Editor’s Note: This column, originally published in 2016, remains a useful guide to establishing a scholarship fund to honor a hero in your life. We occasionally review and update the external links on this page to keep it up to date. We like to share this column with our readers on Memorial Day and encourage you to do the same.
My uncle was a navigator on a B-29 in World War II. He died a few years ago, and I’d like to set up a scholarship in his name to help students who want to study engineering. How do I do this?
A scholarship is a great way to remember your uncle and help students with their education expenses. You usually need about $20,000 to $25,000 to endow a scholarship that pays out $1,000 every year. You can take a charitable deduction for the money you give to a college, community foundation or other eligible charity.
The development office at a school or community foundation will help you set up the scholarship. You may want to focus on students who live in your uncle’s hometown or those who plan to go into aviation or a specific type of engineering, for example. The organization can help you determine the requirements to impose without making the applicant pool too small.
The amount of money you need varies by organization. Some let you create a shorter-term scholarship fund with less money. San Diego State University, for example, requires $50,000 to endow a $2,000 annual scholarship, or you can commit to giving $5,000 a year over three years to finance three $5,000 scholarships.
The organization may help you create a fund even if you don’t have enough money to endow an annual scholarship. Rather than paying for college tuition, for example, your gift could pay for students to attend a study-abroad program or educational camp.
A community foundation can help you set up a scholarship that isn’t tied to a particular school — helping local students who are interested in studying engineering at any college, for example. See the Community Foundation Locator to find one in your area. Look for one with experience managing scholarships.
Ask how the scholarship will be advertised, how the recipient will be selected and if there are any fees. Find out how involved you can be; you may be able to sit on the selection committee but not be the main decision maker, for example.
You may also be able to set up a scholarship fund or support educational programs through a charity that specializes in helping veterans and their families. Check out the charity first; some are much more effective than others. See Charity Navigator’s list of highly rated charities to support veterans and active duty service members. Also see CharityWatch’s top-rated charities for veterans and the military. You can also search for charities and learn more about their finances and ratings at Give.org and Guidestar.org.
Another option is to donate to a military emergency relief fund that provides financial support for service members and their families and often helps with educational expenses, too. Army Emergency Relief, for example, provides scholarships to military spouses and children, in addition to other financial assistance. Each branch of the military has an emergency relief fund or aid society (see the Air Force Aid Society, the Navy-Marine Corps Relief Society, and Coast Guard Mutual Assistance to find out more about making a donation in memory of your uncle).
Ask the school, charity or community foundation what types of assets you can give and how it will invest the money. You can give cash, appreciated stock or other investments to create the scholarship fund. A retirement-account required minimum distribution for people over age 70½ is another source of money. You can transfer up to $100,000 tax-free from an IRA to charity every year, which counts as the RMD but isn’t included in your adjusted gross income. (See How to Ensure Your IRA Donation to Charity Is Tax-Free for more information.)
See Also: 10 Best Financial Benefits for Military Families
Copyright 2016-2020 The Kiplinger Washington Editors