 Scholarship funds have been created at the Community Foundation by individuals and families, schools and organizations to provide financial assistance for qualified students in their pursuit of higher education. Creating a scholarship fund is a wonderful way to inspire and support young people and to recognize the contribution that education has made in our lives. The process of creating a scholarship fund at the Foundation is fairly simple, but donors should carefully consider several factors.
Donors may establish scholarship funds to benefit students of a particular school, geographic region, educational discipline, gender or other group, such as the handicapped. Scholarship criteria may be merit of need, or both.
The following key points are the Community Foundation of a successful scholarship program.
The donor or group establishing a scholarship fund should define the eligibility requirements for selection: For example, "students age 18 and over to attend accredited nursing programs," or "graduating seniors of a given high school who are enrolling as full-time students in an accredited two- or four-year post-secondary educational program." The donor or group also should determine, in consultation with the Community Foundation, the criteria for selection. These vary, but often include personal and academic qualifications, financial need, extracurricular activities or community involvement. They must also decide whether the award should be for one year only or if it is renewable, and what the criteria will be for subsequent awards.
It is the donor's sponsoring organization's responsibility to make sure prospective students know that the scholarship exists, and to receive, screen and select winners using a fair and impartial committee according to the established criteria. The Community Foundation will have responsibility for fund management and administration, for check processing, gift receipt and acknowledgment (gifts over $250) and fiduciary oversight of the program. The donor or organization will need to appoint a liaison with the Foundation to insure good communication.
A selection committee should be named or defined by the donor or sponsoring organization to screen applicants and choose recipients. Those charged with selecting scholarship recipients must not be in a position to derive an economic benefit, directly or indirectly, from the scholarship program. Provisions should be in place to avoid conflicts of interest with respect to a particular application. The Community Foundation customarily does not participate in the selection process, but is notified of the winner's name, address, the amount of the award and the institution they will be attending.
IRS rules require that scholarship programs benefit members of a charitable class e.g., a group that is large enough so that an indefinite number of individuals may benefit, or a group by virtue of circumstances beyond the control of the selection committee.
Scholarship payments usually are made to both the student and the educational institution he or she will be attending, requiring endorsement by both parties.
Scholarship funds are established through a fund agreement, and additions may be made to the Fund through future gifts. On a quarterly basis, the donor or sponsoring organization will receive a statement summarizing fund activity; additional gifts, payments, investment gains or losses, fees, etc.
An endowed scholarship fund requires about $25,000 for each annual scholarship of $1,000. If the scholarship is renewable at this level for four years, by the fourth year, four students will each be receiving $1,000 scholarships, requiring an endowed fund balance of $100,000.
Donors who have a variety of charitable objectives may choose to establish a donor advised fund first, and recommend an annual grant to an existing scholarship fund, or to a school for distribution through its existing scholarship program.
The Community Foundation offers expert advice in the design and management of successful scholarship programs and will be happy to discuss how a program can be created to achieve each donor's charitable objectives.
For additional information on this type of fund or for information about the Community Foundation, please contact Sheila Kinman by phone at 515.447.4207 or email. |
