Forget fun runs, PTA bake sales, and Saturday morning car washes.
The future of public school fundraising may soon look more like payroll deduction. Or perhaps door-to-door campaigns each tax season asking tax filers to direct their donations to support nearby public schools.
When President Donald Trump’s tax overhaul, known as the One Big Beautiful Bill Act last year, created the nation’s first school voucher-style program to help families pay for private schools or homeschool costs, it also allowed public schools to benefit as well. According to US Treasury guidelines released in June,The program allows specific nonprofit organizations to collect donations from their federal taxes for a wide range of public schools. costs, such as transportation or tutoring.
Sara Hazel, president of the Denver Public Schools Foundation, the fundraising arm of Colorado’s largest school district, is among a small but growing number of district leaders who said they plan to take advantage of the financial opportunity. She said she plans to tell potential donors, “Do you want this money to go to the IRS or to local children?”
The program works like this: Taxpayers can contribute up to $1,700 to what’s called a scholarship organization and receive a credit on their federal income tax. It is a dollar-for-dollar credit, meaning that each dollar pledged reduces by that amount what an individual owes to the Internal Revenue Service.
These new intermediaries could be formed by a collection of nonprofit organizations, including public school foundations, with their state’s approval. The organization awarding the scholarship would then pass the money on to the benefit to private school and home school applicants in the form of scholarships – or to school districts so they can cover certain services for student applicants.
Marguerite Roza, expert in school finances, informedSchool districts — many of which have patched up their shrinking budgets by closing campuses or issuing pink slips — can’t afford to ignore this new funding source. “Whenever a revenue source is available, we don’t typically see districts say, ‘No thanks,’” said Roza, director of the Edunomics Lab at Georgetown University.
States must adhere to the program and, so far, 30 stateswe did it. Now it’s up to school district leaders in those states to decide whether they want to try to tap into that money.
School finance experts suggest the grants could help districts access funding comparable to 3 percent of their total budget. But exploiting these unexpected revenues risks provoking political reactions and logistical problems. Governors and superintendents could face fierce resistance from teachers unions, which in many states have cast the new program as a Trojan horse for voucher expansion in education because it helps funnel money to families to fund private schools.
Some opponents also worry about creating a new funding system that could favor school districts with a pool of wealthy donors over those in low-income communities where few residents can dutyenough federal taxes to contribute to scholarships.
“In low-income areas, it’s not easy for school districts to raise this money,” said Thomas Toch, director of the FutureEd think tank at Georgetown University.
He expressed concern that the inclusion of public school districts in the legislation was little more than a ploy, a clever political strategy aimed at expanding school choice in states that would otherwise be unlikely to support it.
“It was designed to demonstrate that this program can support the public sector in order to gain support from blue states,” Toch said.
Related: 10 things to know about Trump’s new school voucher program
The tax credit’s scholarship mechanism represents a radical departure from the way the federal government supports schools.
Money intended for scholarships never flows into the coffers of the federal Department of Education, thereby entirely bypassing Congress and its spending decisions.
Treasury regulators will soon release formal rulesto install additional guardrails for the program. But the law suggests the grants could be used to cover a long list of expenses that public schools often struggle to fund, including costs like field trips, clubs, technology, textbooks or support services.
The inclusion of public schools now presents some governors, superintendents and school boards with a new dilemma: Do they choose to resort to a Trump-backed program that could improve their bottom lines, or do they leave tax credit money on the table for others to claim?
“The reality is this program exists, and if there’s money on the table that can go to our kids and our families, I don’t see the point in not trying to do everything we can,” said Justin Dayhoff, chief financial officer of Nevada’s Clark County School District, which includes Las Vegas.
His district, like many others around the country, is strapped for cash as health insurance and other costs rise and fewer students enroll in public schools due to population decline. Enrollment in Clark County — the nation’s fifth-largest district — has declined by more than 35,000 students, or 11%, since before the pandemic. The school system eliminated approximately 1,200 positions, primarily through attrition and retirements, ahead of this new school year.*
Related: Arizona gave families public money for private schools. Then private schools raised tuition fees
It remains to be seen what financial difference the voucher-style program would make to school districts.
Some school finance experts expect soliciting donations to be as simple as districts partnering with employers to enroll their workers in the tax credit program, perhaps in another form in their regular HR documents. (Many employers already partner with nonprofits like United Way to collect pre-tax donations from paychecks.)
Roza, of Georgetown, estimates that a district could earn about $200 per student just by enrolling its own employees in the program. Convincing big companies to do the same — directing profits to nonprofits supporting students who attend local public schools — could boost that number. City and county governments could also participate.
“Local employers are an absolutely critical piece of this puzzle,” said Hazel, of the Denver Public Schools Foundation.
His organization has yet to officially contact any of its corporate partners about enrolling their employees in the tax credit program. (Past donorsThe foundation includes Chevron, the Colorado Rockies and United Airlines.) But Hazel already wonders whether Denver Public Schools will have to compete with other Colorado districts to try to court the same business leaders.
“We’re the largest school district in Colorado, so we already have an advantage,” Hazel said. “But how do we go to a company and say, ‘Your employees have to choose between all these big school districts?’ » »
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But his new fundraising plans will face serious operational obstacles.
Under the new law, at least 90 percent of all donations to scholarship-granting organizations like Hazel’s must go directly to scholarships, leaving relatively little room to cover marketing, staffing, annual independent audits and payment processing. Fees already make up 4% of each credit card transaction, Hazel said.
Yet even as she awaits clarification from Treasury on how organizations can raise donations, she imagines what that money could mean for Denver schools.
“My dream is to be able to give every second grader a tutor and bring everyone up to grade level in reading and math,” Hazel said. “There are things like that that are very scalable and could help every student.”
*Correction: This story has been updated with the correct number of positions eliminated in the Clark County School District.
Contact staff writer Neal Morton at 212-678-8247, on Signal at nealmorton.99 or by email at morton@hechingerreport.org.
This story about the One Big Beautiful Bill Act was produced by The Hechinger reportan independent, nonprofit news organization focused on inequality and innovation in education. Register at Hechinger Newsletter.
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