January 9, 2009, Newsletter Issue #150: College Development Professionals Can Assist Alumni Set Up Scholarship Endowments

Tip of the Week

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.

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