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 through a nonprofit organization or as an endowed scholarship.
When it comes to scholarships, there are many misconceptions, one of which is that only governments, universities, companies, or professional fundraising managers can initiate them. The good news is that anyone can establish a scholarship or memorial fund. If you don’t know where to begin, look below for expert advice about how to start a scholarship fund in memory of your loved one. These scholarship programs can support students with financial need in achieving their educational goals.
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.
Starting from scratch, all the way up to disbursement of your scholarship, here are 7 simple steps for how to create a scholarship fund for a student attending an educational institution.
1. Establish your vision and goals
First, you need to spend some time considering the why of your scholarship — who or what, exactly, are you trying to benefit with your scholarship? When establishing a scholarship fund in memory of a loved one, it should line up with that person’s interests, values, and the legacy he or she left behind. Did they have any special hobbies or interests? What were their favorite subjects at school? What were their effects on their local community?
Contemplating 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 or pursuing a related field of study.
Of course, the price of education extends well beyond tuition, so you might create an educational scholarship or grant dedicated to helping students with additional costs (books, school supplies, housing) that are entirely necessary supports for scholarship recipients.
2. Decide on a budget and timeline
After you’ve chosen whom you want to aid and what type of scholarship fund you want to establish, it’s time to consider other practicalities, namely, your budget and timeline. Would you prefer a renewable scholarship? Or do you want to simply run it one time? Some scholarships are ongoing through investment (or endowment funds), which is a mechanism where the donated amount is invested and allowed to generate payments permanently as an endowed scholarship.
Because creating your scholarship fund will ultimately be an output of cash (especially if you are going to be managing it yourself), you need to formulate a realistic and clear budget before you begin. Choose how many students that you’d like to sponsor, and establish a minimum that you’d like to grant. Make sure to include all applicable professional fees in your scholarship fund budget, such as legal costs, marketing expenses, and the cost of potentially reinvesting your fund’s assets. Think about setting up your fund with a nonprofit organization, which makes contributions tax-deductible.
3. Choose a management framework
The third step to creating a scholarship fund is selecting the management structure you would like to use. There are two primary choices: administering the fund directly or using a scholarship management service. The direct approach provides greater freedom and control, but is usually expensive and necessitates some familiarity with IRS guidelines and their tax implications. Working with a specialized scholarship management organization can help smooth this process, and their tax-exempt status also ensures that your gift will not be reduced due to taxes.
You’ll also save money on many costs, such as website design, marketing your fund, and legal fees (unless you are managing it yourself), instead leaving more to be spent on remembering your loved one. Although this method fast-tracks the establishment process and means you are in compliance with the law, it does not come cheap, and you will have less direct input at the inception of your scholarship fund. Still, it may be worthwhile for the opportunity to support students through scholarship programs tailored to specific eligibility criteria.
4. Set application criteria
One important aspect of getting a scholarship fund up and running is clearly identifying who is able to receive funding. Each scholarship also has certain eligibility requirements students must meet to be awarded. The questions you want your applicants to answer will do a lot of your work for you when deciding who is the best fit for your scholarship. Make the most of scholarship application questions that allow students to highlight the things they’re actually good at.
It’s usual to establish an average GPA students must meet in order to qualify, though the grade point average expectation for athletes will look different than it does for those receiving based on merit. For instance, a merit scholarship often needs several recommendation letters from teachers along with a higher GPA. Customize your scholarship to fit the purpose, and always remember your loved one’s legacy. Include specific selection criteria in your application to help guide your subsequent selection committee.
5. Select a meaningful name
Your scholarship fund’s name is the one thing most people will remember, so choose wisely when deciding what to call 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. Consider the interests of your friend or family member who has passed away, and see if you can include them in the name of your scholarship fund.
But whatever way you call attention to your loved one in the title of your scholarship fund, you would be wise to keep clarity and simplicity in mind. You want your scholarship fund’s name to be memorable and easy to pronounce, but also to feel close to your loved one’s spirit and resonate with others. Once you’ve thought up some names, do a brief trademark search to ensure that your scholarship name hasn’t already been trademarked.
6. Establish a selection process
It’s going to be time-consuming, trying to get through all of the applications, so it’s good to have a small team or committee to help with that 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 a good idea to make a clear rubric for how the judge will choose who the scholarship recipient is, so the process is fair. An established procedure helps maintain a nondiscriminatory basis for all scholarship awards.
7. Register your scholarship fund
Registering your scholarship fund with a community foundation is one of the easiest ways, but you may have less of a say in the qualification criteria you want to use. To locate accredited community foundations in your state or local area, you can use this community foundation locator. Another option would be to partner with a school, college, or a university to create an academic scholarship, but many require you to have allocated a certain amount of money in a fund. Researching scholarship management services can also help to streamline the registration process.
You can also apply to be recognized as an official nonprofit, so any of your scholarship fund’s donors would get tax benefits. In walking yourself through this process, there are some IRS-related factors pertaining to state and federal law and how you award (or don’t) recipients. One thing to point out here is that it can be a very expensive and lengthy process to register as a nonprofit with the IRS when you are setting up a scholarship fund.
IRS guidelines for starting a scholarship fund
It’s worth noting once again that there are specific taxes as well as IRS rules that need to be observed when setting up 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 you’re trying to establish a scholarship fund on your own, you’d need to establish a private foundation and file the necessary IRS paperwork to avoid being heavily taxed.
Once you are set up as a private foundation, you must complete legal documents to show that your scholarship fund is eligible to be considered tax-exempt. Registration forms must also be filled out and submitted to your state and federal authorities. You’ll need to demonstrate that your scholarship will be awarded in a fair way, with procedures for how recipients will be selected. Although this is a tedious process and requires quite a bit of paperwork, if you follow the IRS regulations, your scholarship fund can be set up appropriately, and you can benefit from significant 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.
GoFundMe fundraising is safe, fast, and easy. Just build your page, share your story, and spread the word about your fundraiser! Donations will flow directly to your beneficiary’s bank account, and you don’t have to reach your fundraising goal to access the cash. If you’re still not sure how to begin raising funds for your scholarship, check out our article on 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 gone, but he’ll never be forgotten, and those who knew him tell stories to this day of his gentle, kind spirit. In 2017, he was voted “Most Unforgettable” by his classmates at Chicopee Comprehensive High School, and, as there was nothing he loved more than the life-changing potential of an education, he served as a mentor to many of the younger kids around him.
After his death, through a group of close friends, a scholarship fund was established in his name to continue Danny’s legacy of education. The Danny Pepin Memorial Scholarship Fund aims to provide students at Chicopee Comprehensive 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 started playing guitar over 50 years ago on the beaches of Hawaii, and it was one of his first loves in life. It was fun, relaxing, and gave him an opportunity to be with others. Following David’s death, his family made it their mission to give something back to the next generation of young musicians, thus the scholarship fund.
His family wanted David to have some type of scholarship that was based on what he had always loved, and from there, David’s family began crowdfunding to find the $5,000 they needed for their project. They had surpassed their original fundraising goal by more than three times that sum in just a few weeks.
Delaney Marchant Memorial Scholarship Fund
The people who knew Delaney say she will be remembered as a compassionate person who always sought to help and do something good in the world. Delaney’s loved ones established two scholarship funds to help others discover the same joys she found in life, since her two greatest loves in life were theater and Taekwondo.
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. In only two short years, Delaney’s scholarship fund has surpassed this ambitious fundraising goal with the help of family, friends, and donors from all across the USA.
Honor your loved one by setting up a scholarship fund today
You can honor the memory of a loved one, all while providing hope to students who need assistance in funding their education, when you establish a scholarship fund. Your friend or relative will be remembered, and their scholarship will ensure that there are always future generations of people who can make a lasting impact. Using GoFundMe to start a scholarship fundraiser will help offset any costs, and our fundraising tips and ideas will help give you the best shot 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.