The “Workforce Development Through Post-Graduation Scholarships Act” is a new piece of legislation generating excitement for philanthropic entities around the country. If voted into law, H.R. 6486, would amend the Internal Revenue Code to exclude certain post-graduation scholarship grants from being treated as gross income, the same way scholarship payments made by foundations are currently treated under the tax code.

“It will give community foundations across America a new opportunity to be more strategic with their scholarship assets,” Randy Maiers, president and CEO, Community Foundation of St. Clair County (SCC), told CMF. “This program not only helps reduce the financial burden of a college degree, the same as a traditional front-end scholarship, but it also allows a community foundation to use its assets in a manner that supports economic growth and prosperity. Foundations will be able to help address talent attraction and retention.”

Maiers was instrumental in the legislation’s development. The Community Foundation of SCC launched a post-graduation scholarship program in early 2016 and since that time, Maiers has been engaged in efforts to change the related tax code. He has spoken nationally about the program, and as a result, community foundations in eight states have expressed interest in following a similar model.

“With the help and leadership of CMF, we had three meetings in Washington D.C. with staff from the U.S. Treasury to plan out an approach for eventually introducing legislation that would recognize these types of back end scholarships as a charitable activity,” Maiers explains. "From the very beginning, we have been exploring how to get legislation introduced.”

The bill's introduction came on July 24, 2018 from Representatives Darin LaHood (R-IL) and Terri Sewell (D-AL) with support from Representative Paul Mitchell of Michigan as a co-sponsor. Representative Mike Bishop of Michigan on the House Ways and Means Committee has also agreed to support the Bill. A companion bill has been developed; it is anticipated that the bill will be introduced by Senator Gary Peters in the Senate in August.

“This bipartisan legislation will not only help recruit talent to often underserved areas and professions, relieve individuals of student loan debt and help foster economic development to particular regions, but charitable organizations will be provided greater flexibility to serve their unique communities,” Rep. LaHood stated.

Rep. Sewell said the bill “takes a smart approach to building a skilled workforce in underserved communities while at the same time tackling our nation’s student debt crisis.”

Regarding how such a process would work, the Council on Foundations (COF) explains in its FAQ on the bill that like traditional scholarships, a foundation would establish appropriate eligibility requirements and put in place a process to verify that those requirements continue to be met through the duration of the scholarship award agreement.

“For example, a foundation that is looking to attract nurses or doctors to a community facing a shortage of qualified health professionals could award a post-scholarship to a recipient but require that an individual live and be employed within a particular range of zip codes for a set number of years.”

COF sent a letter to every House office urging representatives to cosponsor this bill and calls on citizens to encourage their representatives to cosponsor H.R. 6486. COF has provided an online form for individuals looking to express support for the Bill to their legislators.

The Bill will be considered by the House Ways and Means Committee, of which Representative LaHood is a member, this fall.

Want more?

Read COF’s Frequently Asked Questions document on post-graduation scholarships.

Read COF's one-pager “Legal Background on Scholarship Grantmaking by Foundations.”