Scholarship Providers Using CSA: Is It Tax-Deductible?

1. If the Scholarship Provider Is a 501(c)(3) Nonprofit

• Yes, scholarships awarded via the CSA are generally tax-deductible.

• The CSA is a platform — the tax status of the organization awarding the scholarship determines deductibility.

• The nonprofit must:

  • Follow IRS rules (objective criteria, nondiscriminatory selection).

  • Maintain control over the use of funds.

2. If the Scholarship Provider Is a Business

• Yes, it may be deductible as a business expense, if:

  • The scholarship serves a business purpose (e.g., public goodwill, industry development).

  • Selection is impartial and complies with IRS regulations (Publication 970).

3. If the Provider Is an Individual

• No, individuals cannot deduct personal scholarship gifts unless:

  • They contribute to a 501(c)(3) which administers the scholarship.

  • They establish a Donor-Advised Fund or scholarship through a community foundation or nonprofit.