How Can Public Schools Benefit from the Education Freedom Tax Credit? | Antonio Parés

In this episode of the Getting Smart Podcast, host Nate McClennen sits down with Antonio Parés, founder and principal of Walnut Hill Workshop, a strategy studio working at the intersection of education, philanthropy, and civic life. Together they unpack the Education Freedom Tax Credit, or EFTC, a landmark provision in the One Big Beautiful Bill that creates a dollar-for-dollar federal tax credit of up to $1,700 per filing for donations to approved scholarship-granting organizations. With Treasury rulemaking expected in late 2026 and the program set to launch in 2027, the conversation is both timely and urgent, particularly for public school leaders who may not yet realize how well-positioned they already are to take advantage of this new funding mechanism.

Antonio walks through the mechanics of how scholarship-granting organizations work, the history of Coverdell Section 530 expenses that underpin eligible costs, and the critical 90/10 rule that will shape how both new and existing nonprofits structure themselves. The conversation covers what superintendents should be doing right now, from mapping eligible fees and expenses to thinking strategically about donor mobilization through payroll systems, back-to-school campaigns, and community partnerships. Perhaps most striking is the picture Antonio paints of Colorado, where charter schools, district foundations, advocacy organizations, and philanthropies are finding rare common ground, building shared SGO infrastructure and recognizing that public education, with its deep roots in community trust and its vast network of parents, alumni, and civic partners, may be the sector best built to turn this tax credit into real, durable opportunity for kids.

Transcript

Nate McClennen: Welcome to the Getting Smart podcast. I’m Nate McClennen, excited to be here today with my friend Antonio. We’re going to dive deeply into what’s called the Education Freedom Tax Credit, or the Federal Tax Credits for Scholarships, sometimes abbreviated as FTCS.

This is a big deal. It’s emerging in January of 2027. Essentially, the quick summary — and we’ll dive more into this with Antonio — is a $1,700 tax credit per tax return. You donate to a local scholarship-granting organization in your own state, if your state has approved it. The state approves these scholarship-granting organizations, who then can re-grant that money to learners in their area who qualify.

Typically, that’s under 300% of the area median income level. There’s a bunch of other rules we’ll dive into, but the big thing I want to unpack today with Antonio Parés is really thinking about what this means for the public sector specifically. So we’re going to dive in, ask a bunch of questions, talk about it, riff back and forth, and hopefully leave with some real action steps for public school folks who are listening and want to take this on, since it’s emerging really, really quickly.

So welcome. Antonio Parés is the founder and principal of Walnut Hill Workshop. I’ve known Antonio for a long time. Walnut Hill is a strategy studio focusing on all things education — organizational strategy, new ventures, public policy, advocacy, and communications across education, philanthropy, nonprofit, and civic life.

Antonio’s been involved in a lot of things, especially in the Colorado area, and with Teach For America and the Charter School Growth Fund. So I’m really excited to catch up — we haven’t had a chance in a while. Welcome, Antonio. Good to see you again.

Antonio Parés: Thank you, Nate. Thanks for having me. I’m excited to be on the pod with you all.

Antonio’s Background: Student Government and Formative Learning

Nate McClennen: Awesome. I’m going to start with the same question I ask everybody on the podcast. Growing up — you grew up in the Denver area, I think — what was your most memorable, most engaging K-12 learning experience? By “engaging,” I mean the one where you learned the most, felt the best about it, et cetera.

This could be out of school, in school, anything. So start us off with that, just to get to know you a little better.

Antonio Parés: Sure. Yeah, I’m from just north of Denver — the Front Range, the Northern Front Range. I grew up in Fort Collins and Longmont, and I went to CU Boulder.

So I like to think of myself as a good northern Colorado boy, a Boulder County kid at heart, still, all these years later. I feel very lucky — I was in public education, and I had incredible access to great schools and great programming. But the truth is, when you ask this question, the thing that comes to mind is being a member of student government in high school.

I entered student government as a junior and became student body president my senior year. I name that specifically because it was probably one of the first times an adult wasn’t guiding me. There was a club sponsor — a student government sponsor, Ms. Holly Stetson, by the way.

I still remember her. If I ever bump into her again, I’ll always thank her, because it was great. It was us who decided — the students drove a lot of our decisions, the way we thought about bylaws. We changed bylaws. We took votes on things.

And when I think about the kind of skills you use as an adult, the things that happened in there — communicating with people, advocating for ideas and issues, building coalitions, communicating clearly, being a strong listener, being able to convince folks of your ideas or co-create something so they’re bought in with you —

— which, of course, if you talk to anybody who was in student government with me, led to me very sneakily becoming student body president with only one year of student government experience, which wasn’t originally allowed at Longmont High School. But I amended the bylaws to allow it during my junior year, and I became student body president.

I’d argue that a lot of the skills, experiences, and practices we used during that time came into play later — when I was in college, when I interned at the state capitol with state legislators, when I worked on political campaigns. I think about the executive skills that really undergird a lot of what we do well in our professional careers, what makes us strong.

I could point back to Ms. Holly Stetson and student government at Longmont High School.

Nate McClennen: Awesome. I’m a fellow student government participant — I was class treasurer, helping support that whole system. Reflecting back, I think it’s the same thing: agency. For the first time, we had decision-making power, and we could self-govern. And then purpose — we were actually doing things that mattered. So I’d also say that was one of my more memorable experiences. I have this distinct memory of running candy sales to fund various activities. I had pockets full of cash because people were buying chocolate bars for two dollars a box, so I had some experience in banking, too, in that process.

Antonio Parés: Awesome. We led the concession stands during our basketball games our junior year, and we had to come up with marketing campaigns, price points, all of that stuff. Totally agree — I never thought about it quite this way before.

Nate McClennen: Yeah, and what’s interesting is that student government has really persisted in schools for a long time. It’s a great way to learn all these — well, we’re now calling them durable skills, transferable skills. But also, what does it mean to run a business, market a business, and engage civically — all the things we know matter in the world.

Antonio Parés: Totally.

Nate McClennen: Well, good — a little bit of a digression, but thanks for sharing. All right, so your newest endeavor is really thinking about Colorado and statewide scholarship-granting organizations.

The Basics: What the Education Freedom Tax Credit Actually Does

Nate McClennen: I gave a brief preamble at the beginning about the law — what else would you add or reinforce? It feels like it’s still emerging, since the rulemaking is happening at the federal level, but everyone’s trying to prepare at the same time — I’ll put “everyone” in quotes, because I want to talk about that. What are the fact-based pieces you know are important, thinking about the audience of public sector folks listening right now — what should they do? So let’s start with the background and the facts.

Antonio Parés: Yeah. I think one important thing to understand is what happened at the end of last year — September, October — in the “One Big Beautiful Bill”: the introduction of the tax credit, Section 25F, is the language.

It points to an existing set of expenses that people refer to as Section 530 in the Coverdell language, which gave rise to scholarship-granting organizations almost 30 years ago. One thing I always like to point out is that the 501(c)(3)s we’re calling scholarship-granting orgs have existed in different shapes for a while — many doing private school tuition, but also covering fees related to going to school: transportation, uniforms, AP exams, CTE.

Those things have existed for a while. The difference is there was no incentive at the federal level to give to those SGOs above and beyond what we’d normally do when contributing to a nonprofit. And if you’re someone who takes the standard deduction and doesn’t itemize, that incentive didn’t really matter anyway. But the difference now is they’ve incentivized us — as individual donors — to give up to $1,700 (you could give more) and get a dollar-for-dollar tax credit that reduces your federal tax liability. Sometimes people get a little wigged out about that, so I explain it this way: you have the chance, as a donor, to say to the federal government, “I’m going to take up to $1,700 of my federal tax liability and direct it into a nonprofit that’s going to redistribute that money toward kids, communities, programs, schools, or areas of interest that I care about.”

I always tell people it feels a bit like small-p philanthropy for a lot of us who’ve never quite had this kind of tax incentive to give before. The other way to think about it: you’re redirecting federal taxes back into a local tax base, almost. In some ways it’s not that different from local taxes — you’re just getting to choose where the money goes.

So that’s one thing I help people understand. The new component is the tax credit itself, and some of the additional language added around it — that this has to be additive to a kid’s K-12 education. That’s new language that didn’t quite exist under Section 530, which we should talk about, because it may shift what counts as an eligible expense.

Not everything listed under 530 may perfectly fit the new federal tax credit’s expectations. Another important thing for people to recognize, to your point, is that there are still things we’re waiting on. It could be $1,700 per tax filer — or per filing. So, is it $1,700 per person? That hasn’t been determined yet. I tell people that later this month — middle to late September — we should have the majority of Treasury’s guidance for the 2027 tax year.

But I think it’s important for people listening now, or in the future, not to wait until they hear the final guidance. Treasury gave us a preview back in early June — Kevin Salinger has been speaking on their behalf about this. It’s pretty clear what’s currently probably possible, with plenty of gray area to think and play in, which I think is good, because we should be thinking innovatively and differently to help everyone understand what could be possible. I’d rather pull some ideas back now than have to unwind everything I built in October.

So I think people — especially public ed folks — should be thinking about this now. Another important thing, and something we talked about in Colorado — this is why Governor Polis was the first Democratic governor to opt into the federal program — is that if there are no eligible SGOs in Colorado, nothing stops me, as a donor, from sending my $1,700 to an SGO in another state and still getting the tax credit.

I personally taught in South Texas — I started my career in education as a teacher at a charter school in the Rio Grande Valley. If there were a scholarship-granting org supporting the communities I once worked in there, but none eligible in Colorado, I’d send my $1,700 to Texas instead.

I’d still get the tax credit and lower my federal tax liability. The only difference is local folks in Colorado miss out on my money — there’d be no one for me to give it to. So that’s important for states, governors, and legislators who are sitting on the edge, waiting, to think about. Why let your donor base — your taxpayers’ money — flow to another state?

And the other thing: let’s not pretend — this was written by people who care a lot about private schools, private school tuition, vouchers, and ESAs. I say that as a fan of many forms of school choice.

I’m a public ed guy, with almost 20 years in education, and I’m still a big fan of letting people choose, of finding the right environment and the right school. So I’m in favor of all that. But this law is written to include the kinds of expenses and fees that public schools, public students, and public ed currently incur, or that parents of kids in public schools incur — and I think we should treat those as separate buckets, because people sometimes conflate them.

So this is, in a real sense, written for public education to take advantage of. And when the Senate decided to cap this at $1,700 — meaning you can’t get a dollar-for-dollar credit above that amount — it became a small-dollar donor campaign. This isn’t about big checks; it’s a small-dollar game.

And who has access to tons of small givers who already have trusted, established relationships with them? Public education. I think public education is incredibly well-positioned to take advantage of this tax credit, because they’re sitting on the parents, the staff, the grandparents, the alumni, the community partners, the business partners — the donor base — that they could drive toward an SGO. Those donors get the federal tax credit, and that money gets redirected. Hopefully, if you’re the school or district advocating to your donors to give to an SGO, that money flows back into your community and your schools, covering expenses that K-12 or parents of K-12 kids already cover.

I don’t think people in public education should be sleeping on this. I think they should see it as something that was actually very well-written for them, honestly. That would be my addition to what you said.

How the Tax Credit Works for Donors

How the Tax Credit Works for Donors

Nate McClennen: No, I love it. Okay, a couple of clarifications — I think I got that; it was really well articulated. Just functionally: say I’m up in Wyoming, and an SGO starts in my community that’s going to give back to, let’s say, the public schools in Teton County School District. My wife and I file jointly, and say it’s $1,700 per filing — so $1,700. I make the donation separately, get a receipt, and then get the credit directly back on my tax return when I file. So it’s a net zero for me. I guess that’s the first thing.

Antonio Parés: Yes, I like that — it is a net zero for you. It costs you nothing extra. You’re putting that $1,700 into a local nonprofit, or some SGO nonprofit elsewhere in the country — as long as it’s on an eligibility list. But if you and your wife decided to give to a local SGO in Wyoming that wanted to redirect those dollars into fees and expenses for local kids, you could — and your federal tax liability would decrease. Net zero for you, big gain for your local community. You’d give, say, in 2027, get your tax receipt, and use it when filing your taxes, usually in early 2028, for the 2027 tax year.

Nate McClennen: Gotcha, gotcha. Okay, second clarification question: when the SGO gets my donation, do they then give that money out to third-party intermediary providers, or directly to the parent — like cutting a check to the parent for whatever the amount is, say $2,000, and the parent decides what to spend it on: public school district fees, tutoring, whatever? Or does the SGO give directly to the intermediary? Or is that not defined yet?

Antonio Parés: That’s a great question. It is somewhat defined, in the sense that SGOs have existed before, so we already understand how the money flows. The answer is, it’s all of the above. You can be an SGO that puts that money into a wallet, into the hands of a family — or, like they do in Arizona, potentially a debit card model — as long as there’s a predetermined marketplace, and the family can direct that money to an eligible expense sitting in their “wallet,” so to speak, waiting to be used.

You could also provide it as a scholarship that goes directly to the provider the family chose. If a family chose a tutoring program at their local public charter school or district, the SGO could direct that scholarship straight to the provider.

For districts and charter schools running eligible expenses at scale, you could submit to an SGO a list of eligible kids and their eligible costs — such as transportation — have those families approve the scholarship, and have it flow directly from the SGO to the district to cover, say, transportation. That’s actually not a fee, because there’s a difference — Section 530 discusses both fees and expenses. Transportation is an expense. It could currently take the form of a fee for some families, but many already cover the cost of transportation, and it’s an eligible expense either way.

So yes — you could reimburse a parent, have a parent direct scholarship money to eligible expenses they choose, or a parent could simply say, “I already choose my school’s tutoring program, so I’ll do a one-button email — ‘Yes, please, I qualify’ — with proof that I’m at or below 300% of the local area median gross income.”

So there are two or three ways this can work. SGOs have a lot of authority here, and I think that’s the big thing folks need to understand: the way a 501(c)(3) sets itself up as an SGO is going to determine the rules the donor’s money abides by. We need to follow 25F and 530, of course. And by the way, there are certain fees you can’t charge if your state says you can’t — doesn’t matter.

Nate McClennen: Right, if it’s part of a comprehensive education —

Antonio Parés: Exactly, right. Or federal IDEA law stipulates you can’t charge certain fees, or if you’re a charter school, your authorizer’s contract may restrict what you can charge.

So I always tell people it’s not just the eligible expenses listed in 530 — you have to think about what the new tax credit language, 25F, adds in terms of filters and complexity around eligible costs. And you need to understand what your state allows you to charge, how this money can mingle with 21st Century grant dollars, or with other tax credits if you’re an after-school provider. If you’re supporting special education services, you can’t charge a fee for some of those. So SGOs are going to live in that world, but they’ll determine: is this direct to the parent? Is it a reimbursement? Direct to the provider with parent approval? How much depth do you want? What expenses do you deem eligible? An SGO could narrowly stipulate that it only covers literacy tutoring, or just transportation for charter schools.

So — taking your question a bit further — there are a few ways for the money to flow. Parents will still have to act as an approver. They may not hold or direct the money themselves, but they’ll approve their provider — a school, a tutoring program, an after-school program, a charter or private school — getting a scholarship on their kids’ behalf to cover eligible costs. But these SGOs also have a lot of autonomy and freedom in this new world being created by the federal tax credit.

The 90/10 Rule and Building SGO Infrastructure

Nate McClennen: Right. So let’s imagine — I don’t know, maybe 60 or 70% of districts in the U.S. have some kind of education fund that takes in donations and redirects them to the school. Sometimes restricted, sometimes not. Typically, a teacher applies for grant funds. Could an existing ed fund set itself up to also be an SGO, or does the SGO need to be a separate entity from a local ed fund? What’s your thinking there?

Antonio Parés: Great question. This all comes down to how Treasury interprets the 90/10 rule. Part of the 25F language — when they created this tax credit this year — added some additional things. One thing to keep in mind is that this was a new tax credit added to a reconciliation package, and to add new items to a reconciliation package, they have to be tax- and spend-related.

So there were things like the state governor opt-in, the eligible list of SGOs, and the 90/10 rule — all put in place for that reason. Some people interpret it this way: if I raise a million dollars by having people take advantage of the tax credit, then $900,000 has to go out in scholarships. I can use $100,000 toward general administrative expenses — or less. You don’t have to use the full 10%, but you can’t use more.

Other people interpret it differently — and I actually think this is closer to how Treasury has been thinking about it, based on what Kevin Salinger has been saying: it’s the 90/10 split of the total income of your organization. So, using your example — if I’m the Denver Public Schools Foundation and I want to become an SGO, under that second interpretation, all the money I bring in from any source has to go 90% toward scholarships, and only 10% toward admin expenses.

In other words, it’d be really hard for an existing 501(c)(3) with programs and costs above and beyond that 90% scholarship threshold. So a lot of people are launching brand-new nonprofits, or repurposing existing ones, because there’s nothing that says your existing 501(c)(3) couldn’t have been slightly different but related, if you want to pivot purely to the SGO model. But because of how the 90/10 rule gets interpreted, it’s going to be very difficult for an existing organization that needs more than 10% of all its revenue to cover expenses —

Nate McClennen: — unless it’s restricted, or interpreted as just the scholarship program itself, as a program within the org. But that’s still to be determined — we don’t know yet.

Antonio Parés: That is to be determined, yeah. And for anyone listening who’s tracking this closely — submit public comments. Talk to your senators and members of Congress. People need to press Treasury to understand how restrictive that 90/10 rule is, because district foundations and ed funds are really well-positioned. They already have existing partnerships, usually MOUs with districts, charter schools, or even out-of-school-time providers.

They already know what it’s like to capture money from individual donors and distribute it — all those mechanisms already exist inside a lot of districts, though not all. Frankly, here in Colorado, and nationally, district foundations are often light-years ahead of their own districts in recognizing this as money they could take advantage of.

One thing we’ve named is that a lot of different people are going to want to launch SGOs, and my personal belief is that we should let people figure out what makes the most sense for them. If you’re a district that believes you have the scale to launch one — not that a district can own this, by the way, but if a district wants to partner with others to create a nonprofit in their community intended to redirect these tax dollars into local scholarships — you should. If you’re a program with a vision for parents in the driver’s seat directing this money, you should. If you care about private schools with a Jewish or Catholic affiliation, you should.

If you’re someone like me, who wants to build infrastructure that as many districts, charter schools, and out-of-school-time providers as possible can take advantage of, you start heading toward the idea of shared SGOs. Should they be regional? Shared through rural collaboratives? In Colorado, we have BOCES — Boards of Cooperative Education Services — which help rural districts create economies of scale. Would BOCES do that? Or should we go to statewide associations and public ed groups and ask what it looks like to build an SGO meant to operate as shared infrastructure for every public district or charter school in the state?

For me, as someone now helping build this, shared SGO infrastructure matters. That’s what we’re thinking in Colorado. Now, does that mean there won’t be others? I think there’ll be three, four, five — who knows — homegrown SGOs that launch, plus what I’d call federal SGOs, ones that can operate across multiple states. National SGOs are coming to Colorado, too. I’ve run into EducationSuperHighway, which is thinking about this from an early literacy lens, and Future School Fund, led by Deborah Gist, who used to be a superintendent in Tulsa and led public education in Rhode Island for a long time. She’s thinking about this at a national level. And yes — an SGO that’s largely worked in private schools is now saying, “This is a game changer, and we could open up our shared infrastructure to charter schools or public districts that want to participate.”

So I believe there will be a lot of people with different ideas, and you have to let folks figure out the right fit for them — whether to launch something or partner with something that exists. But as far as how Antonio is advising and supporting public education: we’re on the path to building a statewide SGO that any district in Colorado could opt into and use, in a sense, as their own — for their donors, their students, their eligible costs and fees within their own district.

Nate McClennen: Yeah, and there’s an economy of scale there, right? If you have a hundred small SGOs in Colorado rather than one larger one, there are efficiencies that could help make the whole process smoother.

Antonio Parés: And imagine the 90/10 rule ends up as restrictive as it could be — at that point, you really want a number of people working together, sharing services, because it’s going to drive down costs. Do you really need to keep 10%? If you have millions and millions of dollars moving through your SGO, maybe you can drop to 7%, or 6%.

Nate McClennen: Right — and give more out to scholarships.

Antonio Parés: Yeah, exactly. Give more out to scholarships, 100%.

Nate McClennen: Yeah. And there will always be a place for a religiously affiliated network of schools that wants an SGO specifically focused on that. But given that the vast majority of students are enrolled in the public sector, having the most efficient infrastructure possible is going to matter.

Eligible Expenses and Fees: What Districts Should Know

Nate McClennen: So — you’ve mentioned this a few times — let’s say there’s a district leader listening, a superintendent, a school board member. You’ve talked a bit about expenses and fees. Can you say more about what can and can’t be covered, the pros and cons?

Antonio Parés: Yeah. I don’t think there’s one single place to start, but if I were a superintendent starting to get a sense of what’s possible, the first thing I’d do is look at Section 530 of Coverdell and understand what’s currently listed as an eligible expense or fee — things like AP exam fees, CTE, transportation costs, tutoring, extended learning, uniforms, technology.

Nate McClennen: Those are all included in Coverdell?

Antonio Parés: Those are all covered under Coverdell. Then you need to filter it. What does 25F, the new federal tax credit, let you do versus not do? It’s not super restrictive, but it does say the expense has to be additive to a kid’s K-12 education. So, in my interpretation — as someone who’s not a lawyer, remotely, though I famously enjoyed Law & Order as a kid and Suits as an adult —

Nate McClennen: That basically makes you an attorney, I’m pretty sure.

Antonio Parés: I’m giving no legal expertise here. But think about it this way: imagine you run a summer program unaffiliated with the district — very unstructured, drop-in, maybe like a forest school. My daughter attended a forest school for a few years —

Nate McClennen: Or Teton Science Schools — I worked there for years, here in Jackson. Same kind of thing.

Antonio Parés: Yeah — those kinds of expenses might walk you further away from the new 25F language that requires the expense be additive to a kid’s K-12 learning.

Nate McClennen: Or education.

Antonio Parés: Right. So there are some filters to run this through: does your state allow you to charge a fee, and so on. But the truth is, if you’re a superintendent, you should be asking, “What are my local priorities? What are we focused on doing for learners, kids, and families in our community?” Start there — you shouldn’t be inventing something brand new. Then, secondarily, think about the existing costs the district, the school, or parents incur, in the form of fees, that stand in the way of kids accessing those priorities — the opportunities that lead to kids who are truly ready to live in a democracy, prepared for college, prepared for career.

So start with what’s true about your community and district, what priorities you care about, and what barriers — from an expense and fee perspective — might stand in the way. Then run those against the rules: What fits under Section 530 Coverdell? Does 25F narrow that? What does your state allow you to charge? If you’re a charter, what does your authorizer’s contract allow?

One thing to remember: there are fees currently associated with a kid attending school — related to sports, tutoring, or AP exams — and those fees could very likely be eligible. But there are also expenses that kids and parents don’t directly pay for, yet are still considered eligible expenses. Transportation is a good example. Districts don’t charge parents for transportation, but it’s an eligible expense under 530.

Nate McClennen: What about 25F? Is it eligible there, too?

Antonio Parés: 25F would allow it to continue to be eligible, especially if that transportation is what gets a student to school — it’s additive to their K-12 learning. Another way to think about it: transportation to an off-site CTE program.

Nate McClennen: Right, right.

Antonio Parés: Or a career-prep program — maybe kids running apprenticeship programs through the school. They’re receiving credit for that, or they’re in a concurrent or dual-enrollment course at a community college. Transportation there, too — but also just transportation to school generally. Historically, have districts broken that down into per-kid costs and shown parents what it is? You’re not billing them for it —

Nate McClennen: Right, of course not.

Antonio Parés: But you’d better believe the district knows how much it costs per kid to transport them. And so that’s an eligible expense versus an eligible fee. That doesn’t mean, though, that you don’t still need an eligible family attached to a scholarship — the way it’s written, it’s an eligible family, an eligible cost, and a scholarship that covers the expense or fee. You can’t live in a world where you don’t identify those families, where they haven’t said, “Yes, I agree — please go get a scholarship from this SGO to help cover the cost of this program.”

Or there’s the world we already know, where a parent opts into an account with $1,700, or $5,000, or $300, sees a couple of eligible fees in their district, and directs that money themselves. Any of those approaches could work. But if I were a district, I’d start with: what are my priorities, what do I care about, what are the barriers to those things, what are the costs behind those barriers? Then I’d overlay that against the rules and filter down to something like, “It’s pretty clear that one of our barriers to college and career readiness is the cost of AP exam fees, SAT and ACT prep courses, and transportation.” Some of those might be fees parents already pay, or costs the district already incurs — but if they’re eligible, they could be covered by a scholarship, as long as it’s tied to an eligible kid.

Nate McClennen: And it feels like other things — after-school programming, summer tutoring, things adjacent to but directly related to the district’s mission — could also be eligible. You could set up an SGO to support those, giving students more equitable access to experiences, as long as they’re directly connected to the learning experience.

Antonio Parés: That’s the key. I love what you just did there, because that’s exactly it. As you were reading through 25F, 530, and the Coverdell preview of the Treasury guidance from early June, everything you just said holds true to me. A scholarship-granting org could work with families and/or their provider — an out-of-school-time provider, a Boys & Girls Club, a STEM summer camp, an after-school coding bootcamp — as long as they can clearly say it’s aligned to standards, that kids get credit for it, that it’s clearly, say, math tutoring. If it’s clearly additive to a kid’s K-12 education, an SGO can disperse a scholarship, or a parent can disperse a scholarship, to cover those third-party, non-school, non-district costs.

I’ll caution folks listening to keep an eye on what the Afterschool Alliance is saying about this, because there are people inside Treasury and the federal government interpreting “additive to a kid’s K-12” pretty narrowly. And they haven’t determined internally which way they’ll land — or maybe they have, and we’ll find out when the guidance comes out.

Nate McClennen: Yeah.

Antonio Parés: If the narrow interpretation holds, it’s possible you’d need to be an out-of-school-time provider under contract with the district to even catch a scholarship. I’m not saying that will be true, but it’s something a lot of people nationally are watching closely. And that’s exactly why, if I were in public ed, I wouldn’t sit on the sidelines and let other people determine the shape of this and just hope it works out. We should be at the table, like we’ve been in Colorado — talking to Treasury, talking to national partners, submitting public comment, and pressing Treasury to keep this workable. Governors have submitted public comment, nonprofits have, research centers have — a whole host of folks trying to make this work as well as possible for their constituents.

People should be at the table, because there’s a world where, if we’re not showing up and advocating — not in a lobbying way, but more like, “Hey, we’re just trying to help you understand what’s actually happening on the ground and what would be useful for us” — it could become very hard for a third party, an after-school provider, or a tutoring program to get a scholarship directly from an SGO.

But there’s also a world where, if you’re contracted by a district or operate in a community under an MOU with the district, that might make things more usable, if the guidance defines things narrowly. We just won’t know until it comes out in September. That’s why I keep telling people it’s a good time to talk to your senators and Congress members, to have your governor or local entities send letters. The link on the website to submit public comment seems to be closed, but nothing stops you from emailing people directly, or even sending a letter — people at Treasury are listening.

Because they’re being asked to write rules on something that isn’t their usual area — these aren’t education policy folks.

Nate McClennen: Yeah, yeah. And there was enough vagueness in the original law’s language that — I mean, their job is to write the rules for a federal tax credit.

The Political Landscape and the Case for Public Ed to Act Now

Nate McClennen: Okay, so as we close up here — this all makes sense, right? If 90-plus percent of kids are enrolled in the public sector, whatever the exact number is in the U.S., there’s a huge opportunity for federal dollars to come into the system. I read somewhere it’s bigger than ESSER — if everyone donates. But it’s not an automatic donation, and there’s some nervousness there — like the dollar checkbox at the end of your taxes for campaign funding, which very few people actually use.

But what you were saying about public schools already having an active, mobilized audience — many of them do — means that with the right campaign, communications, and a properly set-up SGO, this could be a real help to public schools facing budget shortfalls, demographic cliffs, and competition from the school choice sector. There’s a lot of financial pressure on the public sector, and this is one place where there could be real benefit. But — and I want you to riff on this for a second — this is a really politicized issue. Colorado’s bucking the trend, along with New York and others, but it feels like politics might be getting in the way of what’s actually good for kids.

We try not to be political on this show, though maybe everything’s political now. In a blue state like Colorado, do you feel like there’s real bipartisanship as you work with public school districts? A sense that this is possible?

Antonio Parés: Yeah, there really is. It’s funny you put it that way, because the group I’ve been describing — it’s loosely organized, we don’t meet monthly on a formal basis, but we talk, we bring in national experts, we build FAQs together, we’ve built public comment together — and from that group, we’ve seen a number of these homegrown SGOs realize they should launch something local, that they should own this themselves. That’s come directly out of this working group, this table that’s been meeting and talking.

I’ve had a number of people at that table — and I’m not just someone who helps lead and facilitate it, I’m a member of it too. I’m part of the public ed and broader ed space in Colorado. I’m a parent. I care about these things. So I’m a member of that table, and we often step back and say, “When was the last time you had charter schools, public district foundations, philanthropic foundations, advocacy orgs, center-left, center-right, membership groups, and businesses all sitting at a table together talking about this — and trying to find ways to coordinate with each other?” Because here’s something you said earlier that matters a great deal.

If I’m a district, I need to run a campaign to drive donors from within my community. I might think about how to make it easier for people to direct their giving to an SGO — hopefully mine — through a payroll opt-in. There’s something there. United Way has done this really well. Because United Way is so ingrained, there’s often an option built into payroll services themselves.

Nate McClennen: Right, on the payroll side.

Antonio Parés: Right, exactly. You have to think differently about how you help people say yes, how you help them opt in — whether that’s parents at back-to-school nights, and so on. Public ed’s going to have to do some legwork here to get this done. But what’s interesting is that we’re all in the same bucket. A charter school listening to this and a district listening to this don’t actually believe they’re in direct competition with each other — because they’re thinking about the adults and potential givers within their own community, their own eligible expenses, the kids who could benefit, and maybe the SGO to partner with. And you start to realize we’re all experiencing very similar things.

Enrollment isn’t just shifting to other districts, charter schools, or homeschooling — it’s evaporating, because we simply have fewer kids. And yes, there’s some bleed into other options too, but I don’t know if people have sat at the same table in Colorado — I don’t want to assume too much — but maybe not since 2006 through 2012 or so, and I’ve heard people tell me it feels really good and different and fun in a way that folks who were pushing hard on Colorado’s education infrastructure and sector maybe haven’t felt in a long time.

Nate McClennen: Yeah. It’s — I try to be an optimist, and I appreciate that you’re feeling that way, this idea of bringing people together around a shared understanding of what’s good for young people. Too often, if you stay in the media world and what media wants us to believe, we get caught up in this strong “us versus them” framing, and that just gets in the way of what’s actually good for students.

One last question: what haven’t I asked you that maybe I should have, or is there anything else you want to share before I do a quick wrap?

Antonio Parés: Something to think about: there’s work to be done now. We talked about the 90/10 rule and what happens once money actually starts flowing through an SGO in the beginning of 2027. As I’ve told folks, people should be building things now, because you’re not beholden to the 90/10 rule yet.

Antonio Parés: Something to think about: there’s work to be done now. We talked about the 90/10 rule and what happens once money actually starts flowing through an SGO in the beginning of 2027. As I’ve told folks, people should be building things now, because you’re not beholden to the 90/10 rule yet.

I keep coming back to this: we’re in a really interesting window. Yes, we’re waiting on some things, but nothing is perfectly locked into place yet. This is a good time to actually be acting, building, and figuring out what’s possible.

Closing Thoughts

Nate McClennen: Yeah, I really appreciate that — thinking proactively about it. My guess is that some states won’t opt in, and there’ll be an outflow of money to other states that could have stayed local. Those states may opt in later, but the models being built by you and others in Colorado, and in other states moving early in the public sector, are going to be good models for the rest of the country. I’m hoping others are watching, and that philanthropy is paying attention and supporting the teams doing this work.

Because this is good for learners who have opportunities in their public systems to get some of these fees and costs offset, which helps in the long run. So — here’s my quick summary, the takeaway points I wrote down as you talked. First: SGOs have existed for a long time. I actually wasn’t aware of that. So the idea that SGOs aren’t brand new — there’ll be a lot of brand-new ones emerging, but the model already exists. There’s massive potential in terms of the amount of money and participation here. These are low-dollar donations supporting larger systems, and building now matters.

Most profound for me is what you’ve built in Colorado — this working group of people who might not have been talking to each other before, now saying, “We can do this together.” It can cover existing costs; they don’t have to be purely additive, as long as they’re aligned to K-12 — things like transportation or tutoring. And then there’s the question of how you set up the participation side: come 2027, how do you incentivize giving through payroll or similar mechanisms? Antonio, let’s definitely stay in touch — this is super interesting. I think the next six months, the first two quarters of 2027, are going to be very interesting as data starts flowing.

Antonio Parés: Agreed.

Nate McClennen: And I think come September, or whenever the final rulemaking comes out — especially around the 90/10 rule — that’ll be interesting too, along with tracking the states that haven’t made a decision yet, to see where they land. I think we’re at 30 states right now that have said yes, and there’s a handful that haven’t taken a stand either way. Really appreciate the work you’re doing, your thinking, and helping young people — and taking the time to talk today. Thanks so much.

Antonio Parés: Of course. Thanks, Nate. I hope folks listening got a little smarter.

Nate McClennen: All right, we’ll talk to you later — and we’ll put a bunch of resources on our site for listeners who want more information.

Resources

• Antonio Parés LinkedIn
• Bellwether Q&A with Antonio Parés
• Tax Credit Article in the 74 Million