A common misconception is that scholarship funds can only be created by government entities, universities or corporations.
Donors set up scholarship funds for various reasons, such as supporting educational opportunities and college attainment, wanting to honor or memorialize a loved one, establishing a family legacy of giving, or supporting an educational institution.
Many philanthropists turn to community foundations to start their scholarship funds for simplicity and ease. Community foundations like San Diego Foundation (SDF) provide staff assistance, community expertise and a variety of services that help donors set up and award scholarship dollars to students. They’re also not tied to a particular educational institution.
In 2023, for example, SDF donors awarded a record-breaking $4 million in scholarships to more than 1,000 local college students. Historically, Black/African American, Latino/a and low-income students continue to be underrepresented in higher education. Among the 2023 – 2024 scholarship recipients, 70% are first-generation college students, or the first in their immediate families to pursue higher education, and 92% of students are considered low-middle income, according to their Earned Family Contribution data.
These awards are ever more vital in light of the recent U.S. Supreme Court decision that struck down affirmative action in higher education enrollment decisions. The SDF Community Scholarship Program enables a diverse cohort of largely local students to attend college. Black/African American and Latino/a students represented 16% and 40% of 2023 – 2024 scholarship recipients, respectively.
Benefits of Starting a Scholarship Fund
There are many benefits to starting a scholarship fund, including:
- Helping students achieve their dreams: Scholarships can help students who would not otherwise be able to afford college achieve their dreams of a higher education. This can lead to better job opportunities, a more diverse workforce, higher earnings and more economic equity.
- Giving back to the community: Starting a scholarship fund is a great way to give back and make a lasting impact on the lives of young people to help them reach their full potential.
- Promoting education: Scholarships can help promote education and encourage students to pursue higher learning. They can also help to level the playing field and make college more accessible to all students, regardless of their socio-economic background.
- Building a legacy: Starting a scholarship fund is a way to build a legacy and leave a lasting impact on the world. It is a way to be remembered for your generosity and commitment to helping others. You can set up your children or grandchildren as successor advisors of your scholarship fund at a community foundation so they can carry out awarding scholarships from your fund after you pass away.
- Tax benefits: As with most donations, there may be tax benefits to starting a scholarship fund at a community foundations depending on the assets you contribute to your fund.
Starting a scholarship fund is a rewarding experience that can make a real difference in the lives of young people.
How to Set Up a Scholarship Fund
If you’re considering establishing a scholarship fund, where do you begin? Our Giving Team has outlined six simple steps to help get you started.
1. Identify who you want to support
Are you interested in helping underrepresented populations obtain college degrees? Or, maybe you have a passion for supporting female adults in science and technology. The first step in setting up a scholarship fund is identifying the students you want to support. Community foundations are great resources for information on community needs and opportunities.
2. Decide what to give
Almost any asset may be used to start your scholarship fund, including cash, publicly traded securities, closely held stock, interests in limited partnerships, real estate, life insurance, personal property and private foundation assets. Tax deductions are earned at the time of your gift, while scholarships awarded continue into the future.
3. Define your scholarship timeline
Your scholarship can be a one-time gift or an annual fund that you award once every year. Another option is to create a scholarship endowment fund, which is permanent. This allows you to establish children and grandchildren as successor advisors after you pass away so your legacy of philanthropy grows for future generations.
4. Choose your eligibility requirements
Community foundation staff assists with establishing scholarship eligibility requirements and criteria that reflect your passions and priorities. At SDF, we use our experience and expertise to identify the best criteria to attract the most qualified applicants.
5. Name your scholarship fund
Scholarship funds can be created to honor or memorialize someone special, to honor an individual’s passions, or on behalf of a business or organization. Whatever the reason, your scholarship will carry the name you choose. If you prefer anonymity through a community foundation, you can select a name that reflects your charitable purpose(s).
6. Create a selection process
You can be as involved as you like in the recipient selection process. Community foundations offer scholarship selection committees comprised of education experts who can put their years of experience to work for you.
Since establishing our Community Scholarship Program in 1997, our generous scholarship donors have awarded more than $49 million to more than 13,000 college students from San Diego, making our program the largest non-university scholarship provider in San Diego County.
We partner with individuals, families, corporations and nonprofit organizations to transform the lives of first-generation, low-middle-income and other deserving students through the gift of higher education.