A new federal tax credit scheduled to take effect next year could open a major new stream of scholarship funding for yeshivos across the United States, and Agudath Israel of America and Torah Umesorah have now thrown their support behind a nationwide Jewish effort designed to maximize the opportunity.
The two organizations announced their endorsement of the Opportunity Fund for Jewish Education, a newly created national Scholarship Granting Organization, or SGO, that will seek to collect tax-credit-eligible contributions and direct the funds toward scholarships at participating Jewish schools and yeshivos.
The move follows months of discussion within Agudath Israel and Torah Umesorah over how the Orthodox community could best utilize the new Federal Scholarship Tax Credit, which takes effect Jan. 1, 2027. The discussions included extensive consideration by Agudah’s Moetzes Gedolei HaTorah and Torah Umesorah’s Vaad Roshei Hayeshivos. The organizations ultimately determined that participating in a large, unified national SGO offered the greatest potential to generate substantial new funding for yeshivos rather than establishing a separate system serving only one segment of the Jewish community.
The Opportunity Fund was launched through a partnership of the Orthodox Union and Teach Coalition, Jewish Federations of North America, and Prizmah: Center for Jewish Day Schools. In addition to Agudath Israel and Torah Umesorah, the initiative has attracted backing from other Jewish organizations, creating an unusually broad coalition centered on expanding scholarship assistance for Jewish education.
At the heart of the initiative is a provision of the federal tax law enacted in 2025 and signed by President Donald Trump. Section 25F of the Internal Revenue Code creates a federal income-tax credit for individuals who make qualifying cash contributions to approved SGOs. Beginning in 2027, an eligible taxpayer may receive a credit of as much as $1,700 per year.
The distinction between a tax credit and the charitable deduction familiar to most donors is significant.
A charitable deduction generally reduces the amount of income on which a taxpayer owes taxes. The new program instead provides a dollar-for-dollar credit against federal income-tax liability. Thus, subject to the law’s requirements, a taxpayer who contributes $1,700 to a qualifying SGO could reduce his federal income-tax liability by $1,700. The credit is nonrefundable, although unused amounts may generally be carried forward for as many as five years.
The money collected by SGOs is then used to provide scholarships for eligible elementary and secondary school students. Under the federal law, student eligibility is generally limited to children from households with income not exceeding 300% of the area median gross income. Scholarships may be used for qualifying K-12 educational expenses, including private-school tuition.
For the yeshiva community, the implications could be enormous.
Rather than asking families and supporters simply to make additional charitable donations, participating yeshivos could encourage taxpayers to use money that can qualify for the federal credit to fund scholarships. If participation becomes widespread, thousands of individual $1,700 contributions could produce millions of dollars in additional tuition assistance.
The Opportunity Fund’s structure is intended to allow individual communities to benefit directly while simultaneously taking advantage of the reach of a national campaign. Donors will be permitted to designate participating schools they wish their contributions to benefit, according to the organizations behind the initiative.
The Fund has also committed that 100% of money designated for a particular school will be used for scholarships for students at that school. Administrative and operating costs are expected to be funded separately rather than deducted from those designated scholarship contributions.
That feature could allow a yeshiva to mobilize its own network of parents, grandparents, alumni and supporters much as it would for an ordinary fundraising campaign. The difference is that those efforts would operate within a much larger national system capable of reaching donors who may have no previous connection to a particular yeshiva.
Organizers believe that broader reach is critical.
If the program merely causes existing yeshiva donors to redirect money they would have contributed anyway, the net financial benefit to the community could be limited. A national effort, however, could potentially bring an entirely new pool of contributors into Jewish education, including taxpayers who do not currently donate to yeshivos or who do not have children attending Jewish schools.
Paul Bernstein, CEO of Prizmah, said the organizations concluded that collaboration offered a greater opportunity than having individual Jewish groups pursue the program separately.
“We realized we are much more likely to be successful if we work together across the entire community,” Bernstein said. “This really does have the potential to have a huge impact, but it depends on us mobilizing the Jewish community to really participate in the tax credit and support our schools.”
The potential pool is substantial. The Joint Committee on Taxation has estimated that the federal program could generate approximately $500 million in contributions to SGOs, according to eJewishPhilanthropy. The federal program itself does not impose an overall annual nationwide cap on the amount of credits available, although each individual taxpayer’s annual credit is capped at $1,700.
Sydney Altfield, national director of Teach Coalition, said the scale of Jewish education in the United States makes national infrastructure particularly important.
“This is an amazing opportunity for the Jewish community to come together and make sure we maximize the benefit of this new federal program for Jewish families,” Altfield said. “With more than 900 Jewish day schools and yeshivas across the country, we need the infrastructure to make it easy for schools to participate, for donors to contribute and for those dollars to reach families. By working together nationally, we can turn this into meaningful tuition relief at a scale that could have a real impact on Jewish education.”
There is, however, an important condition to the new program: participation is not automatic in every state.
Federal law requires a state to opt into the program and submit to the IRS a list of qualifying SGOs. A contribution to an SGO can qualify for the federal credit only under the rules established by Section 25F, including the state-participation requirements.
As of the IRS’s most recently published list, dated July 24, 30 states had made advance elections to participate in the 2027 program. They include Florida, Texas, Ohio, Pennsylvania-neighboring West Virginia, and numerous other states, but notably do not yet include New York or New Jersey, home to two of the country’s largest concentrations of yeshivos and Orthodox families.
Efforts surrounding state participation are continuing. In New Jersey, legislation has been introduced that would require the state to elect participation in the federal program and direct the state education commissioner to provide the information necessary to maintain that participation annually.
Treasury has meanwhile been working on regulations governing the program. The department said in June that it expected to issue proposed regulations by the end of September, with states, taxpayers and SGOs expected to be able to rely upon those regulations as they prepare for the January 2027 launch.
Agudath Israel has been involved with the federal scholarship-credit effort well before this week’s announcement. The organization advocated for federal school-choice legislation for years and subsequently submitted recommendations to Treasury concerning implementation of the new program.
With the law now moving toward implementation, the focus is shifting from Washington advocacy to mobilizing schools and taxpayers.
Yeshivos can begin registering with the Opportunity Fund and preparing their communities for the program, while prospective contributors can pledge now to participate once eligible contributions begin in January. Agudah and Torah Umesorah said they intend to work with yeshivos over the coming months to help schools prepare.
For yeshivos struggling with rising payrolls, facilities costs and other expenses, and for parents carrying increasingly heavy tuition obligations, even a modest level of participation could produce meaningful assistance. If the program reaches the scale its organizers envision, however, its effect could be considerably greater.
Instead of each yeshiva attempting to navigate a complicated new federal program independently, Agudah and Torah Umesorah are betting that a coordinated national infrastructure — coupled with aggressive local participation by individual mosdos and their supporters — offers the best opportunity to channel a potentially significant new source of funding into Torah education.
The dollars will not begin flowing until 2027, and important regulatory and state-level questions remain to be resolved. But the preparations are already underway for what could become one of the most consequential new sources of scholarship funding available to American yeshivos in years.
{Matzav.com}
