Creating a Lasting Legacy: Establishing a Memorial Scholarship Fund

Losing someone dear is an incredibly painful experience. In the wake of such a loss, many seek ways to honor the memory of their loved one and ensure their legacy continues to inspire. One profound and impactful way to do this is by establishing a memorial scholarship fund. This act not only commemorates the individual's life and values but also provides opportunities for future generations to pursue their educational aspirations.

Why Start a Memorial Scholarship Fund?

A memorial scholarship fund serves as a living tribute to the deceased, reflecting their passions, values, and the impact they had on others. It's a way to ensure that their name and spirit are remembered while simultaneously contributing to the betterment of society. By supporting students who share similar interests or values, the scholarship helps perpetuate the loved one's legacy and inspires future generations to make a lasting impact.

Memorial scholarship funds offer a multitude of benefits:

Honoring a Loved One's Memory: The scholarship becomes a lasting testament to their life and the values they held dear.
Supporting Future Generations: It provides financial assistance to students, opening doors to educational opportunities that might otherwise be unattainable.
Creating a Positive Impact: By investing in education, the scholarship contributes to the development of future leaders and innovators.
Channeling Grief into Something Positive: Starting a scholarship fund can be a therapeutic way to cope with loss and transform grief into a force for good.
Inspiring Others: The scholarship can inspire others to give back and create a cycle of support within the community.

Getting Started: Key Considerations

Before diving into the practical steps of establishing a memorial scholarship fund, it's crucial to carefully consider several key aspects:

1. Defining the Scholarship's Purpose and Scope

The first step is to clearly define the 'why' behind your scholarship. What specific goals do you hope to achieve? Who or what are you trying to benefit? Consider the following questions:

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Whom do you want to help? Think about the person you lost. What qualities did they have? What did they care about? What did they teach you? There is no right answer to who the scholarship is for.
What were their passions and interests? Did they have any special hobbies or interests? What were their favorite subjects at school?
What values did they embody? What were the defining characteristics that made them unique?
What impact did they have on the community? How did they contribute to the lives of others?

Aligning the scholarship with the loved one's interests, values, and legacy will ensure that it authentically commemorates their life. For example, if they were passionate about environmental science, you might target students pursuing studies in this field. If they were an arts lover, the scholarship could benefit students pursuing art, music, literature, and theater. If they came from rural Appalachia and ascended to lead boardrooms around the world, you could earmark the funds for students on a similar journey. Perhaps their racial or ethnic identity was meaningful to them; setting up a scholarship within a specific community would be a resonant way to help students from a similar background.

2. Determining Eligibility Criteria

Next, you need to determine the specific criteria that applicants must meet to be eligible for the scholarship. This will help ensure that the funds are awarded to deserving students who align with the scholarship's purpose. Common eligibility requirements include:

Academic Achievement: Establishing an average GPA students must meet in order to qualify. The grade point average expectation for athletes will look different than it does for those receiving based on merit. A merit scholarship often needs several recommendation letters from teachers along with a higher GPA.
Financial Need: For students with financial need.
Field of Study: Targeting students pursuing studies in a specific field.
Community Involvement: Demonstrating a commitment to community service and making a meaningful contribution to society both present and future. Be involved in a balance of community, school and work activities.
Personal Qualities: Pursue goals and aspirations with integrity, resolution, self-discipline and judgment. Strong applicants would demonstrate a desire to make a meaningful contribution to society both present and future and be involved in a balance of community, school and work activities.

Applicants must be:

An entering or returning student at an accredited undergraduate institution in the United States and must be enrolled full-time (at least 12 hours).
Pursuing a bachelor’s degree (BA, BS, BFA, BSN for example) for the first time. Students in one-year or two-year certificate or associate’s degree programs do not qualify.

3. Establishing a Realistic Budget and Timeline

Creating a scholarship fund will ultimately be an output of cash. 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.

Consider your financial resources and determine how much you can realistically contribute to the scholarship fund. Would you prefer a renewable scholarship? Or do you want to simply run it one time?

Here are some common options for setting up a memorial scholarship, along with an overview of the typical costs involved:

Establishing an Endowed Scholarship at a University: Minimum Contribution: $50,000-$100,000, depending on the university’s guidelines. Costs: Administrative or setup fees, typically up to 5%. Fundraising Support: No. For an endowed scholarship awarded indefinitely through a university, you’ll need at least $25,000. At this level you can create a scholarship that will live on indefinitely.
Starting a Non-Profit Organization: Minimum Contribution: Usually, at least $1,000 to fund the creation of the organization. Costs: Legal expenses range from $5,000-$10,000 to set up the non-profit and secure tax-exempt status.
One-Time Gift: Even an award in the hundreds of dollars could be a game-changer for a student.

4. Selecting a Management Structure

You'll also need to consider the ongoing administrative costs, such as marketing expenses and the cost of potentially reinvesting your fund's assets. One important detail to consider is the cost of a third-party administrator and total award distribution.

There are two primary choices:

Administering the fund directly: The direct approach provides greater freedom and control, but is usually expensive and necessitates some familiarity with IRS guidelines and their tax implications. If you start a scholarship fund on your own, you'll need very careful planning. You’ll need to clearly define eligibility criteria, outline how applications must be submitted and how they must be evaluated, and establish a fair selection process for winners. You'll also need to work with a sponsor 501(c)(3) non-profit if you'd like the donation to be tax deductible and to avoid creating an income tax burden for your scholarship winners.
Using a scholarship management service: 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.

5. Naming the Scholarship Fund

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. 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.

6. Fundraising and Donations

First, you’ll want to determine how to fund the scholarship program. Will you, your family or an organization fund the program? Will you ask for donations or memorial gifts? If you are accepting monetary donations, will you set up a memorial fund at a bank or work with a nonprofit organization where people can send donations (such as the Scholarship America Memorial Scholarship Fund)?

Read also: Crafting Perfect Thank You Notes

Step-by-Step Guide to Setting Up a Memorial Scholarship Fund

Once you've carefully considered the key aspects outlined above, you can begin the process of establishing your memorial scholarship fund. Here's a step-by-step guide to help you navigate the process:

Step 1: Define the Scholarship's Vision and Goals

Begin by identifying the purpose and scope of the scholarship. Consider what you aim to achieve-whether it's supporting students with financial need, encouraging studies in a specific field, or rewarding community service. The scope of your scholarship can be broad or narrow, depending on your objectives.

Step 2: Focus on the Legal Framework and Structure

You have two main paths:

Managing the fund directly.
Partnering with a scholarship management organization.

Direct management offers full control but requires dealing with complex IRS guidelines and tax implications. It is time-consuming and costly, requiring legal and financial expertise to ensure compliance and favorable tax treatment.

Alternatively, using a scholarship management service like Bold.org simplifies the process.

Step 3: Secure Funding

Initially, you might tap into personal savings, family contributions, or donations from friends to kickstart the fund. For sustainable funding, consider engaging community organizations, local businesses, and hosting fundraising events that resonate with your loved one's memory and the scholarship's mission.

For ease of donation collection and ongoing fund management, BetterWorld offers an easy solution.

If you’re having trouble gathering the money you need, online crowdfunding platforms like GoFundMe can help. 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.

Step 4: Establish Eligibility Criteria and Outline the Application Process

Decide on the qualifications candidates must meet, such as academic achievements, community involvement, or specific areas of study that align with your loved one's passions or fields of interest. Specify application requirements, including essays, recommendation letters, or academic records.

You’ll want to map out a specific and rigorous selection process: required submission documents, deadlines, interviews, and the date on which you’ll announce the winner or winners. In addition, make sure to create bylaws and standards to clearly define who is eligible.

Step 5: Design a Fair and Transparent Selection Process

Develop a set of criteria based on the scholarship's goals and the eligibility requirements previously established. 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. 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.

Step 6: Promote the Scholarship

Social media is a powerful way to spread the word, enabling you to share details about the scholarship, the story behind it, and how to apply. Educational institutions, such as high schools and universities, can also be valuable partners in promoting the scholarship to eligible students directly.

Reach out to schools (e.g., high schools, colleges, universities). Connect with local organizations (e.g., community centers, libraries, student groups).

Additionally, consider using scholarship platforms, which specialize in connecting students with funding opportunities. These platforms can significantly increase the scholarship's visibility among students actively seeking financial aid.

Step 7: Review Applications and Select Recipients

Consider forming a selection committee composed of individuals who share a commitment to the scholarship's goals. This committee should be trained to review applications objectively, ensuring a bias-free and fair selection process.

Splitting the work up makes the job easier, but it is also helpful in removing any inconsistency-or perceived bias-in the review process. Make sure to give yourself plenty of time between the application deadline and the date to name the recipient of your loved one’s scholarship. After all, the recipient will be getting a boost that will help them achieve their ambitions.

Step 8: Formally Award the Scholarship

Organizing an award ceremony or announcement event can add a personal touch and honor your loved one's memory in a special way. This event can be a virtual event or in-person, depending on your resources and the recipients' locations. During the ceremony, share the story of your loved one and the scholarship's purpose.

Provide clear guidance on how the funds are to be used, whether for tuition, books, or other educational expenses.

Step 9: Monitor and Follow Up on the Progress of Scholarship Recipients

Keeping track of their academic and personal achievements allows you to see the impact of your fund. You can stay in touch with the recipients and possibly their educational institutions to gather updates on their progress.

Sharing these success stories is also important.

Navigating the Legal and Financial Aspects

Setting up a scholarship fund requires careful attention to legal and financial considerations. Here's a breakdown of the key aspects:

1. IRS Compliance

Scholarship funds must comply with IRS rules, including filing specific forms for tax-exempt status and ensuring the fund's operations meet federal regulations for charitable grants. The IRS requires scholarships to be awarded on a nondiscriminatory basis, with clear, objective procedures for the selection and oversight of recipients.

The Foundation, in making grants, does not discriminate on the basis of race, color, creed, sex, gender identity, sexual orientation, disability, national origin, ethnicity, or any other characteristic protected by law.

2. Tax Deductibility

Scholarship funds are generally considered tax-deductible donations if they comply with specific IRS guidelines. Consulting a tax advisor can help ensure your scholarship meets these requirements to receive tax benefits.

Moreover, partnering with a trusted scholarship management service or nonprofit organization helps simplify the process by ensuring accurate tax reporting, proper fund distribution, and support for eligible educational expenses, offering confidence and clarity for both donors and recipients.

3. Seeking Professional Advice

It is helpful to work with a community foundation if you pursue these options. Such a foundation can also help you set up scholarships that are not tied to a particular college, if that’s your preference. These third-party administrators are a good option if you’d like to be hands-off, but most cost at least $3,000 to set up and may require ongoing payments.

Make sure to speak to a tax attorney before you set up any scholarship fund. You can structure the fund in several ways: setting up a trust, creating a nonprofit organization, or using your own personal funds each year. Each of these options will have different tax implications.

Leveraging Scholarship Management Services

For those seeking a streamlined and hassle-free approach, scholarship management services offer a valuable solution. These organizations handle the administrative and legal complexities of setting up and managing a scholarship fund, allowing you to focus on honoring your loved one's memory and supporting deserving students.

Benefits of Using a Scholarship Management Service:

Simplified Setup: They guide you through every step of the process, from defining eligibility criteria to creating application prompts.
Legal Compliance: They ensure that your scholarship complies with all relevant nonprofit and grant-making regulations.
Tax-Deductible Donations: Donations made through their platform are 100% tax-deductible.
Automated Matching: Your scholarship will be automatically matched with exceptional candidates who meet your criteria.
Dedicated Support: You'll receive dedicated support in reviewing applications and selecting the most fitting recipient.
Cost-Effective: Some services, like Bold.org, offer completely free setup and management, with no administrative fees.

Popular Scholarship Management Services:

Bold.org: Bold.org strives to make creating and managing memorial scholarships as simple and straightforward as possible. The best part about Bold is that they walk you through every step of the process.

* You can fully customize your scholarship, from eligibility requirements to the topic, application prompt, and selection criteria, to reflect the values and story of the person you’re honoring.* You can design essay, video, or image application prompts to inspire creative and meaningful submissions.* Your scholarship will automatically be matched with exceptional candidates, ensuring it reaches applicants who meet your criteria and reflect its purpose.* Your donations, along with contributions from friends, family, and your community, are 100% tax-deductible.* Every dollar you donate goes directly to deserving recipients-there are no administrative fees.* You’ll receive dedicated support to help you review applications and select the most fitting recipient.* You’ll work with an experienced team that has guided thousands of donors in creating impactful scholarships.* We’ll ensure your scholarship complies with all nonprofit and grant-making regulations so the process is secure and worry-free.* The entire process is completely free. You don't need to pay for anything beyond your donation.

Scholarship America: If you do have the time and budget to dedicate to starting a full scholarship, you may want to partner with an existing organization to administer the program.

Examples of Memorial Scholarship Funds

The Danny Pepin Memorial Scholarship Fund: 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.
David's Scholarship: 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. 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.
Delaney's Scholarship: 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. 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.

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