Supporting College Scholarship Funds
Few philanthropic gifts are as personal and immediate as a college scholarship. Individuals give them to students who will improve the community. Spouses or parents set them up in memory of a departed loved one. “People think of scholarships as a way of making sure [that] what happens in the future is a positive thing,” says Amy Murphy, director of donor services and scholarships for the Greater St. Louis Community Foundation. “It seems more direct than giving grants to other organizations or providing support for a cause.”
That’s because the donor is giving money to an individual to accomplish a goal that they both believe is important: college, graduate school, or other specialized educational programs. Generally the donor endows a scholarship fund at a community foundation—though some universities also administer funds—that then pays out 5 percent of the fund each year toward a student’s college tuition.
Supporting the Future
Scholarships are particularly attractive because donors can design them to target a specific type of individual: the brightest student in the class, the one who needs financial aid most, or someone who fits another profile.
When their son Dennis died several years ago in a car accident, Evalyn and Darold Deitz wanted a scholarship fund that would benefit students who are much like Dennis: youngsters who are not necessarily tops in their class but who show creativity and artistic aspirations. A selection committee of school staff chooses the recipients from the Longview, Washington, school where Dennis was a student.
In general, most community foundations are happy to manage scholarships, but fees may depend on how involved the staff becomes in the selection process. The easiest scholarship to award would go to the valedictorian of a particular school or to the student with the highest SAT scores, while a donor who values more qualitative measures may need an application or nomination process.
Finding the Appropriate Endowment
The other big decision facing donors is how much money to award. A $10,000 endowed fund would pay out $500 annually, minus any management or investment fees. Experts caution that anything less does not make much sense, given today’s tuition rates, and some institutions have higher minimums.
The Rochester Area Community Foundation in upstate New York requires at least $25,000 to endow a scholarship fund, but it also provides cheaper alternatives. Rochester administers one-time scholarships and runs a community scholarship fund to which individuals can contribute. Donors may also set up an “acorn fund” into which a donor contributes a sum every year until the endowment grows large enough to begin to make awards.
Creating Effective Programs
The bigger the stipend, the greater the impact of the gift will be. A donor in southern Illinois, retired attorney Edgar Zimmer, awarded about forty scholarships of about $2,000 each annually, until he decided to restructure the program. “The feedback he was getting from students, or lack thereof, convinced him that it would be better to concentrate his giving,” says his financial advisor, Jim Maher, of Merrill Lynch. So Zimmer converted his private foundation to a fund at the Greater St. Louis Community Foundation and whittled the number of recipients down to eight per year. Each student now receives $5,000 for each of the four years of college.
Four-year scholarships are costlier, of course, and require careful planning to guarantee that the fund will have enough resources to meet its commitments down the road, but many financial aid experts say they are by far preferable to a one-year award. “Many freshmen often receive several scholarships for the first year and then need to scrape for the second year,” says Murphy of the Greater St. Louis Community Foundation.
Another option that is gaining popularity is rewarding graduating seniors with scholarships to help pay off loans. The resulting advantage is that donors know the students have successfully completed a degree, and relieving their debt burden can free them to pursue lower-paying careers in fields such as teaching or public service.
Donors often serve on the selection committees, though they cannot, by law, choose the recipient outright, and the community foundation will vet any decision to protect against a conflict of interest. “We have to make sure that the scholarship fund serves a charitable purpose,” explains Bonita Hindman, vice president for donor services at the Rochester Area Community Foundation. But, at the very least, donors can personally present the scholarship at the school’s award ceremony. It is this personal connection, after all, that provides the greatest joy and satisfaction to the donor.
One recently created scholarship honors Michael Lindquist, a longtime teacher and administrator in the Fort Zumwalt West School District outside St. Louis. He and his wife, Karen, also a teacher, had long talked about devoting part of their savings to a scholarship fund. When Mr. Lindquist died in May after a long struggle with a spinal tumor (during which time he continued to work), his wife decided almost on the spot to have friends make contributions in lieu of flowers.
Many current and former students came to the funeral, a testament to Mr. Lindquist’s popularity on campus. The $1,000 scholarship made possible by contributions to the St. Louis Community Foundation Fund goes to the type of student that he had particularly encouraged during his life: someone involved in school activities or athletics and who plans to pursue a career in education. During the first years of the scholarship’s distribution, chances are its recipients will have known the scholarship’s namesake as the assistant principal who used to greet each student as they walked in the door each morning.
Matthew Schuerman is a freelance writer based in Brooklyn, New York.
Copyright 2004 Community Foundations of America
Used with permission