Do not call a fee discount a scholarship

Tricia from TX is helping her homeschool co-op apply for 501c3 tax exempt status with the IRS.

On the application form (Form 1023), the IRS asks about scholarships and Tricia asks:

 We do provide scholarships for our members that cannot pay their $30 membership fee.  Should we check “yes” for line 22?

Part VIII, Line 22 is for “real” scholarships like the kind a high school graduate is given to go to college.

What your group offers is a fee discount. I find that co-ops frequently call these fee discounts “scholarships.” That is the wrong word to use.

Do not call a fee discount a scholarship.

I recommend that you change your wording in your co-op and especially change the word on your application to the IRS.

I think you should check the box NO. You do not provide scholarships as the IRS is using the word.

Homeschool leaders, if your group does provide “real” scholarships (and a few homeschool groups do award college scholarships), then I can help. I can assist you setting up a scholarship award program and in explaining your program properly to the IRS.  Contact me  here.

Carol Topp, CPA

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