Scholarship Donations Returned in New Hampshire

Half of the funds that were donated by businesses to a scholarship fund for schoolchildren last year in New Hampshire went unused. The money had to be returned due to a decision made by the state court banning scholarships for families who send their children to church-related schools.

The money was granted as part of a program that gives businesses a credit against 85 percent of their state business profits tax for donations to a scholarship fund. The fund provides scholarships to children who pay tuition to attend private or out-of-district schools or who are home-schooled.

A ruling last year by Strafford County Superior Court banned the use of the money raised to provide scholarships to schools using “any sect or denomination”. Judge John Lewis said the Constitution does not allow the state to fund a “religious education”. This decision has been appealed to the state Supreme Court. Businesses who donated money had funds refunded pro rata, meaning that every business who gave had some of their donation returned.

Kate Baker, executive director of Network for Educational Opportunity, said $125,000 of the $250,000 her group raised had to be given back. Her group is state-authorized to raise and spend money under the program, and plans to expand their donor base next year.


“The legislation says 70 percent of the dollars need to go to children going from public to private schools or for home schooling,” Baker said. “One-half to three-quarters of private schools in New Hampshire have some religious affiliation, so based on the metrics in the legislation; we could only use $125,000 of what we had.”

Bill Smith of the New Hampshire Leader reported that the Supreme Court agreed to hear an appeal on the ruling banning the use of scholarship funds for church-related schools, but has not yet scheduled oral arguments.

While the state Attorney General’s Office has the responsibility of defending the constitutionality of a law enacted by the state Legislature, Gov. Maggie Hassan, who appointed Attorney General Joseph Foster, called in a friend-of-the-court brief for upholding the ban on religious school scholarships. The Attorney General’s Office argued in Superior Court that the money donated by businesses never goes into state coffers, so it can’t be considered public money.   

Hassan’s attorney’s say that because the donations are reimbursed by a tax credit it is the same as public funding the church-related school, which violates the Constitutional rights of taxpayers who do not want their tax dollars spent on “such schools”.

While waiting for the state Constitutional issues to be determined, the NEO has a goal of doubling its donations for its second year of awarding scholarships. Baker says the money should be easier to raise this year because “we have shown that people want to invest in education and help children where they need it most”.