A version of this article appeared in Financial Advisor Magazine on May 4, 2018.
For many New Jerseyans, creating a scholarship fund is an effective way to establish a philanthropic legacy and provide meaningful support to students, customized to reflect the donors’ interests, fields of study and institutions they care about most.
As with any philanthropic venture, though, there is important guidance on what works best. For every well-designed scholarship program, there is another, well-intentioned scholarship that fails to deliver the desired impact.
As the holder of more than 100 New Jersey families’ scholarship funds, which grant out more than $1 million to students each year, the scholarship team at the Community Foundation of New Jersey offer seven key questions to ask yourself before moving forward. Clear answers to these questions can help make the difference in creating a scholarship ideally suited to encourage students’ success at college and beyond.
1. What profile of students do you want to help?
Whether the scholarship you create is merit-based, need-based, or a combination of the two goes a long way in narrowing the intended audience. But there are many additional factors beyond that. How do you weigh an applicants’ achievements against their circumstances? How do you compare the student who has to work and as a result has a lower GPA and fewer extra-curriculars with a higher achieving student that did not have to work? In the design of a scholarship think about the kind of people you want to reach. While it’s become increasingly popular to focus on students with slightly lower GPAs—the idea is to help those overcoming challenges to maintain decent GPAs—it can be challenging to overlook straight-A students from similarly challenging circumstances once the applications come in. It takes careful balancing of these considerations to identify the desired student profile, coupled with the discipline to maintain your criteria as you go through the selection process.
2. Do you favor specific schools or fields of study?
Perhaps the type of student you support is less important to you than increasing enrollment at a certain school or in a specific major. We know, for example, that the United States faces a major nursing shortage, with more than one million positions becoming available in the next five years. A scholarship aimed squarely at nursing students at-large can help to solve the broader problem. Other national priorities include generating greater interest in computer coding and increasing the number of women in STEM-related fields.
3. What type of schooling would you like to support?
Most scholarship funds defray tuition costs at four-year institutions, but these represents just some of the educational opportunities out there. Donors may create scholarship funds for trade schools, county colleges, high schools, and even camperships. So long as learning is at its core, a scholarship can help any type of individual experience the education that is right for them.
4. How will you design the application, find the students, review applications, and make selections?
This is where the rubber meets the road, where your dream of providing scholarships either comes to life or doesn’t, and, ultimately, a lot of work. It’s important to either prepare for the workload or identify an experienced partner who can take on the burden of managing your scholarship fund’s operations and logistics. A well-run scholarship fund uses its dollars in the most efficient way and enables the donor to choose his or her level of involvement, unencumbered by the day to day. It also makes a difference when it comes to assembling a large pool of applicants, which will make or break the fund’s focus and sustainability.
5. Is the scholarship a one-time award or a recurring award?
Whether you offer students one-time scholarship awards or recurring amounts throughout college makes a big difference to those students, but also the supporting organization. A recurring scholarship adds incentive for students to stay in school and achieve their degrees, even if their majors change. One-time scholarships, while more generous upfront, can sometimes leave students lacking support as they get closer to reaching their degrees. On the other hand, a one-time scholarship may free up dollars to support a greater number of students. A recurring scholarship draws down the fund over time and also comes with additional work, including the expectation that scholarship recipients keep the funder appraised of their progress, whether through personal statements or student transcripts. This due diligence takes time, but typically enables a scholarship fund to achieve greater long-term impact.
6. What if you intervened later in a college student’s academic career?
Despite the advantages of a recurring scholarship, the majority of scholarships are, in fact, one-time awards. This leaves sophomores, juniors, and seniors – not to mention graduate students – in search of critical funding to complete their degrees. A scholarship fund that supports upperclassmen or graduate students helps these students cross the finish line and get into their careers, often yielding a greater return on investment.
7. What is your scholarship’s life cycle?
Just as scholarships awards can be one-time or recurring, so too can your contributions into a scholarship fund. Think about how long into the future you would like your scholarship fund to generate awards. You can give a scholarship fund a specific end date, with any excess dollars granted out in line with existing criteria. You can also have a scholarship fund live out in perpetuity, assuming it is of sufficient size. For scholarship funds intended to last in perpetuity, be careful not to constrict the use of the dollars too tightly. While, in the example above, the United States faces a nursing shortage today, it may face an altogether unrelated academic challenge in the not-too-distant future. Make sure to build in the sort of flexibility that ensures your scholarship fund remains relevant, aligned with your goals, and impact-oriented well into the future.
A higher education is a determining factor in future employment, salary, and financial independence, making scholarships a critical link to a much brighter, more sustainable future.
Just be sure to answer these seven questions before creating a scholarship fund – so that your philanthropic dollars are achieving the greatest intended impact.