How to Start a Memorial Scholarship Fund
When a loved one passes away, we often want to find something that honors their memory in a big way—and a scholarship fund is a good platform for doing just that. By providing a foundation for someone’s education, you are giving a gift that lasts an entire lifetime. And by making it part of a loved one’s legacy (by including their name on the scholarship or earmarking the funds for a field of study they were passionate about), you can ensure that their memory lives on in an important way.
How Much Money Does a Scholarship Fund Require?
Although there are always exceptions, most families should expect to set aside at least $20,000 in order to establish a formal scholarship fund. Because the entire idea behind most scholarships is that they last more than one year, you need to ensure that there is enough money to keep it going for several decades. (In fact, the colleges themselves often put a minimum price tag on scholarship gifts to ensure that their resources are being used to promote ongoing, effective financial aid.)
For example, a $20,000 gift to a local university might result in an annual scholarship of $1,000 for 20 years. You might also be able to gift the entire $20,000 all at once, or set it up so that it becomes a regular endowment. It all depends on what kind of a commitment you can make and what rules the college has in place.
Where Does the Scholarship Money Go?
When you make a formal gift of this size, you are not just sending money out whenever and however you feel like it. In almost all cases, you will make the donation through the college or a foundation that manages the money and screens applicants on your behalf.
You can opt for:
- A one-time scholarship (in which the entire amount is donated at once)
- An annual scholarship (in which the donation is divided into yearly scholarships until the money is gone)
- An endowment (in which a school or foundation manages the money so that the award is ongoing and paid for out of interest/earnings on the principle)
You should contact a college directly or a foundation in your area to learn more about your options and what kind of financial requirements exist. You will most likely work with the college administration or with a private scholarship service to ensure everything is done legally and within IRS guidelines.
How to Make the Scholarship Special
One of the nicest things about this kind of legacy is that you can personalize it. In addition to naming the scholarship (something along the lines of the John Smith Memorial Scholarship is common), you can ensure the money goes toward something the deceased loved. Aspiring doctors and nurses, underserved populations or first-generation college students, those who write a compelling essay about the loved one’s favorite book…there are countless ways you can oversee the application process.
Leaving a memorial scholarship tends to be an expensive undertaking, but the rewards are well worth the investment. If you are interested in setting this up during funeral pre-planning stages, you can even ensure that the endowment is ready to go before you say your final goodbyes.