How to Start a Scholarship Fund in 7 Simple Steps in 2023
⏰ Updated January 2023
✍️ Written by Calvin Rosser
👩🎓 $28k in scholarships awarded
Want to learn how to start a scholarship fund?
A scholarship fund is a tax-deductible grant that helps students pay for their direct educational costs, such as tuition, books, and fees. To be eligible for favorable tax treatment, the scholarship needs to follow the IRS guidelines, which require working with an organization that can help you award the scholarship on an objective and nondiscriminatory basis.
The good news is that creating a scholarship fund is easier than you think. Whether you want to set up a scholarship for low-income students or establish a memorial fund in memory of someone, anyone can create a scholarship for deserving students in a few days with the right help.
While you can create your own nonprofit organization, that is a complicated and expensive process that can take many months. The best route for most people is to work with a reputable scholarship management organization. They can help you set up the scholarship, collect donations, find deserving students, review applications, and award the grant.
There are 7 basic steps to starting a scholarship fund.
- Decide your budget
- Figure out who you want to help
- Choose the scholarship eligibility criteria
- Do the paperwork
- Establish the scholarship
- Promote your scholarship:
- Choose the winners
1. Decide Your Budget
There is a common misconception that you need tens of thousands of dollars to start a scholarship fund. It is true that if you want to create an endowed scholarship at a particular school, they may require you to raise a large amount of money.
But most people can work with a scholarship management service to start a scholarship fund for as little as $500. Some of these organizations have administrative fees, but others offer their services at no cost.
If you’re considering starting a nonprofit, keep in mind that it that your costs will likely include the scholarship amount, legal fees, website costs, and advertising. That may not be worth the cost and effort, especially if you’d like to award a scholarship fund under $5,000.
Because creating a scholarship has tax benefits, it can help you achieve your financial goals. When thinking about how much you want to spend on a scholarship, consider how much you can give on an annual basis.
Outside of what you can personally give, you can also raise funds from other people who want to support the cause. Tax exempt organizations like Bold.org allow you to start scholarships and collect one time gifts from other people at no cost.
When I created my first scholarship, I knew I wanted to give about $5,000 per year. I wanted to create multiple grants for different causes, so I decided to do a suite of scholarships that ranged from $500 to $2,000 awards.
2. figure out who you want to help
Once you know how much you want to spend, the next step to starting a scholarship is thinking about who you want your grant to help. The best place to begin is to choose a group of students who you genuinely want to help. You can support students who are like a younger version of yourself, who come from underrepresented backgrounds, or who are passionate about causes you care about.
Choosing a group that resonates with you will make the scholarship a more rewarding experience. For example, I’ve created scholarships for mental health awareness, black entrepreneurs, women in technology, first-generation students, and other causes I personally find important.
There is no “right” answer to what your scholarship program is about or who it is for.
Scholarships are awesome because you can customize and personalize the specific criteria for the grants in ways that resonate with you. Many people also establish a memorial fund in memory of loved ones who have passed away.
3. Choose the scholarship eligibility criteria
With your scholarship idea and budget decided, you need to think about the eligibility criteria, application process, and program deadlines.
Is it a one-time award? Is it for high school students in their senior year? Is it for college students studying specific majors? Is it for first-generation students with financial need?
The main eligibility requirements to consider include:
- Educational level: high school, trade school, undergraduate, or graduate school.
- Demographic information: race, ethnicity, location, first-generation students, etc.
- Academic information: GPA, field of study, career of interest, and volunteering history.
- Submission requirements: An essay, video, and other information to apply.
The most important part is deciding on an essay or video prompt that will help you learn more about the students as you review the applicants in the selection process.
With the specific criteria spelled out, the last step is to figure out the application deadlines. A good rule of thumb is to keep your scholarship open for 3-6 months to ensure that you allow students the time to apply and have a competitive applicant pool.
4. do the paperwork
Once you have an idea about who your scholarship program is for and how much you want to give, it’s time to begin the scholarship creation process. If you’ve never done it before, you probably have many questions:
- Do I need to start a non-profit? How do I raise funds? How will I find students? How do I manage applications? Are there legal considerations?
Thankfully, you don’t need to figure out everything on your own. To finalize the scholarship, you can choose one of three options: create your own nonprofit, create an endowed scholarship with a university, or work with a scholarship management service.
Unless you have tens of thousands of dollars that you want to give, your best option is to work with a scholarship management service. These organizations are built to help everyday people create scholarships and take care of all of the logistical and administrative work for you.
What scholarship management service should you use?
If you do not know how to start a scholarship fund, the best organization for starting and managing your scholarship is Bold.org.
Bold is a nonprofit organization that helps everyday people create scholarships. It’s also the most popular platform for anyone who wants to create a memorial scholarship.
Bold.org helps you:
The best part is that Bold.org is completely free. And because they are an established nonprofit, you don’t need to create your own foundation or manage the tax paperwork for donors. That means you can avoid the administrative overhead of running the scholarship program.
You can sign up to speak with someone on their team who can guide you through the process.
If you want to consider other scholarship management services, Going Merry, Scholarship America, and Tun are other providers. They generally provide lower quality services and can be very expensive depending o the type of scholarship you set up.
5. Establish the scholarship
Go to Bold.org and get your scholarship set up on the platform. The site is pretty intuitive, but below are the basic steps in the process. You can get it live in a few days.
1. Create your donor profile. You’ll answer a few basic questions to get your donor profile set up. Verify your email.
2. Submit your scholarship proposal. Once you’re logged in, you submit a proposal for your scholarship or grant with the rough details. The Bold team will help you clarify everything.
3. Schedule a call. Bold has you get on a 5-10 minute call with the philanthropy team. They answer all of your questions about the scholarship, process, and platform.
4. Fund your scholarship. Once your proposal is ready, you fund it. It goes live within an hour. At this point, students can apply, and you can share it with your network to get more donations.
You can also spend some time to secure additional scholarship funding if you need to, and Bold.org allows other people to donate to your scholarship program in a tax-deductible way.
6. Promote your scholarship
Once your scholarship is live, you can start sharing it. This is the fun part. Bold.org has a database of millions of students, and they promote your scholarship to all of the students who are eligible. This means that you’ll likely get many scholarship applications in the first week.
If you’d like to do additional promotion, consider sharing the scholarship on your social networks, with schools that have students, or with people you know who might be a good fit. It’s very common for people who create memorial scholarships to 5x their initial donation by sharing it with people who may want to contribute.
7. choose the winners
Once your scholarship application deadline passes, you can review applicants. What’s helpful about Bold is that their team reviews your applications as they come in and recommend the best candidates based on the quality of the applications. You receive 10-50 recommended applicants.
So instead of reviewing 1,000 applications, you can review 25 to find a winner. When choosing finalists and a scholarship recipient, look for the students whose stories resonate with you. The best part about scholarships is that you get to give money directly to someone who you want to help.
Once you’ve reviewed applications, select the prospective winner. The Bold.org team will notify the winner and ensure that they receive the funds. You can connect with the winner if you’d like to chat.
🙌And that’s it! If you enjoyed your scholarship, you can renew it with the click of a button. You can also create new ones for different groups of people. It’s up to you.
Bonus: Examples of scholarship funds
- AMPLIFY Black Entrepreneurs Scholarship: A scholarship designed to promote diversity in startups by supporting any Black student interested in entrepreneurship.
- Ginny Biada Memorial Scholarship: A memorial scholarship that exists to support Christian undergraduate students who are heavily involved in their community or non-profit work.
- Elevate Mental Health Awareness Scholarship: A scholarship to shed light on the mental health crisis. Open to any student who has personally struggled or had someone close to them struggle with mental health issues.
- Lucille Hobbs Education Scholarship: A scholarship for BIPOC students who will be the first in their family to pursue higher education.
- Elizabeth D. Stark Art Scholarship: A scholarship to support two female students pursuing a degree in art or art history.
Frequently asked questions about starting a scholarship fund
A scholarship fund is a grant that is awarded on an objective and nondiscriminatory basis to a student to pay for their direct educational costs, which include tuition, fees, course-related books, and other related educational expenses. You can set up a scholarship fund for as little as $500, though some programs require $20,000+ to get them off the ground.
As long as you set up a scholarship that goes toward paying direct educational costs (tuition, fees, and course-required books, or supplies and equipment) for a student in a qualified charitable class and award the scholarship program on an objective and nondiscriminatory basis, your scholarship is tax-deductible as the donor.
A scholarship fund is a financial award that is given to a student who exhibits the best application for a scholarship based on the criteria set forth by the scholarship fund. The award is then given to the student to pay for direct educational costs in order to reduce the financial burden of attending an institution of higher learning.
A common misconception is that you need $20-25 thousand to create a scholarship. The reality is that you can start a scholarship for as little as $500 every year if you do it with the right organization.
While you can set up scholarship funds for high school students for free with as little as $500, it’s important to know that the student won’t receive the funds until they enroll in a qualified institution of higher learning. Those funds will then be used to pay for their direct educational costs, so it’s best to set up a high school scholarship for high school seniors.
With Bold.org, you can create a scholarship program for as little as $500. You can then share that scholarship with friends, family, and your network to secure additional scholarship funding beyond your personal funds. All of their donations are tax-deductible and go toward directly increasing the award. You can also use platforms like GoFundMe, but they often have fees associated with raising funds.
Anyone can start a scholarship fund for students in higher education or non-students to pay down student debt. You do not need to create a nonprofit organization to do so. The best way to start a scholarship is with an organization that facilitates the process for you.
A scholarship management service is an organization that can help you take care of the logistics, distribution, and awarding of your scholarship. With a scholarship management service, you can avoid having to set up your own nonprofit and get your scholarship to the right students in just a few days. Bold.org is the best scholarship management service, though there are some others like GoingMerry.
Bold.org is the best and most legitimate scholarship management service. At no cost, they help everyday people and companies set up impactful and fully tax-deductible scholarships, grants, and fellowships for students. The company is used by hundreds of donors and has awarded hundreds of thousands of dollars to deserving students.
Starting scholarships is the most rewarding form of giving that I’ve encountered. And with the technology available, it’s easier than ever to get started and begin helping people in need.
If it’s your first time, I’d consider using Bold.org because they make the process incredibly easy for you, which allows you to focus on the fun parts.
For further resources, you can learn how to set up a memorial scholarship in honor of a loved one if that’s your goal.