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Rhode Island – Tax Credits for Contributions to Scholarship Organizations

Rhode Island – Tax Credits for Contributions to Scholarship Organizations

Rhode Island’s tax-credit scholarship program, enacted in 2006 and launched in 2007, offers a 75 percent tax credit to businesses that donate to Scholarship Granting Organizations (SGOs) or 90 percent if donated for two consecutive years and the second year’s donation is worth at least 80 percent of the first year’s donation. SGOs are non-profits that offer private school scholarships of varying amounts to students from low-income households. Learn more about this tax-credit scholarship program’s funding, eligibility, regulations, and governing statutes on this page.

Program Fast Facts

  • 415 students participating (2015)

  • 39 percent of families with children income-eligible statewide

  • Six scholarship organizations awarding scholarships (2014)

  • 51 schools participating (2015)

  • Average scholarship value: $3,738 (2015)

  • Value as a percentage of public school per-student spending: 25 percent

Program Details

Rhode Island’s Tax Credits for Contributions to Scholarship Organization Participation

Students Participating
Calendar Year

Click the + symbols to learn more about this program’s details.

Rhode Island provides a credit on corporate income taxes for donations to scholarship-granting organizations (SGOs), nonprofits that provide private school scholarships. Tax credits are worth 75 percent of the contribution or 90 percent if donated for two consecutive years and the second year’s donation is worth at least 80 percent of the first year’s donation. The total amount of tax credits is capped at $1.5 million. Each corporate donor can receive only $100,000 in tax credits each year and cannot use surplus donations in one year to generate tax credits in future years.

Student Funding

Scholarship amounts are determined by SGOs.

Student Eligibility

Students must have family incomes at or below 250 percent of the poverty level ($61,500 for a family of four in 2017–18).

EdChoice Expert Feedback

Rhode Island’s $1.5 million cap for available funding is extremely low when compared with demand. Only about one-third of potential donors have been able to participate in any given year. SGOs have the ability to determine their own student funding amounts, which is a plus; however, the overall cap on tax credits severely limits the potential and overall scope of those scholarships. The 75 percent deduction if donating for one year or 90 percent if donating for two years offers an attractive opportunity for corporations to continue supporting the program. And private school regulation is kept to a minimum: Schools must comply with health, safety and nondiscrimination laws, employ teachers with bachelor’s degrees and conduct teacher background checks. The program could serve more children if the overall cap were increased or an escalator clause, similar to Florida’s, were added to allow the program to grow to match demand.

Rules and Regulations

  • Income Limit: 250 percent x Poverty
  • Prior Year Public School Requirement: None
  • Geographic Limit: Statewide
  • Enrollment Cap: None
  • Scholarship Cap: None
  • Testing Mandates: None
  • Credit Value: 75 percent / 90 percent
  • Total Credit Cap: Yes
  • Budget Cap: $1.5 million

 

SGO Requirements:

  • Use at least 90 percent of contributions for scholarships
  • Provide annual report to the state detailing number and value of scholarships awarded, ZIP Codes of recipients, and criteria used to award scholarships

Legal History

No legal challenges have been filed against the program.

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