Setting Up a Scholarship Tips
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College Development Professionals Can Assist Alumni Set Up Scholarship Endowments
Many colleges and universities have comprehensive development programs that encourage alumni to consider creating a scholarship endowment, either in their own names or in honor or memory of another person. Most school development officers have knowledgeable fundraising professionals on staff who can teach interested graduates how to set up a scholarship fund that provides a perpetual source of scholarship funding for students as well as tax advantages for the donor.
Alumni who set up endowed scholarship funds at their alma mater generally do so by donating money, stocks or bonds, real estate, or through a bequest in their wills. There is a minimum donation amount required to create a scholarship endowment. The amount varies among institutions, but rarely is less than $25,000.
When you set up an endowed scholarship fund, the donor can designate criteria (within the bounds of legality) for how the funds will be awarded. For example, alumni frequently designate that funds from their endowments be made available only to students who are majoring in the same field as the donor.
The beauty of scholarship endowments is that the principal amount of the donation becomes a permanent asset for the school. The principal is invested, and the interest earned on the principal is what is given to scholarship winners. Once an endowment fund is established at an institution, it will always be there.
What You Need to Know to Set Up a Scholarship Fund
Scholarship funds can be set up by any individual or organization. Creating a scholarship program might seem like a daunting task at first glance, but it seems much easier once you learn how to start a scholarship program. All it takes to set up a scholarship program is a combination of money and planning.
Steps in setting up a scholarship fund include:
Money - determine the amount of money available for the scholarship program. Many scholarship funds are started with generous donations from major corporate sponsors. Others are launched as a result of a bequest. Still others are the result of fundraising efforts of individuals or members of clubs or organizations.
Compliance - make sure the scholarship program is being established and operated within the boundaries of state and federal laws, including Internal Revenue Service regulations.
Scholarship Value - set an amount to be paid each year in scholarship funds. Some scholarship funds have a set dollar amount each year. Others are set up so that the value of funds to be awarded can change each year.
Eligibility Criteria - every scholarship fund must have documented criteria for eligibility, that specify the qualifications required to receive funding under the scholarship program.
Award Period - Some scholarships are one time awards for which previous winners may or may not be allowed to re-apply. Others are renewable based on certain criteria (such as satisfactory academic progress or continued performance ability).
Duration of Fund - some scholarship programs are one-time gifts. Others are established as endowment funds, in which the principal of the donation is invested and the interest is awarded to scholarship recipients. These types of scholarship programs become self perpetuating, if managed properly.
Community Foundations Are a Valuable Resource For Setting Up Scholarship
When thinking about starting a scholarship program of your own, one of the best resources for providing you information regarding how to start a scholarship fund is your local community foundation. Most metropolitan areas have a community foundation, which is an organization that both provides grant funding to charitable organizations and assists citizens who wish to contribute to or establish charitable funds. Examples of community foundations include The Dallas Foundation and The Community Foundation of South Alabama.
Individuals, corporations, professional organizations, and other groups can set easily up scholarship funds with the assistance of a community foundation. Community foundations can handle scholarship funds that are established as a result of a bequest, as well as funds donated by individuals, corporations, and other groups.
Community foundations can provide a variety of services that ensure that new scholarship programs are established in compliance with IRS regulations. Foundations are able to assist donors by setting up eligibility criteria, structuring the procedures for applying for the scholarship, and putting together an advisory committee.
Memorial Scholarships Pay Tribute to Important People
Setting up a memorial scholarship is a wonderful way to pay tribute to a loved one who has passed away. There are a many different ways to approach setting up a memorial scholarship. When thinking about setting up a memorial scholarship fund, it is a good idea to consider what causes were near and dear to the heart of the person for whom the fund will be named.
Examples of Memorial Scholarship Funds:
College Activity: The parents of Connie Keicher, a former member of the University of Michigan Marching band, established a scholarship in her memory that is awarded to a member of the school's band each year.
Illness: The Matt Stauffer Memorial Scholarship, administered through the Ulman Cancer Fund for Young Adults, is awarded to young people living with cancer who are seeking higher education.
Career Path: The Fred Rogers Memorial Scholarship (from television's Mr. Rogers' Neighborhood), administered by the Academy of Television Arts & Science Foundation is awarded to college students pursing careers in children's media.
What better way to honor the memory of someone who made an impact on your life than with a memorial scholarship fund that can have a positive impact on many additional lives in the future?
Starting a Scholarship Through a Community Foundation
Those who wish to start a scholarship fund have many different options. When investigating how to start a scholarship, foundation organizations in your community are generally the best resources for information.
Community foundations can help individuals, organizations, and corporations start scholarship funds. Unless you plan to establish a private or corporate foundation, it is generally best to establish your foundation based scholarship with your local community foundation.
There are many different ways you can set up a scholarship foundation fund.
- Contribute money to an existing scholarship fund or to establish a new one.
- Contribute stocks, bonds, or real property to an existing scholarship fund or to establish a new one.
- Bequeath money to the foundation in your will for the purpose of starting a scholarship fund.
- Name the foundation as a beneficiary for your life insurance policy or annuities.
- Establish a charitable remainder trust or other planned giving resource.
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| Kristle Jones |
