Scholarship Funds

This type of fund supports educational grants to individuals based upon eligibility and selection criteria recommended by the donor. The Board of Directors approves distribution of grants to the educational institutions for the benefit of the scholarship recipients.

Restricted Scholarship Funds

A restricted scholarship fund is a scholarship fund in which a donor selects the receiving institution and establishes the selection criteria (subject to applicable laws) but does not actively participate in the selection of recipients. Many donors use this type of scholarship as part of an estate planning strategy (i.e., a bequest).

What Are the Tax Advantages of Restricted Scholarship Funds?

  • Receive the maximum tax deduction available in the year the contribution is made.
  • Reduce estate taxes with testamentary gifts.
  • Avoid costly capital gains taxes while realizing the maximum tax deductibility of your donation with a gift of real estate or other complex assets.
  • Expenditure responsibility requirements do not apply, unlike with a private foundation.
     

Discretionary Scholarship Funds

A discretionary scholarship fund allows the donor to define criteria for a student while the Community Foundation oversees the selection process. After the donor establishes the criteria, it requires minimal participation from the donor since the Foundation manages the fund and selects scholarship recipients based on eligibility requirements.

What Are the Benefits of a Discretionary Scholarship Fund?

  • Establish general eligibility requirements (subject to applicable laws) and then allow the Foundation to oversee the fund.
  • Avoid administrative hassles by having the Foundation fully manage and administer the scholarship program.
  • Can give complex or unusual assets at fair market value (e.g., real estate, closely-held stock).
  • Opportunity to name the fund after you or in honor of a family member, a friend or an organization.
  • Ability to grant anonymously to scholarship recipients, if the donor chooses to do so.
     

What Are the Tax Advantages of a Discretionary Scholarship Fund?

  • Receive the maximum tax deduction available in the year the contribution is made.
  • Reduce estate taxes with testamentary gifts.
  • Avoid costly capital gains taxes while realizing the maximum tax deductibility of your donation with a gift of real estate or other complex assets.
  • Expenditure responsibility requirements do not apply, unlike with a private foundation.


For more information on scholarship funds, contact Randy Kuhlman, CEO, at 515.573.3171 or rk@fd-foundation.org.