The resources you need will depend on whether you want donations to your scholarship fund to qualify for tax deductions. If you want to collect money for a fund that would benefit yourself or someone you know such as a relative or a specific group of people designated by you, then donations to your fund would not be tax deductible.
On the other hand, if you wish to start a scholarship that provides funds on an objective and nondiscriminatory basis, then donors can receive tax deductions. The IRS has guidelines on who can and cannot receive grants, as summarized by FinAid (scroll down to "Laws and Regulations"):
The scholarship must be awarded on an objective and nondiscriminatory basis. The group of applicants from which the recipients are selected must be sufficiently broad as to be considered a charitable class. The donor of a scholarship cannot take a charitable deduction for a scholarship that is earmarked for the benefit of a specific individual, not even if that individual is unrelated to the donor. Moreover, donors may not circumvent this restriction by tightly delineating the selection criteria. No grants may be awarded to an officer, manager or trustee of the organization, nor to a member of the selection committee, nor to a substantial contributor, nor to certain US government officials. Family members of these individuals are also not eligible to receive grants.
Below are resources for setting-up a scholarship fund:
- Your local community foundation - Scholarship funds often are set up and administered by a third party, such as a community foundation. Your local community foundation may have services to help you set up a scholarship fund. FinAid also lists organizations that provide scholarship management services.
- A bank or credit union - You can set-up an account to accept scholarship donations. However, be aware that large donations may be subject to a gift tax.
- 529 plan or trust - Are two additional ways to set-up a scholarship fund. According to savingforcollege.com, you can set-up a 529 plan and have others contribute. "The account would grow tax-deferred and be distributed tax-free for the beneficiary's qualified college costs, thereby avoiding income taxes." Although establishing a trust is an option, the effort and expense can significantly outweigh the benefit.
- Crowdfunding - If you want to raise scholarship funds crowdfunding is a viable option. Crowdfunding is a way to raise funds for a specific cause or project by asking a large number of people to donate money, usually in small amounts, and usually during a relatively short period of time, such as a few months.
- You also can start your own organization, but this may be the most complex option. More about starting a nonprofit.
Check out these Foundation Center resources:
Population Group(s) Children / Youth
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