparent stewardship,” according to Osland. The goal is to preserve school independence while keeping student impact at the center.

Considering and working with government funding may seem familiar to you, if you’re in a state that has had SGOs for a while now, or still very new. If you’re looking for additional resources, NBOA has articles and webinars at the ready. In November 2024, NBOA’s Net Assets magazine shared stories of schools that had accepted state funding in various forms, and the advantages and challenges that came with those choices. Last year’s coverage of the OBBBA, in webinar and article formats, also touches on SGOs in the new federal law. And NBOA Connect is always an open and robust source for conversation among business office peers.

Rest assured NBOA will continue to follow these developments, and we will always participate in advocacy efforts on behalf of independent school business, finance and operations. Happy New Year to all in our community!

Jeffrey Shields, FASAE, CAE

NBOA President and CEO

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