{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/58.1-439.28.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/58.1-439.28.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/58.1-439.28.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/58.1-439.28.html"}],"law_id":65773,"edition_id":1,"section_id":65773,"structure_id":15394,"section_number":"58.1-439.28","catch_line":"(Applicable to taxable years beginning on and after January 1, 2028) Guidelines for scholarship foundations","history":"2012, cc. 731, 842; 2013, cc. 713, 716; 2016, cc. 751, 767; 2019, cc. 808, 817.","full_text":"A\n\nAs a condition for qualification by the Department of Education, a scholarship foundation, as defined in § 58.1-439.25 and included on the list published annually by the Department of Education pursuant to this section, shall disburse an amount at least equal to 90 percent of the value of the donations it receives (for which tax credits were issued under this article) during each 12-month period ending on June 30 by the immediately following June 30 for qualified educational expenses through scholarships to eligible students. Tax-credit-derived funds not used for such scholarships may only be used for the administrative expenses of the scholarship foundation. Any scholarship foundation that fails to meet such disbursal requirement shall, for the first offense, be required to pay a civil penalty equal to the difference between 90 percent of the value of the tax-credit-derived donations it received in the applicable 12-month period and the amount that was actually disbursed. Such civil penalty shall be remitted by the scholarship foundation to the Department of Education within 30 days after the end of the one-year period and deposited to the general fund. For a second offense within a five-year period, the scholarship foundation shall be removed from the annual list published pursuant to this section and shall not be entitled to request preauthorization for additional tax credits, nor shall it be entitled to receive and administer additional tax-credit-derived funds for two years. After two years, the scholarship foundation shall be eligible to reapply to be included on the annual list to receive and administer tax-credit derived funds. If a scholarship foundation is authorized to be added to the annual list after such reapplication, the scholarship foundation shall not be considered to have any previous offenses for purposes of this subsection. The required disbursement under this section shall begin with donations received for the period January 1, 2013, through June 30, 2014.B\n\nBy September 30 of each year beginning in 2016, the scholarship foundation shall provide the following information to the Department of Education: (i) the total number and value of donations received by the foundation during the 12-month period ending on June 30 of the prior calendar year for which tax credits were issued by the Superintendent of Public Instruction, (ii) the dates when such donations were received, and (iii) the total number and dollar amount of qualified educational expenses scholarships awarded from tax-credit-derived donations and disbursed by the scholarship foundation during the 24-month period ending on June 30 of the current calendar year. Any scholarship foundation that fails to provide this report by September 30 shall, for the first offense, be required to pay a $1,000 civil penalty. Such civil penalty shall be remitted by the scholarship foundation to the Department of Education by November 1 of the same year and deposited to the general fund. For a second offense within a five-year period, the scholarship foundation shall be removed from the annual list published pursuant to this section and shall not be entitled to request preauthorization for additional tax credits, nor shall it be entitled to receive and administer additional tax-credit-derived funds. After two years, the scholarship foundation shall be eligible to reapply to be included on the annual list to receive and administer tax-credit derived funds. If a scholarship foundation is authorized to be added to the annual list after such reapplication, the scholarship foundation shall not be considered to have any previous offenses for purposes of this subsection.C\n\nIn awarding scholarships from tax-credit-derived funds, the scholarship foundation shall (i) provide scholarships for qualified educational expenses only to students whose family’s annual household income is not in excess of 300 percent of the current poverty guidelines, eligible students with a disability, or eligible pre-kindergarten children; (ii) not limit scholarships to students of one school; and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student’s parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article.D\n\n1. Scholarship foundations shall ensure that schools selected by students to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth’s and locality’s health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are (a) for students in grades K through 12, nonpublic schools that comply with nonpublic school accreditation requirements as set forth in \u00a7 22.1-19 and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students’ progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills and (b) for eligible pre-kindergarten children, nonpublic pre-kindergarten programs.2\n\nEach nonpublic pre-kindergarten program shall (i) provide to the eligible pre-kindergarten child a curriculum that is aligned with Virginia’s Foundation Blocks for Early Learning: Comprehensive Standards for Four-Year-Olds as published by the Department of Education, or any successor standards published by the Department of Education; (ii) have maximum class sizes of 20 students with a teacher-student ratio of not fewer than two teachers for every 20 students; (iii) provide at least half-day services and operate for at least the school year; (iv) agree to provide the Department of Education with student information for each eligible pre-kindergarten child receiving a scholarship foundation scholarship for purposes of allowing the Department of Education to conduct studies comparing the academic performance of such children while attending primary or secondary school with other children attending primary or secondary school who have attended a pre-kindergarten program, including programs funded under the Virginia Preschool Initiative; and (v) require professional development of program teachers, which enables such teachers to engage in high-quality interactions with eligible pre-kindergarten children and provide high-quality instruction in accordance with the curriculum described under clause (i). Each nonpublic pre-kindergarten program teacher at a minimum shall have earned a certificate from a nationally recognized early childhood education certificate program, including but not limited to any early childhood education program provided or sponsored by the Virginia Community College System.\n\t\t\t\tIn awarding scholarships to eligible pre-kindergarten children, scholarship foundations shall award scholarships from tax-credit-derived funds only to such children who are enrolled in or attending nonpublic pre-kindergarten programs that meet the conditions of this subdivision as certified by the Virginia Council for Private Education or the Virginia Early Childhood Foundation.3\n\nEligible schools shall compile the results of any national norm-referenced achievement test for each of its students receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students with a copy of the results on an annual basis, beginning with the first year of testing of the student. Such schools also shall annually provide to the Department of Education for each such student the achievement test results, beginning with the first year of testing of the student, and student information that would allow the Department to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student and test-related data collection, the Department of Education shall ensure that the achievement test results and associated learning gains are published on the Department of Education’s website in accordance with such classifications and in an aggregate form as to prevent the identification of any student. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department of Education shall ensure compliance with all student privacy laws.\n\t\t\t\tThe provisions of this subdivision shall not apply to eligible pre-kindergarten children.E\n\n1. The aggregate amount of scholarships provided to each student for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses of the student or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student resides) as the state’s share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act.2\n\nIn the case of eligible pre-kindergarten children, the aggregate amount of scholarships provided to each child for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of the actual qualified educational expenses of the child or the state share of the grant per child under the Virginia Preschool Initiative for the locality in which the eligible pre-kindergarten child resides.F\n\nScholarship foundations shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable.G\n\nScholarship foundations that receive donations of marketable securities for which tax credits were issued under this article shall be required to sell such securities and convert the donation into cash immediately, but in no case more than 21 days after receipt of the donation.H\n\nEach scholarship foundation with total revenues (including the value of all donations) (i) in excess of $100,000 for the foundation’s most recent fiscal year ended shall have an audit or review performed by an independent certified public accountant of the foundation’s donations received in such year for which tax credits were issued under this article or (ii) of $100,000 or less for the foundation’s most recent fiscal year ended shall have a compilation performed by an independent certified public accountant of the foundation’s donations received in such year for which tax credits were issued under this article. A summary report of the audit, review, or compilation shall be made available to the public and the Department of Education upon request.I\n\nThe Department of Education shall publish annually on its website a list of each scholarship foundation qualified under this article. Once a foundation has been qualified by the Department of Education, it shall remain qualified until the Department removes the foundation from its annual list. The Department of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article.J\n\nActions of the Superintendent of Public Instruction or the Department of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the Superintendent of Public Instruction or the Department of Education shall be final and not subject to review or appeal.","order_by":null,"text":{"0":{"id":239032,"text":"As a condition for qualification by the Department of Education, a scholarship foundation, as defined in § 58.1-439.25 and included on the list published annually by the Department of Education pursuant to this section, shall disburse an amount at least equal to 90 percent of the value of the donations it receives (for which tax credits were issued under this article) during each 12-month period ending on June 30 by the immediately following June 30 for qualified educational expenses through scholarships to eligible students. Tax-credit-derived funds not used for such scholarships may only be used for the administrative expenses of the scholarship foundation. Any scholarship foundation that fails to meet such disbursal requirement shall, for the first offense, be required to pay a civil penalty equal to the difference between 90 percent of the value of the tax-credit-derived donations it received in the applicable 12-month period and the amount that was actually disbursed. Such civil penalty shall be remitted by the scholarship foundation to the Department of Education within 30 days after the end of the one-year period and deposited to the general fund. For a second offense within a five-year period, the scholarship foundation shall be removed from the annual list published pursuant to this section and shall not be entitled to request preauthorization for additional tax credits, nor shall it be entitled to receive and administer additional tax-credit-derived funds for two years. After two years, the scholarship foundation shall be eligible to reapply to be included on the annual list to receive and administer tax-credit derived funds. If a scholarship foundation is authorized to be added to the annual list after such reapplication, the scholarship foundation shall not be considered to have any previous offenses for purposes of this subsection. The required disbursement under this section shall begin with donations received for the period January 1, 2013, through June 30, 2014.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":239033,"text":"By September 30 of each year beginning in 2016, the scholarship foundation shall provide the following information to the Department of Education: (i) the total number and value of donations received by the foundation during the 12-month period ending on June 30 of the prior calendar year for which tax credits were issued by the Superintendent of Public Instruction, (ii) the dates when such donations were received, and (iii) the total number and dollar amount of qualified educational expenses scholarships awarded from tax-credit-derived donations and disbursed by the scholarship foundation during the 24-month period ending on June 30 of the current calendar year. Any scholarship foundation that fails to provide this report by September 30 shall, for the first offense, be required to pay a $1,000 civil penalty. Such civil penalty shall be remitted by the scholarship foundation to the Department of Education by November 1 of the same year and deposited to the general fund. For a second offense within a five-year period, the scholarship foundation shall be removed from the annual list published pursuant to this section and shall not be entitled to request preauthorization for additional tax credits, nor shall it be entitled to receive and administer additional tax-credit-derived funds. After two years, the scholarship foundation shall be eligible to reapply to be included on the annual list to receive and administer tax-credit derived funds. If a scholarship foundation is authorized to be added to the annual list after such reapplication, the scholarship foundation shall not be considered to have any previous offenses for purposes of this subsection.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":239034,"text":"In awarding scholarships from tax-credit-derived funds, the scholarship foundation shall (i) provide scholarships for qualified educational expenses only to students whose family’s annual household income is not in excess of 300 percent of the current poverty guidelines, eligible students with a disability, or eligible pre-kindergarten children; (ii) not limit scholarships to students of one school; and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation shall be by individual warrant or check made payable to and mailed to the eligible school that the student’s parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":239035,"text":"1. Scholarship foundations shall ensure that schools selected by students to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth’s and locality’s health and safety laws and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are (a) for students in grades K through 12, nonpublic schools that comply with nonpublic school accreditation requirements as set forth in \u00a7 22.1-19 and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students’ progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills and (b) for eligible pre-kindergarten children, nonpublic pre-kindergarten programs.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"D2"},"4":{"id":239036,"text":"Each nonpublic pre-kindergarten program shall (i) provide to the eligible pre-kindergarten child a curriculum that is aligned with Virginia’s Foundation Blocks for Early Learning: Comprehensive Standards for Four-Year-Olds as published by the Department of Education, or any successor standards published by the Department of Education; (ii) have maximum class sizes of 20 students with a teacher-student ratio of not fewer than two teachers for every 20 students; (iii) provide at least half-day services and operate for at least the school year; (iv) agree to provide the Department of Education with student information for each eligible pre-kindergarten child receiving a scholarship foundation scholarship for purposes of allowing the Department of Education to conduct studies comparing the academic performance of such children while attending primary or secondary school with other children attending primary or secondary school who have attended a pre-kindergarten program, including programs funded under the Virginia Preschool Initiative; and (v) require professional development of program teachers, which enables such teachers to engage in high-quality interactions with eligible pre-kindergarten children and provide high-quality instruction in accordance with the curriculum described under clause (i). Each nonpublic pre-kindergarten program teacher at a minimum shall have earned a certificate from a nationally recognized early childhood education certificate program, including but not limited to any early childhood education program provided or sponsored by the Virginia Community College System.\n\t\t\t\tIn awarding scholarships to eligible pre-kindergarten children, scholarship foundations shall award scholarships from tax-credit-derived funds only to such children who are enrolled in or attending nonpublic pre-kindergarten programs that meet the conditions of this subdivision as certified by the Virginia Council for Private Education or the Virginia Early Childhood Foundation.","type":"section","prefixes":["D","2"],"prefix":"2","entire_prefix":"D2","prefix_anchor":"D2","level":2,"prior_prefix":"D","next_prefix":"D3"},"5":{"id":239037,"text":"Eligible schools shall compile the results of any national norm-referenced achievement test for each of its students receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students with a copy of the results on an annual basis, beginning with the first year of testing of the student. Such schools also shall annually provide to the Department of Education for each such student the achievement test results, beginning with the first year of testing of the student, and student information that would allow the Department to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student and test-related data collection, the Department of Education shall ensure that the achievement test results and associated learning gains are published on the Department of Education’s website in accordance with such classifications and in an aggregate form as to prevent the identification of any student. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department of Education shall ensure compliance with all student privacy laws.\n\t\t\t\tThe provisions of this subdivision shall not apply to eligible pre-kindergarten children.","type":"section","prefixes":["D","3"],"prefix":"3","entire_prefix":"D3","prefix_anchor":"D3","level":2,"prior_prefix":"D2","next_prefix":"E"},"6":{"id":239038,"text":"1. The aggregate amount of scholarships provided to each student for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses of the student or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student resides) as the state’s share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D3","next_prefix":"E2"},"7":{"id":239039,"text":"In the case of eligible pre-kindergarten children, the aggregate amount of scholarships provided to each child for any single school year by all eligible scholarship foundations from eligible donations shall not exceed the lesser of the actual qualified educational expenses of the child or the state share of the grant per child under the Virginia Preschool Initiative for the locality in which the eligible pre-kindergarten child resides.","type":"section","prefixes":["E","2"],"prefix":"2","entire_prefix":"E2","prefix_anchor":"E2","level":2,"prior_prefix":"E","next_prefix":"F"},"8":{"id":239040,"text":"Scholarship foundations shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E2","next_prefix":"G"},"9":{"id":239041,"text":"Scholarship foundations that receive donations of marketable securities for which tax credits were issued under this article shall be required to sell such securities and convert the donation into cash immediately, but in no case more than 21 days after receipt of the donation.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F","next_prefix":"H"},"10":{"id":239042,"text":"Each scholarship foundation with total revenues (including the value of all donations) (i) in excess of $100,000 for the foundation’s most recent fiscal year ended shall have an audit or review performed by an independent certified public accountant of the foundation’s donations received in such year for which tax credits were issued under this article or (ii) of $100,000 or less for the foundation’s most recent fiscal year ended shall have a compilation performed by an independent certified public accountant of the foundation’s donations received in such year for which tax credits were issued under this article. A summary report of the audit, review, or compilation shall be made available to the public and the Department of Education upon request.","type":"section","prefixes":["H"],"prefix":"H","entire_prefix":"H","prefix_anchor":"H","level":1,"prior_prefix":"G","next_prefix":"I"},"11":{"id":239043,"text":"The Department of Education shall publish annually on its website a list of each scholarship foundation qualified under this article. Once a foundation has been qualified by the Department of Education, it shall remain qualified until the Department removes the foundation from its annual list. The Department of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article.","type":"section","prefixes":["I"],"prefix":"I","entire_prefix":"I","prefix_anchor":"I","level":1,"prior_prefix":"H","next_prefix":"J"},"12":{"id":239044,"text":"Actions of the Superintendent of Public Instruction or the Department of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the Superintendent of Public Instruction or the Department of Education shall be final and not subject to review or appeal.","type":"section","prefixes":["J"],"prefix":"J","entire_prefix":"J","prefix_anchor":"J","level":1,"prior_prefix":"I"}},"ancestry":[{"id":15394,"edition_id":1,"name":"Education Improvement Scholarships Tax Credits","identifier":"13.3","label":"article","depth":4,"order_by":1,"parent_id":13152,"metadata":{},"date_created":"2026-06-26 03:54:36","date_modified":"2026-06-26 03:54:36","permalink":{"id":253691,"object_type":"structure","relational_id":15394,"identifier":"13.3","token":"58.1\/I\/3\/13.3","url":"\/58.1\/I\/3\/13.3\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13152,"edition_id":1,"name":"Income Tax","identifier":"3","label":"chapter","depth":3,"order_by":1,"parent_id":12837,"metadata":{},"date_created":"2026-06-26 03:44:21","date_modified":"2026-06-26 03:44:21","permalink":{"id":253267,"object_type":"structure","relational_id":13152,"identifier":"3","token":"58.1\/I\/3","url":"\/58.1\/I\/3\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12837,"edition_id":1,"name":"Taxes Administered by the Department of Taxation","identifier":"I","label":"subtitle","depth":2,"order_by":1,"parent_id":12703,"metadata":{},"date_created":"2026-06-26 03:43:55","date_modified":"2026-06-26 03:43:55","permalink":{"id":252075,"object_type":"structure","relational_id":12837,"identifier":"I","token":"58.1\/I","url":"\/58.1\/I\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12703,"edition_id":1,"name":"Taxation","identifier":"58.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":251959,"object_type":"structure","relational_id":12703,"identifier":"58.1","token":"58.1","url":"\/58.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":64701,"structure_id":15394,"section_number":"58.1-439.25","catch_line":"(Applicable to taxable years beginning January 1, 2028) Definitions","url":"\/58.1-439.25\/","token":"58.1\/I\/3\/13.3\/58.1-439.25","metadata":false},{"id":58634,"structure_id":15394,"section_number":"58.1-439.26","catch_line":"Tax credit for donations to certain scholarship foundations","url":"\/58.1-439.26\/","token":"58.1\/I\/3\/13.3\/58.1-439.26","metadata":false},{"id":87412,"structure_id":15394,"section_number":"58.1-439.27","catch_line":"Scholarship foundation eligibility and requirements; list of foundations receiving donations","url":"\/58.1-439.27\/","token":"58.1\/I\/3\/13.3\/58.1-439.27","metadata":false},{"id":65773,"structure_id":15394,"section_number":"58.1-439.28","catch_line":"(Applicable to taxable years beginning on and after January 1, 2028) Guidelines for scholarship foundations","url":"\/58.1-439.28\/","token":"58.1\/I\/3\/13.3\/58.1-439.28","metadata":false}],"previous_section":{"id":87412,"structure_id":15394,"section_number":"58.1-439.27","catch_line":"Scholarship foundation eligibility and requirements; list of foundations receiving donations","url":"\/58.1-439.27\/","token":"58.1\/I\/3\/13.3\/58.1-439.27","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/58.1-439.28\/","history_text":"

This law was first created in 2012. The record of its establishment is cataloged in chapters 731<\/a> and 842<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. It has been modified 3 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 2013, chapters 713<\/a> and 716<\/a>; in 2016, chapters 751<\/a> and 767<\/a>; in 2019, chapters 808<\/a> and 817<\/a>.<\/p>","references":[{"id":58634,"section_number":"58.1-439.26","catch_line":"Tax credit for donations to certain scholarship foundations","order_by":null,"url":"\/58.1-439.26\/"}],"refers_to":[{"id":86911,"section_number":"2.2-4000","catch_line":"Short title; purpose","order_by":null,"url":"\/2.2-4000\/"},{"id":55423,"section_number":"22.1-19","catch_line":"Accreditation of elementary, middle, and high schools; nursery schools; recognition of certain organizations; child day center regulation","order_by":null,"url":"\/22.1-19\/"},{"id":64701,"section_number":"58.1-439.25","catch_line":"(Applicable to taxable years beginning January 1, 2028) Definitions","order_by":null,"url":"\/58.1-439.25\/"}],"permalink":{"id":253705,"object_type":"law","relational_id":65773,"identifier":"58.1-439.28","token":"58.1\/I\/3\/13.3\/58.1-439.28","url":"\/58.1-439.28\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/58.1-439.28\/","token":"58.1\/I\/3\/13.3\/58.1-439.28","dublin_core":{"Title":"(Applicable to taxable years beginning on and after January 1, 2028) Guidelines for scholarship foundations","Type":"Text","Format":"text\/html","Identifier":"\u00a7 58.1-439.28","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> As a condition for qualification by the Department<\/span> of Education, a scholarship foundation<\/span>, as defined in § 58.1-439.25<\/a> and included on the list published annually by the Department<\/span> of Education pursuant to this section, shall disburse an amount at least equal to 90 percent of the value of the donations it receives (for which tax credits were issued under this article) during each 12-month period ending on June 30 by the immediately following June 30 for qualified educational expenses<\/span> through scholarships to eligible students<\/span>. Tax-credit-derived funds not used for such scholarships may only be used for the administrative expenses of the scholarship foundation<\/span>. Any scholarship foundation<\/span> that fails to meet such disbursal requirement shall, for the first offense<\/span>, be required to pay a civil penalty<\/span> equal to the difference between 90 percent of the value of the tax-credit-derived donations it received in the applicable 12-month period and the amount that was actually disbursed. Such civil penalty<\/span> shall be remitted by the scholarship foundation<\/span> to the Department<\/span> of Education within 30 days after the end of the one-year period and deposited to the general fund. For a second offense<\/span> within a five-year period, the scholarship foundation<\/span> shall be removed from the annual list published pursuant to this section and shall not be entitled to request preauthorization for additional tax credits, nor shall it be entitled to receive and administer additional tax-credit-derived funds for two years. After two years, the scholarship foundation<\/span> shall be eligible to reapply to be included on the annual list to receive and administer tax-credit derived funds. If a scholarship foundation<\/span> is authorized to be added to the annual list after such reapplication, the scholarship foundation<\/span> shall not be considered to have any previous offenses<\/span> for purposes of this subsection. The required disbursement under this section shall begin with donations received for the period January 1, 2013, through June 30, 2014. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> By September 30 of each year beginning in 2016, the scholarship foundation<\/span> shall provide the following information to the Department<\/span> of Education: (i) the total number and value of donations received by the foundation during the 12-month period ending on June 30 of the prior calendar year for which tax credits were issued by the Superintendent of Public Instruction, (ii) the dates when such donations were received, and (iii) the total number and dollar amount of qualified educational expenses<\/span> scholarships awarded from tax-credit-derived donations and disbursed by the scholarship foundation<\/span> during the 24-month period ending on June 30 of the current calendar year. Any scholarship foundation<\/span> that fails to provide this report by September 30 shall, for the first offense<\/span>, be required to pay a $1,000 civil penalty<\/span>. Such civil penalty<\/span> shall be remitted by the scholarship foundation<\/span> to the Department<\/span> of Education by November 1 of the same year and deposited to the general fund. For a second offense<\/span> within a five-year period, the scholarship foundation<\/span> shall be removed from the annual list published pursuant to this section and shall not be entitled to request preauthorization for additional tax credits, nor shall it be entitled to receive and administer additional tax-credit-derived funds. After two years, the scholarship foundation<\/span> shall be eligible to reapply to be included on the annual list to receive and administer tax-credit derived funds. If a scholarship foundation<\/span> is authorized to be added to the annual list after such reapplication, the scholarship foundation<\/span> shall not be considered to have any previous offenses<\/span> for purposes of this subsection. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> In awarding scholarships from tax-credit-derived funds, the scholarship foundation<\/span> shall (i) provide scholarships for qualified educational expenses<\/span> only to students<\/span> whose family’s annual household income is not in excess of 300 percent of the current poverty guidelines<\/span>, eligible students<\/span> with a disability, or eligible pre-kindergarten children; (ii) not limit scholarships to students<\/span> of one school; and (iii) comply with Title VI of the Civil Rights Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds by the eligible scholarship foundation<\/span> shall be by individual<\/span> warrant or check made payable to and mailed to the eligible school that the student<\/span>’s parent or legal guardian indicates. In mailing such scholarship payments, the eligible scholarship foundation<\/span> shall include a written notice to the eligible school that the source of the scholarship was donations made by persons receiving tax credits for the same pursuant to this article. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> 1. Scholarship foundations<\/span> shall ensure that schools selected by students<\/span> to which tax-credit-derived funds may be paid (i) are in compliance with the Commonwealth’s and locality’s health and safety laws<\/span> and codes; (ii) hold a valid occupancy permit as required by the locality; (iii) comply with Title VI of the Civil Rights Act of 1964, as amended; and (iv) are (a) for students<\/span> in grades K through 12, nonpublic schools that comply with nonpublic school accreditation requirements as set forth in \u00a7 22.1-19<\/a> and administered by the Virginia Council for Private Education or nonpublic schools that maintain an assessment system that annually measures scholarship students<\/span>’ progress in reading and math using a national norm-referenced achievement test, including but not limited to the Stanford Achievement Test, California Achievement Test, and Iowa Test of Basic Skills and (b) for eligible pre-kindergarten children, nonpublic pre-kindergarten programs<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Each nonpublic pre-kindergarten program<\/span> shall (i) provide to the eligible pre-kindergarten child<\/span> a curriculum that is aligned with Virginia’s Foundation Blocks for Early Learning: Comprehensive Standards for Four-Year-Olds as published by the Department<\/span> of Education, or any successor standards published by the Department<\/span> of Education; (ii) have maximum class sizes of 20 students<\/span> with a teacher-student<\/span> ratio of not fewer than two teachers for every 20 students<\/span>; (iii) provide at least half-day services and operate for at least the school year; (iv) agree to provide the Department<\/span> of Education with student<\/span> information for each eligible pre-kindergarten child<\/span> receiving a scholarship foundation<\/span> scholarship for purposes of allowing the Department<\/span> of Education to conduct studies comparing the academic performance of such children while attending primary or secondary school with other children attending primary or secondary school who have attended a pre-kindergarten program, including programs funded under the Virginia Preschool Initiative; and (v) require professional development of program teachers, which enables such teachers to engage in high-quality interactions with eligible pre-kindergarten children and provide high-quality instruction in accordance with the curriculum described under clause (i). Each nonpublic pre-kindergarten program<\/span> teacher at a minimum shall have earned a certificate from a nationally recognized early childhood education certificate program, including but not limited to any early childhood education program provided or sponsored by the Virginia Community College System.\n\t\t\t\tIn awarding scholarships to eligible pre-kindergarten children, scholarship foundations<\/span> shall award scholarships from tax-credit-derived funds only to such children who are enrolled in or attending nonpublic pre-kindergarten programs<\/span> that meet the conditions of this subdivision as certified by the Virginia Council for Private Education or the Virginia Early Childhood Foundation. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Eligible schools shall compile the results of any national norm-referenced achievement test for each of its students<\/span> receiving tax-credit-derived scholarships and shall provide the respective parents or legal guardians of such students<\/span> with a copy of the results on an annual basis, beginning with the first year of testing of the student<\/span>. Such schools also shall annually provide to the Department<\/span> of Education for each such student<\/span> the achievement test results, beginning with the first year of testing of the student<\/span>, and student<\/span> information that would allow the Department<\/span> to aggregate the achievement test results by grade level, gender, family income level, number of years of participation in the scholarship program, and race. Beginning with the third year of testing of each such student<\/span> and test-related data collection, the Department<\/span> of Education shall ensure that the achievement test results and associated learning gains are published on the Department<\/span> of Education’s website in accordance with such classifications and in an aggregate form as to prevent the identification of any student<\/span>. Eligible schools shall annually provide to the Superintendent of Public Instruction graduation rates of its students<\/span> participating in the scholarship program in a manner consistent with nationally recognized standards. In publishing and disseminating achievement test results and other information, the Superintendent of Public Instruction and the Department<\/span> of Education shall ensure compliance with all student<\/span> privacy laws<\/span>.\n\t\t\t\tThe provisions of this subdivision shall not apply to eligible pre-kindergarten children. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> 1. The aggregate amount of scholarships provided to each student<\/span> for any single school year by all eligible scholarship foundations<\/span> from eligible donations shall not exceed the lesser of (i) the actual qualified educational expenses<\/span> of the student<\/span> or (ii) 100 percent of the per-pupil amount distributed to the local school division (in which the student<\/span> resides) as the state’s share of the standards of quality costs using the composite index of ability to pay as defined in the general appropriation act. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> In the case of eligible pre-kindergarten children, the aggregate amount of scholarships provided to each child for any single school year by all eligible scholarship foundations<\/span> from eligible donations shall not exceed the lesser of the actual qualified educational expenses<\/span> of the child or the state share of the grant per child under the Virginia Preschool Initiative for the locality in which the eligible pre-kindergarten child<\/span> resides. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> Scholarship foundations<\/span> shall develop procedures for disbursing scholarships in quarterly or semester payments throughout the school year to ensure scholarships are portable. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> Scholarship foundations<\/span> that receive donations of marketable securities for which tax credits were issued under this article shall be required to sell such securities and convert the donation into cash immediately, but in no case more than 21 days after receipt of the donation. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

H.<\/span> Each scholarship foundation<\/span> with total revenues (including the value of all donations) (i) in excess of $100,000 for the foundation’s most recent fiscal year ended shall have an audit or review performed by an independent certified public accountant of the foundation’s donations received in such year for which tax credits were issued under this article or (ii) of $100,000 or less for the foundation’s most recent fiscal year ended shall have a compilation performed by an independent certified public accountant of the foundation’s donations received in such year for which tax credits were issued under this article. A summary report of the audit, review, or compilation shall be made available to the public and the Department<\/span> of Education upon request. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

I.<\/span> The Department<\/span> of Education shall publish annually on its website a list of each scholarship foundation<\/span> qualified under this article. Once a foundation has been qualified by the Department<\/span> of Education, it shall remain qualified until the Department<\/span> removes the foundation from its annual list. The Department<\/span> of Education shall remove a foundation from the annual list if it no longer meets the requirements of this article. The Department<\/span> of Education may periodically require a qualified foundation to submit updated or additional information for purposes of determining whether or not the foundation continues to meet the requirements of this article. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

J.<\/span> Actions of the Superintendent of Public Instruction or the Department<\/span> of Education relating to the awarding of tax credits under this article and the qualification of scholarship foundations<\/span> shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000<\/a> et seq.). Decisions of the Superintendent of Public Instruction or the Department<\/span> of Education shall be final and not subject to review or appeal<\/span>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\n(APPLICABLE TO TAXABLE YEARS BEGINNING ON AND AFTER JANUARY 1, 2028) GUIDELINES\nFOR SCHOLARSHIP FOUNDATIONS (\u00a7 58.1-439.28)\n\nA. As a condition for qualification by the Department of Education, a\nscholarship foundation, as defined in § 58.1-439.25 and included on the\nlist published annually by the Department of Education pursuant to this section,\nshall disburse an amount at least equal to 90 percent of the value of the\ndonations it receives (for which tax credits were issued under this article)\nduring each 12-month period ending on June 30 by the immediately following June\n30 for qualified educational expenses through scholarships to eligible students.\nTax-credit-derived funds not used for such scholarships may only be used for the\nadministrative expenses of the scholarship foundation. Any scholarship\nfoundation that fails to meet such disbursal requirement shall, for the first\noffense, be required to pay a civil penalty equal to the difference between 90\npercent of the value of the tax-credit-derived donations it received in the\napplicable 12-month period and the amount that was actually disbursed. Such\ncivil penalty shall be remitted by the scholarship foundation to the Department\nof Education within 30 days after the end of the one-year period and deposited\nto the general fund. For a second offense within a five-year period, the\nscholarship foundation shall be removed from the annual list published pursuant\nto this section and shall not be entitled to request preauthorization for\nadditional tax credits, nor shall it be entitled to receive and administer\nadditional tax-credit-derived funds for two years. After two years, the\nscholarship foundation shall be eligible to reapply to be included on the annual\nlist to receive and administer tax-credit derived funds. If a scholarship\nfoundation is authorized to be added to the annual list after such\nreapplication, the scholarship foundation shall not be considered to have any\nprevious offenses for purposes of this subsection. The required disbursement\nunder this section shall begin with donations received for the period January 1,\n2013, through June 30, 2014.\n\nB. By September 30 of each year beginning in 2016, the scholarship foundation\nshall provide the following information to the Department of Education: (i) the\ntotal number and value of donations received by the foundation during the\n12-month period ending on June 30 of the prior calendar year for which tax\ncredits were issued by the Superintendent of Public Instruction, (ii) the dates\nwhen such donations were received, and (iii) the total number and dollar amount\nof qualified educational expenses scholarships awarded from tax-credit-derived\ndonations and disbursed by the scholarship foundation during the 24-month period\nending on June 30 of the current calendar year. Any scholarship foundation that\nfails to provide this report by September 30 shall, for the first offense, be\nrequired to pay a $1,000 civil penalty. Such civil penalty shall be remitted by\nthe scholarship foundation to the Department of Education by November 1 of the\nsame year and deposited to the general fund. For a second offense within a\nfive-year period, the scholarship foundation shall be removed from the annual\nlist published pursuant to this section and shall not be entitled to request\npreauthorization for additional tax credits, nor shall it be entitled to receive\nand administer additional tax-credit-derived funds. After two years, the\nscholarship foundation shall be eligible to reapply to be included on the annual\nlist to receive and administer tax-credit derived funds. If a scholarship\nfoundation is authorized to be added to the annual list after such\nreapplication, the scholarship foundation shall not be considered to have any\nprevious offenses for purposes of this subsection.\n\nC. In awarding scholarships from tax-credit-derived funds, the scholarship\nfoundation shall (i) provide scholarships for qualified educational expenses\nonly to students whose family’s annual household income is not in excess\nof 300 percent of the current poverty guidelines, eligible students with a\ndisability, or eligible pre-kindergarten children; (ii) not limit scholarships\nto students of one school; and (iii) comply with Title VI of the Civil Rights\nAct of 1964, as amended. Payment of scholarships from tax-credit-derived funds\nby the eligible scholarship foundation shall be by individual warrant or check\nmade payable to and mailed to the eligible school that the student’s\nparent or legal guardian indicates. In mailing such scholarship payments, the\neligible scholarship foundation shall include a written notice to the eligible\nschool that the source of the scholarship was donations made by persons\nreceiving tax credits for the same pursuant to this article.\n\nD. 1. Scholarship foundations shall ensure that schools selected by students to\nwhich tax-credit-derived funds may be paid (i) are in compliance with the\nCommonwealth’s and locality’s health and safety laws and codes; (ii)\nhold a valid occupancy permit as required by the locality; (iii) comply with\nTitle VI of the Civil Rights Act of 1964, as amended; and (iv) are (a) for\nstudents in grades K through 12, nonpublic schools that comply with nonpublic\nschool accreditation requirements as set forth in \u00a7 22.1-19 and administered by\nthe Virginia Council for Private Education or nonpublic schools that maintain an\nassessment system that annually measures scholarship students’ progress in\nreading and math using a national norm-referenced achievement test, including\nbut not limited to the Stanford Achievement Test, California Achievement Test,\nand Iowa Test of Basic Skills and (b) for eligible pre-kindergarten children,\nnonpublic pre-kindergarten programs.\n\n 2. Each nonpublic pre-kindergarten program shall (i) provide to the eligible\n pre-kindergarten child a curriculum that is aligned with Virginia’s\n Foundation Blocks for Early Learning: Comprehensive Standards for\n Four-Year-Olds as published by the Department of Education, or any successor\n standards published by the Department of Education; (ii) have maximum class\n sizes of 20 students with a teacher-student ratio of not fewer than two\n teachers for every 20 students; (iii) provide at least half-day services and\n operate for at least the school year; (iv) agree to provide the Department of\n Education with student information for each eligible pre-kindergarten child\n receiving a scholarship foundation scholarship for purposes of allowing the\n Department of Education to conduct studies comparing the academic performance\n of such children while attending primary or secondary school with other\n children attending primary or secondary school who have attended a\n pre-kindergarten program, including programs funded under the Virginia\n Preschool Initiative; and (v) require professional development of program\n teachers, which enables such teachers to engage in high-quality interactions\n with eligible pre-kindergarten children and provide high-quality instruction\n in accordance with the curriculum described under clause (i). Each nonpublic\n pre-kindergarten program teacher at a minimum shall have earned a certificate\n from a nationally recognized early childhood education certificate program,\n including but not limited to any early childhood education program provided or\n sponsored by the Virginia Community College System.\n \t\t\t\tIn awarding scholarships to eligible pre-kindergarten children,\n scholarship foundations shall award scholarships from tax-credit-derived funds\n only to such children who are enrolled in or attending nonpublic\n pre-kindergarten programs that meet the conditions of this subdivision as\n certified by the Virginia Council for Private Education or the Virginia Early\n Childhood Foundation.\n\n 3. Eligible schools shall compile the results of any national norm-referenced\n achievement test for each of its students receiving tax-credit-derived\n scholarships and shall provide the respective parents or legal guardians of\n such students with a copy of the results on an annual basis, beginning with\n the first year of testing of the student. Such schools also shall annually\n provide to the Department of Education for each such student the achievement\n test results, beginning with the first year of testing of the student, and\n student information that would allow the Department to aggregate the\n achievement test results by grade level, gender, family income level, number\n of years of participation in the scholarship program, and race. Beginning with\n the third year of testing of each such student and test-related data\n collection, the Department of Education shall ensure that the achievement test\n results and associated learning gains are published on the Department of\n Education’s website in accordance with such classifications and in an\n aggregate form as to prevent the identification of any student. Eligible\n schools shall annually provide to the Superintendent of Public Instruction\n graduation rates of its students participating in the scholarship program in a\n manner consistent with nationally recognized standards. In publishing and\n disseminating achievement test results and other information, the\n Superintendent of Public Instruction and the Department of Education shall\n ensure compliance with all student privacy laws.\n \t\t\t\tThe provisions of this subdivision shall not apply to eligible\n pre-kindergarten children.\n\nE. 1. The aggregate amount of scholarships provided to each student for any\nsingle school year by all eligible scholarship foundations from eligible\ndonations shall not exceed the lesser of (i) the actual qualified educational\nexpenses of the student or (ii) 100 percent of the per-pupil amount distributed\nto the local school division (in which the student resides) as the state’s\nshare of the standards of quality costs using the composite index of ability to\npay as defined in the general appropriation act.\n\n 2. In the case of eligible pre-kindergarten children, the aggregate amount of\n scholarships provided to each child for any single school year by all eligible\n scholarship foundations from eligible donations shall not exceed the lesser of\n the actual qualified educational expenses of the child or the state share of\n the grant per child under the Virginia Preschool Initiative for the locality\n in which the eligible pre-kindergarten child resides.\n\nF. Scholarship foundations shall develop procedures for disbursing scholarships\nin quarterly or semester payments throughout the school year to ensure\nscholarships are portable.\n\nG. Scholarship foundations that receive donations of marketable securities for\nwhich tax credits were issued under this article shall be required to sell such\nsecurities and convert the donation into cash immediately, but in no case more\nthan 21 days after receipt of the donation.\n\nH. Each scholarship foundation with total revenues (including the value of all\ndonations) (i) in excess of $100,000 for the foundation’s most recent\nfiscal year ended shall have an audit or review performed by an independent\ncertified public accountant of the foundation’s donations received in such\nyear for which tax credits were issued under this article or (ii) of $100,000 or\nless for the foundation’s most recent fiscal year ended shall have a\ncompilation performed by an independent certified public accountant of the\nfoundation’s donations received in such year for which tax credits were\nissued under this article. A summary report of the audit, review, or compilation\nshall be made available to the public and the Department of Education upon\nrequest.\n\nI. The Department of Education shall publish annually on its website a list of\neach scholarship foundation qualified under this article. Once a foundation has\nbeen qualified by the Department of Education, it shall remain qualified until\nthe Department removes the foundation from its annual list. The Department of\nEducation shall remove a foundation from the annual list if it no longer meets\nthe requirements of this article. The Department of Education may periodically\nrequire a qualified foundation to submit updated or additional information for\npurposes of determining whether or not the foundation continues to meet the\nrequirements of this article.\n\nJ. Actions of the Superintendent of Public Instruction or the Department of\nEducation relating to the awarding of tax credits under this article and the\nqualification of scholarship foundations shall be exempt from the provisions of\nthe Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the\nSuperintendent of Public Instruction or the Department of Education shall be\nfinal and not subject to review or appeal.\n\nHISTORY: 2012, cc. 731, 842; 2013, cc. 713, 716; 2016, cc. 751, 767; 2019, cc.\n808, 817.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}