What is the Georgia QEE Credit Program?
This program was created by the Georgia General Assembly in 2008 to help expand school choice in Georgia and give Georgians more control over how their education dollars are spent. Within certain limits, it allows individuals, families and businesses to make dollar-for-dollar tax credit donations to private schools, including private schools they designate.
Who can make such tax-credit donations?
Any individual, couple or corporation that has a Georgia income tax liability.
How does it work?
Under the Georgia QEE Credit Program, the State of Georgia establishes a ceiling on the total amount of tax credits it will allow for each calendar year. For calendar year 2013, the ceiling was set at $100,000,000. Georgia taxpayers who want to make donations under this program must file a pre-approval form with the DOR directly or via a qualified SSO such as GaSSO. The SSO then submits the form to the Georgia Department of Revenue for approval, and GADOR approves the applications on a first-come, first-served basis. For calendar year 2013, all $100,000,000 in available tax credits were approved by early May – less than halfway through the calendar year and the earliest the ceiling has been hit. For calendar year 2014, the total amount of tax credits GADOR will award has again been set at $100,000,000. As a practical matter, taxpayers interested in participating in this program should plan to apply for the tax credit as early in 2014 as possible; in 2013, GaSSO received approximately $500,000 in offered donations after the GADOR ceiling had already been hit.
What are the limits? How much can I donate?
Until the state’s annual cap is reached, married couples filing jointly can make dollar-for-dollar tax-credit donations of up to $2,500 per year or their Georgia income tax burden whichever is less; married individuals filing separately can donate up $1,250; unmarried individuals can donate up to $1,000. C-corporations can make tax-credit donations equal to as much as 75 percent of their Georgia income tax obligation, and members of LLCs, ‘S’ corporations and partnerships with pass-through income can donate up to $10,000.
What students are eligible for these scholarships?
See the section titled Student Eligibility.
What is a Student Scholarship Organization, or SSO?
The law establishing the Georgia QEE Credit required that non-profit corporations, called Student Scholarship Organizations (SSOs), be created to manage the donations between taxpayers making the donations and the private schools receiving them. The SSOs have to be incorporated as 501(c)(3) non-profit organizations and have to be approved by the Georgia Department of Education each year to participate in the program.
How do the SSOs operate financially? How much of the donations do you keep?
Under the state law governing the program – which takes affect in 2019 – SSOs can retain up to 8 percent of the first $1.5 million in donations they receive for operational purposes; for donations between the $1.5 million and $10 million levels, SSOs can retain only six (6) percent of the total for operational purposes, and the amount that may be retained continues to decline as the total amount of donations rises beyond the $10 million level.
Doesn’t this mean that the later I wait to donate, the more of my donation will go to the actual scholarship rather than to administration of the SSO?
The stepped or tiered administrative funding levels are new to the SSO program, having been enacted into law in 2013. GaSSO will develop a formula or policy for effectively leveling donations for all schools, regardless of when the donations are made or received. Our objective is to eliminate this unintended incentive to delay donations, which, of course, could put prospective donors in danger of having their donations rejected because they may be requested after the annual cap has been hit. This is, however, a work in progress, and we will update our website and partners as our plans develop.
How can I be sure that my donation will be used for a scholarship and that it will reach the designated school?
While different SSOs follow different protocols and procedures, GaSSO takes several steps to ensure that your donation is used as you intended. First, we protect your money; we don’t even deposit your check or charge your credit card until GADOR approves your tax credit. Then we deposit it in a risk-free government-backed account before transferring the funds to the school of your choice; this usually happens within three business days of receiving the school’s approved scholarship application form. In addition, the state requires all SSOs to have a complete audit of their accounts by an independent CPA within 120 days of the end of their fiscal year. And a report is submitted annually to the Department of Revenue confirming all valid tax credits for the year.
When and how are scholarships awarded?
At the beginning and middle of each month, GaSSO’s partner schools receive an update with the amount of funds immediately available to them for scholarship awards. To receive an award, the school submits a completed scholarship application form to GaSSO. Within three days of receiving the approved scholarship application form, GaSSO sends the scholarship award check to the school. Under GaSSO’s procedures, scholarship awards are made continually throughout the year as donations are received. GaSSO’s process – from filling out an application to securing GADOR approval to sending funds to schools – allows donations to be applied to scholarships in as little as two weeks.
Can a donor designate a specific scholarship recipient?
No. A donation that is directly or indirectly designated for a particular individual – whether or not that individual is a dependent of the donor – is considered as being made to the individual and not to the SSO. As such it is not eligible for the qualified education expense credit. This is consistent with the federal government’s treatment of charitable contributions. Further, recent changes to state law expressly forbid SSOs from in any way suggesting that donations may be targeted to specific students.