How a Nonprofit Can Establish a Scholarship Fund
A scholarship fund is a helpful way to encourage learning across different demographics and foster an environment where everyone has access to the same education. While schools and colleges usually offer scholarship funds, nonprofit organizations have this ability as well. Here are the steps you should consider when establishing one.
1. Come Up With the Idea
The first step is to get a concrete idea in place. What, or who, will this scholarship be for? Are you going to use it for universities or take a new approach? For instance, a fund for college is the most traditional path, but you can also offer one for independent education, such as training programs.
As you turn your preliminary ideas into concrete ones, remember that scholarships covered 31% of college costs in 2018. This number must increase to make education more accessible to everyone.
2. Create a Budget
Your nonprofit likely allocates its annual budget for different things like fundraising, marketing, outreach programs and community events. As you work toward establishing a scholarship fund, you'll need to make room in the spending plan for it.
Funds come with subtle costs. Setting one up requires professional advice, so you may want to budget for management services. Tech programs require more money, too. You must create the application and post it on a platform for all to access. Also, getting the word out means utilizing social media and digital advertising.
With these factors in mind, you won't have any surprise fees you can't handle.
3. Get the Funding
As of 2016, the average student loan debt in America was over $37,000. This number can skyrocket drastically when attending private and more expensive schools or pursuing further education. Paying off these debts can be financially debilitating and a lifelong process — which is why a scholarship can make a difference.
Getting the funding to provide the most helpful scholarship is likely going to come about in two ways. First, fundraising is key for nonprofits that need money. These events can draw thousands of dollars.
Government grants are also monumental for nonprofits. You can check your eligibility and see how much money you can get for your fund. From there, you'll have the cash you need to continue.
4. Choose Your Cause
As you build up your fund, you'll need to choose your cause. Your organization should also decide how the scholarship will be awarded, as most are based on either need or performance. Are you going to partner with a specific institution? Will the scholarship focus on a field of study? How will you select your recipients?
These are the questions you must consider as you choose your demographics. Your scholarship should align with the nonprofit's mission. That way, you are more likely to get tax exemptions from the IRS.
Remember, avoiding fraudulent grant activity is critical. Make sure you partner with institutions wisely, and focus on how your nonprofit stays true to its nature.
5. Fine Tune the Logistics
Your partner institutions should help with a lot of the legwork. They can take care of documentation, guidelines and applications. However, you'll want to oversee it every step of the way. Make sure your vision is coming to fruition.
Who is eligible, and how will students qualify? How will the school and your nonprofit distribute the funds? Is this a one-time offer, or are you planning to make it a recurring thing? How will you promote it?
Set dates for applications and deadlines. Think about how the funds will get to the recipients in the end.
6. Select and Award
Last but not least, you will ultimately help select someone, or multiple people, to receive your nonprofit's scholarship. Remember, to adhere to tax exemption guidelines, the cause should match the mission of the nonprofit. The recipient shouldn't be someone you or your co-workers have a connection with. The more unbiased and fair, the better. Helping students is the final goal.
In the end, your nonprofit's scholarship should help a student get access to education. Income disparities are an issue around the globe. With better opportunities to learn, students can start to thrive.
Kayla Matthews writes about AI, the cloud and retail technology. You can also find her work on The Week, WIRED, Digital Trends, MarketingDive and Contently, or check out her personal tech blog.