How to Set Up a Scholarship

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Introduction

As long as there are students desiring a college education, there will be a need for scholarships.  Access without regard to the ability to pay is a powerful goal for every institution of higher education in America.  Scholarship donors take great satisfaction in knowing they are helping worthy students, as well as the University.  A designated endowment fund bearing a special name is one to which all members of a family or other group—including future members—may continue to contribute in the years to come, in this way, increasing the size of the endowment and therefore, the size and perhaps the number of scholarships Oglethorpe is able to award in that name. 

The perpetual existence of this endowment and the opportunity for existing and future members of a family or other group to contribute to it at any time will be a powerful means of encouraging philanthropic efforts in children and in future generations.  At the same time, it will benefit untold numbers of future Oglethorpe students who would have been unable to attend the University without the financial assistance which this scholarship provides.

Guidelines

These guidelines were formulated to help donors understand how endowed scholarships work.

• Gifts made to an endowment are invested in perpetuity to generate earnings to support the purposes of the endowment.  The gifts form the corpus of the endowment.  The corpus is never spent; the scholarships are provided by the earnings from the corpus.
• For a named endowed scholarship, the minimum initial corpus is $25,000.  When the minimum is reached, the scholarship is considered vested.  Up to five years may be taken to complete the building of a $25,000 corpus.  Scholarships may also be endowed by planned gifts.
• The corpus must be vested for an entire year before the first scholarship awards can be made.  (Example: for a scholarship to be awarded in the fall of 2009, $25,000 would need to be placed in a fund by June 30, 2008.) 

• Endowments are invested by professional investment advisors according to policies adopted by the Board of Trustees.  The Board’s Investment Committee provides oversight of the advisors.

• Distributions are made from endowment earnings according to policies adopted by the Board of Trustees.  The current “spending rule” is 5 percent.  Should the corpus earn more than 5%, unspent earnings are reinvested to preserve the purchasing power of the endowment, so that scholarships can continue to be awarded during lean economic times, as well as good ones.  

• Scholarships are awarded by the Office of Financial Aid consistent with the donor’s criteria and University policies and procedures.  Donors may restrict awards on the basis of need or merit.  Criteria determined by the donor in consultation with University officials can give preference to students enrolled in specific courses of study, seeking particular careers, performing particular roles on campus, or residing in designated geographic locations.  Scholarships are documented by written agreements and drafted by University officials with the consent of both parties. 

Prohibitions

• As a member of NCAA Division III, Oglethorpe University is prohibited from offering athletic scholarships or grants in aid.
• The donor may not name scholarship recipients.
• Criteria may not compromise the University’s tax exempt status or accreditation or violate the law or University policy.

Other Options

An Annual Scholarship.  The donor makes an annual gift to the University which in turns makes a scholarship award in the same amount.  Annual named scholarships can be established with a minimum amount of $1,000, and are renewable each year, as long as we receive the funds for the scholarship by June 30th of that year for distribution in the fall semester.

A Convertible Scholarship.  This option starts as an annual scholarship while the donor makes gifts over a period of years to vest an endowed scholarship.  Example:  A donor pledges $6,000 a year for five years.  Each year’s gift is divided into two parts:  $1,000 is used for an annual scholarship, and the remaining $5,000 is placed in the endowed scholarship fund.  At the end of the fifth year, the endowed scholarship is vested and begins generating scholarship funds in the fall of the next academic year. 

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