How to Start a Scholarship Fund in Memory of a Loved One
When someone close to you passes away, it’s natural to want to honor their legacy and the memories that mean so much to you. The people we hold dearest leave a lasting impact on our lives and the lives of those around us, so there’s few better ways to honor their memory than by using it to help those in need. One effective and increasingly popular way to do this is by starting a scholarship fund in your loved one’s name.
A common misconception about scholarships is that they are only started by governments, universities, corporations, or professional fundraising managers. The good news is that any individual can create a scholarship or memorial fund. If you’re not sure where to begin, keep reading for expert tips on how to start a scholarship fund in honor of your loved one’s memory.
How to set up a scholarship fund in 7 easy steps
Starting a scholarship fund is a great way to keep the memory of a lost friend or family member alive, but it can also be an effective way to channel your grief into something positive. By offering the invaluable gift of education to those who can’t afford it, you can provide life-changing help to those in need while ensuring that your loved one’s legacy is one of generosity and kindness.
From the very first steps to getting your scholarship officially registered—here are 6 simple steps that you can use to successfully set up a scholarship fund.
1. Establish your vision and goals
To start off, you’ll need to spend some time thinking about the purpose behind your scholarship—who are you trying to help, and why? When setting up a scholarship fund in honor of a loved one, it’s important that it aligns with their interests, values and the legacy they left behind. Did they have any unique hobbies or passions? What subjects did they love the most at school? What impact did they leave on their local community? Meditating on these questions will allow you to create a scholarship fund that authentically commemorates your loved one’s life.
For example, if your loved one was a talented painter, then you might customize your scholarship for students attending art school. It’s no surprise that the cost of education extends far beyond just tuition, so you could create a specific educational scholarship or grant that helps students to pay for textbooks, school supplies, and housing.
2. Decide on a budget and timeline
Once you’ve decided on who you want to help and the type of scholarship fund you want to create, the next step is to think about practicalities like your budget and timeline. Do you want your scholarship to be awarded every year? Or would you prefer to run it on a one-time basis? Certain scholarships are operated indefinitely using endowment funds, which are sums of money that are invested to generate funds on a permanent basis.
As setting up your scholarship fund will require some personal investment—especially when managing it directly—it’s important to establish a clear and realistic budget before you start. Decide on how many students you’d like to support, and set a minimum amount that you’d like to award. Make sure to factor all relevant administrative costs into your scholarship fund budget, like legal fees, marketing expenses and the potential cost of reinvesting your fund’s assets.
3. Choose a management framework
The third step in creating a scholarship fund is deciding which management framework you’d like to use. There are two main options—managing the fund directly or partnering with a scholarship management service. Direct management offers more freedom and control, but is often costly and requires a knowledge of IRS guidelines and the relevant tax implications. Partnering with a dedicated scholarship management organization can make the process easier, and their tax-exempt status means that your donations will still be delivered in full.
Teaming up with a scholarship management service will also allow you to save on numerous costs—such as developing a website, marketing your fund and covering legal fees—allowing more money to be spent on supporting your loved one’s memory. While this method speeds up the administration process and ensures legal compliance, the associated costs are still significant, and you’ll have less direct involvement when establishing your scholarship fund.
4. Set application criteria
A crucial part of starting a scholarship fund is clearly defining who is eligible for funding. Each scholarship has specific requirements that students must meet in order to qualify. The questions you’d like applicants to answer will greatly help you determine who is the best fit for your scholarship. When creating the scholarship application questions, try to give students the best possible opportunity to showcase their qualifications and skills.
It is common to set an average GPA that students must meet in order to qualify, though requirements for athletes will look different than those for merit-based recipients. For example, a merit-based scholarship may require multiple letters of recommendation from teachers. Tailor your scholarship according to its purpose, and always keep your loved one’s legacy in mind.
5. Select a meaningful name
The name of your scholarship fund is what most people will remember, so it’s important to give due consideration when selecting it. Many founders of scholarship memorial funds include their loved one’s name in the name of the scholarship itself, but there are plenty of other creative ways to celebrate your loved one’s memory. Think about the passions of your late friend or family member, and try to incorporate them into your scholarship fund’s name.
However you choose to commemorate your loved one in your scholarship fund’s title, it’s important to keep clarity and simplicity in mind. You want your scholarship fund’s name to be memorable and easy to pronounce, while capturing the spirit of your loved one and resonating with a wider audience. Once you’ve come up with some ideas, conduct a quick trademark search to ensure that your scholarship name has not already been registered.
6. Establish a selection process
Whittling down large volumes of applications is time-consuming, so it can be helpful to recruit a small team or committee to assist you in this process. If an official committee feels too formal for your scholarship fund, then soliciting the help of a few trusted friends or family members is a good alternative.
Make sure to give yourself enough time to review each applicant so that you’re able to make a thoroughly-considered decision in time for your chosen deadline. It’s best to establish a specific rubric for determining the winner of your scholarship, so that the decision process remains consistent and unbiased.
7. Register your scholarship fund
One of the simplest ways to register your scholarship fund is through a community foundation, though this may limit your say on the qualification criteria you’d like to use. To find accredited community foundations in your state or local area, use this community foundation locator. You can also work with a school or university to develop an academic scholarship, though most have a minimum fund amount requirement. Researching scholarship management services can also help to streamline the registration process.
You also have the option of applying to be recognized as an official nonprofit so that donors to your scholarship fund receive tax benefits. Throughout this process, it is important to refer to the Internal Revenue Service (IRS) to make sure your scholarship criteria complies with state and federal guidelines. One thing to note here is that it can be quite costly and time-intensive to register as a nonprofit through the IRS when setting up a scholarship fund.
IRS guidelines for starting a scholarship fund
It bears repeating that there are certain tax and IRS regulations that must be carefully followed when starting a scholarship fund. This is particularly important if you plan to manage your fund directly, as scholarship management services will handle these legal technicalities for you. If setting up a scholarship fund by yourself, you’ll need to create a private foundation and submit the necessary IRS paperwork in order to avoid being heavily taxed.
Once you have registered as a private foundation, you’ll need to fill out legal documents that prove your scholarship fund qualifies for tax-exempt status. Registration paperwork must also be completed and filed with both your state and the federal government. You’ll need to prove that your scholarship will be awarded without bias, and have clear procedures in place for the fair selection of recipients. While this is a time-consuming process that involves extensive amounts of paperwork, adhering to IRS guidelines will allow your scholarship fund to operate successfully and receive valuable tax advantages.
How to raise money when starting a scholarship fund
One of the most important parts of setting up a scholarship fund is knowing how to receive funding. If you’re having trouble gathering the money you need, online crowdfunding platforms like GoFundMe can help. Starting a memorial fundraiser for your scholarship fund allows you to unite close friends, family and your wider community around the central goal of honoring your loved one’s life.
Fundraising with GoFundMe is quick, safe and simple. All you need to do is create your page, tell your story and share your fundraiser far and wide. Donations will be sent directly to your beneficiary’s bank account, and you don’t need to hit your fundraising target in order to receive funds. If you’re not sure how to get started with your scholarship fundraiser, read our helpful guide to how GoFundMe works to find simple answers to all your fundraising questions. Here are some examples of the countless people who have used GoFundMe to turn their dreams of starting a scholarship fund into reality.
Support the Danny Pepin Memorial Scholarship Fund
Danny is remembered as a kind and benevolent spirit who made a meaningful impact on the lives of those around him. He was voted ‘Most Unforgettable’ by his classmates at Chicopee Comprehensive High School in 2017, and mentored younger students due to his strong belief in the power of education.
Following his passing, close friends of Danny decided to honor his memory and passion for education by setting up a scholarship fund in his name. The Danny Pepin Memorial Scholarship Fund aims to provide students at Chicopee Comprehensive Cisco with $2,000 over two years, while offering additional financial support to Danny’s family. A fundraising goal of $32,000 was set in order to establish the fund, with almost half of this being raised within one week.
David Porritt Music Scholarship Fund
David first learned to play the guitar over 50 years ago on the beaches of Hawaii, and it was his leading passion in life from that moment forward. It was a source of joy, calm, and a way for him to connect with those around him. After David passed away, his family decided to honor his life by setting up a scholarship fund dedicated to helping the new generation of young musicians.
Having chosen a type of scholarship that was based on his lifelong passion, David’s family turned to crowdfunding to raise the $5,000 needed to get their project off the ground. Within just a few short weeks, they had raised more than triple the amount of their initial fundraising goal.
Delaney Marchant Memorial Scholarship Fund
Delaney’s family and friends remember her as a selfless person with an unending desire to help others and affect positive change in the world. As her two main passions in life were theater and Taekwondo, Delaney’s loved ones decided to set up two scholarship funds that would enable others to find joy in the same areas that she did.
With one scholarship dedicated to graduating seniors pursuing a career in theater, and the other going to a dedicated Taekwondo student—Delaney’s loved ones set an ambitious fundraising goal of $45,000. After just two years, Delaney’s scholarship fund has surpassed this large fundraising goal thanks to the generosity of friends, family and donors from across the country.
Honor your loved one by setting up a scholarship fund today
By starting a scholarship fund, you can commemorate a loved one while giving hope to students in need of financing their education. The legacy of your friend or family member will live on, while your scholarship will pave the way for future generations seeking to make a lasting impact on the world. Starting a scholarship fundraiser with GoFundMe will make it easier to cover the many financial costs, and our expert fundraising ideas will give you the best chance possible at success. It’s never easy to ask for donations, but fundraising to honor the life of a loved one is something that just about anyone can get behind.
Ready to create some positive change? Get your scholarship fundraiser off to the perfect start today.