Setting up a scholarship fund in your name is a way to provide for the educational needs of deserving students while recognizing your contribution to a worthy cause. You can establish the criteria to select the recipients as well as determine who will make the decision about who receives the scholarship.
Choose a name for your scholarship fund. If the scholarship fund is to begin after your demise, naming your contribution as a memorial is a way to keep your name alive and associated with your passion. Some choose to include "endowment" in the naming of the fund. Still other contributors desire to remain anonymous.
Determine the criteria for someone to qualify for a scholarship fund set up in your name. This could specify only students of a specific geographic area, GED students, a defined ethnic group or full-time students. Other criteria may include determination of financial need, a stated grade point average requirement, specific academic or athletic interests or career goals.
Identify the method by which the scholarship recipient will be selected each year. Will you make the selection, or do you prefer to form a committee to make the determination? Some schools have a scholarship committee set up to choose students according to the criteria that donors like you establish.
Determine the amount of money you need to set up a scholarship fund in your name. If you choose to make an endowment fund, the principal is never spent. The earnings are used to award scholarships on an annual basis. The amount of principal must be large enough to provide significant earnings. Check with your investment broker to learn about current interest and the most profitable earnings potential for a scholarship fund.
Consider the requirements of the IRS tax laws concerning the setup of a scholarship fund in your name. It must be nondiscriminatory.
Let a third-party scholarship management company handle all the work to get the funds to the most qualified recipients. By letting an experienced group such as Scholarship America handle the requests for funds, everyone is treated equally and according to specified guidelines (see Resources below).
Encourage family and friends to make contributions to your scholarship fund rather than buy gifts for special occasions. Donate stock toward a scholarship endowment fund to avoid capital gains tax.