Key Takeaways
- Starting a scholarship fund is an impactful way to give back and help students pay for their education.
- While some scholarships require as little as $500 to get off the ground, others may require $10,000-$25,000 for sustainability.
- Once you set a budget for your scholarship fund, you’ll need to define your goals and establish the eligibility criteria so you’ll know how to create your application and select a recipient.
- You’ll also need to address legal and tax considerations, fund the scholarship, and promote it effectively.
Scholarships aren’t just free money*—they can be life-changing for some. In the 2022-2023 school year alone, nearly 61% of students used scholarships to help pay for their college education. That’s 61% of students who might not have had the chance to go to school without that support.
If you’ve ever thought about giving back, creating a scholarship fund is one powerful way to do it. Whether you’d like to honor someone special, support your local community, or just help students succeed, you have the chance to make a difference. In this step-by-step guide, we’ll show you how to start a scholarship fund and leave a lasting impact on someone’s future.
What Is a Scholarship Fund?
A scholarship fund is a pool of money that is gathered to create and award scholarships so that students can pay for school. Anyone can start a scholarship fund—individuals, companies, charities, or schools. When you create a fund, you get to set the rules for who qualifies and ultimately receives the money. Any leftover money can be invested to help the fund grow over time and support more scholarships in the future.
How Much Does It Cost To Start a Scholarship Fund?
Before we get into the steps of creating a scholarship fund, you might be wondering how much it’s going to cost you to start one. It will ultimately depend on how much you can contribute financially and the policies of the organization you partner with. According to the Scholarship Institute, it could cost you as little as $500–$1,000 to start one, though some organizations may require a minimum of $10,000–$25,000 to ensure the fund is sustainable.
How to Start a Scholarship Fund: 8 Steps
So, you have the money and the dream to help students pay for college—now what? We’ve outlined the eight steps you need to know to create a scholarship fund:
1. Set a Budget:
Before you move any further, set a budget. You’ll need to determine the scholarship amount by how much you can give and/or collect while factoring in other costs like legal and administrative fees. You do have the option to fundraise, although you’ll need to be realistic. For example, say you set up a $1,000 scholarship, give the total of $1,000, and then raise an additional $4,000. With this, you’ll be able to cover the scholarship for a total of five years. If your goal is larger, like creating an ongoing scholarship, you may want to consider setting up an endowment to grow the fund over time.
2. Define Your Goals
Now comes the exciting part—deciding who gets to benefit from your scholarship! For this step, you’ll need to identify the purpose of your scholarship and who it is meant to help. Is it for future scientists, the next great artists, or those who have persevered through tough times? You get to choose if it will be merit-based, need-based, or a mix of both. This is your chance to make a difference in a student’s life, so dream big and then define your goals.
3. Establish Eligibility Criteria:
This is where you determine the qualifications for who can apply for your scholarship. Will students need to be from a specific state or school? What about those of a certain major? The clearer (and sometimes more creative) you make the criteria, the easier it’ll be for applicants to say, “This one’s made for me!” Here are some of the main eligibility requirements you’ll need to consider:
- Educational Level: Is your future recipient in high school, trade school, undergraduate, or graduate school? Be specific or broad—it’s up to you.
- Demographic Information: Is your scholarship for first-generation students, local community members, or those from a specific background?
- Academic Information: Whether it’s a certain GPA, a passion for a specific field, or a history of volunteering, you get to specify what academics you’re looking for.
- Submission Requirements (Optional): Will they need to send in an essay that tells their story, a video sharing their dreams, or something creative to stand out? Keep this meaningful—it doesn’t have to be complex.
4. Plan the Application and Selection Process
Before you review and select a winner, you’ll need to create an application and a fair evaluation system. This is what will be used by your chosen selection committee to judge applicants. When assembling your committee, select those from different walks of life and backgrounds so your decision isn’t biased.
Once these are chosen, you’ll establish a timeline for applications, reviews, and award announcements. So, when applicants open their laptops to apply, they’ll know exactly what to do, how to apply, when they’ll be notified, and how they’ll receive funds if selected.
5. Address Legal and Finances
Before you can cross the t’s and dot the i’s on your scholarship fund, you’ll need to ensure everything is set up legally. It is always best to consult a legal professional to make sure everything is done right. This process might look like:
- File Incorporation Papers: Formally create your organization, whether it’s an LLC or a nonprofit.
- Apply for Nonprofit Status: Only if tax-exempt benefits apply.
- Open a Bank Account: Set up a dedicated account to manage scholarship funds.
- Handle Fund Transfers: Sign any necessary documents so that everything flows smoothly.
- Discuss Investments: Chat with accountants or financial advisors about how to grow the scholarship funds.
- Set up Partnerships: Draft agreements with sponsors, donors, universities, and committee members involved in the scholarship.
- Follow IRS Rules: Make sure you’re using fair, non-discriminatory criteria for selecting recipients and operating within tax-exempt guidelines.
6. Fund the Scholarship
After deciding what you can personally contribute, you can then start by reaching out to family and friends for support. For long-term funding, think bigger: talk to local businesses, community organizations, or individual donors who may share your vision. Fundraising is also a great way to bring people together to support your cause. You can host fun dinner events, set up online campaigns (e.g., GoFundMe), or even organize casual fundraisers (e.g., car wash or bake sale).
7. Promote the Scholarship Fund
Creating a scholarship is amazing—but if no one knows about it, how will students apply? You want students to know this opportunity exists, so once your scholarship is up and running, here’s how you can spread the word:
- Post on Social Media: With so many young adults using social media as their source of information, consider using a platform such as Instagram or X to share freely about your scholarship.
- Partner With Schools: Local schools, colleges, and organizations can connect you directly with students who need funding.
- Use Scholarship Platforms: Platforms such as College Raptor are like matchmaking services for scholarships and students. These sites make it easier for students actively seeking financial aid to find yours!
8. Award the Scholarship
And now for the best part—sharing the good news! This is a moment to celebrate. Let your recipient know they’ve won and then send off the funds for them to put towards their education. Most commonly, scholarship money is distributed directly to the student’s chosen college and applied to their tuition and fees. However, the money can be given directly to the student in the form of a check.
Your Impact as a Donor
Creating a scholarship fund is truly one of the most rewarding experiences—not just for the students who benefit, but for you as a donor. Knowing your support is directly helping someone grow, learn, and achieve their dreams is incredibly fulfilling. And once you receive a thank-you message or heartfelt letter from a past recipient, it’ll be a powerful reminder of the impact you’ve made.
When you start a scholarship fund, you aren’t just funding education; you are opening doors that might have stayed closed without your contribution. A scholarship fund gives you the chance to help turn dreams into reality and witness what people can accomplish with a little support. If you’re still on the fence about starting one, let this be your reminder that we all have the power to make a difference in the world.
*While a scholarship does not have to be repaid, there may be other obligations associated with the scholarship.
