Starting a scholarship or grant program to support students in their pursuit of higher education is one of the most impactful ways to use your funds. We understand that getting started can feel a bit daunting, so we’ve put together a step-by-step guide to starting a scholarship fund.
Step 1: Funding
To start a scholarship, you’ll first need to decide on the amount of funding you want to provide and where that money will come from. If your scholarship will be renewable, how will you ensure there are funds available for future years? Also, consider what expenses your scholarship will cover. Will it only be for tuition, or will it also help with costs like books or housing? Once you’ve figured out the details, there are several ways to fund your program. You could cover the costs yourself, find donors, or use an endowment. For endowments, Forbes Advisor estimates you’ll typically need a minimum of $50,000 to get started.
It’s crucial to maximize the impact of your scholarship funds. The costs of running a scholarship program extend beyond just the awards themselves. You’ll also need to factor in expenses for managing the program, such as website maintenance, management services, and administrative tasks. Large foundations often have dedicated teams for marketing, reviewing applications, and handling finances. If you’re starting with a smaller fund or looking to reduce overhead costs to allocate more money directly to students – consider leveraging digital solutions. For instance, with Kaleidoscope, you can manage your entire program efficiently for no more than 5% of your total disbursement costs, allowing you to focus more of your funds on supporting students.
Step 2: IRS compliance and tax exemptions
Scholarship programs can offer benefits beyond helping students; they can also provide tax advantages for you or your organization. To take advantage of these, you’ll need to establish a tax-exempt organization. Typically, funds used for tuition, required fees, books, supplies, and equipment are tax-exempt. If your scholarship or grant also covers room and board or includes a stipend for living expenses, those amounts can be taxable. While the specifics can get a bit more complex, you can find the details on the IRS’s website.
Step 3: Determine who you want to support and the eligibility criteria.
Next, consider who will benefit from your scholarship. For instance, some programs support women around the world pursuing education, while others may focus on giving back to their community. Your choice will help you define the eligibility criteria needed to find the right candidates.
When setting these criteria, think about the screening questions you’ll use to assess applicants. To keep your application process streamlined, avoid including unnecessary questions that won’t aid in filtering applicants. Here are some key eligibility factors you might want to include:
- Minimum Grade Point Average (GPA)
- Level of Schooling/Age
- Specific Extracurricular Activities, Volunteer Work, Interests or Fields of Study
- Geographic Location
- Level of Financial Need
Step 4: Determine scoring criteria applications
Once you’ve determined who is eligible to apply, the next step is to figure out how you’ll select the most deserving candidate. To ensure a fair and objective selection process, you’ll need to establish the criteria your review team will use for scoring and decide how to weigh each criterion. Be clear about the questions you’ll ask to evaluate these factors and avoid including questions that won’t be used for scoring.
Additionally, consider who will be reviewing the applications. Will it be you, a team of people, or a dedicated review board? If multiple individuals are involved in the decision-making process, make sure the process and scoring guidelines are clearly defined.
Step 5: Build your application
With your criteria and questions in mind, the next step is to design the application form and questions for your applicants. Decide whether you’ll require supporting documents such as transcripts, essays, or videos. If you request an essay or another open-ended submission, be clear about the prompt and specify the word count or length to set clear expectations. If you’re asking for recommendations, make sure to inform recommenders about the key factors you’re looking for and the submission process.
Then, choose how you’ll create and collect applications. Here are some common methods:
- Paper-Based Applications – Applicants mail or scan their completed applications by a set deadline.
- Form Builder Tools – A cost-effective way to create your application online. Note that you’ll need to manually enter application data if you want to use digital tools for review, scoring, and selection.
- Scholarship Marketplace – An all-in-one scholarship platform where you can build and host your application form. This approach simplifies the process and ensures your application follows best practices. It can also reduce marketing costs by reaching applicants who are already searching for scholarship opportunities on the platform.
Step 6: Collect your applications
With your application ready, it’s time to open it up to potential applicants. As mentioned previously, billions of dollars of education-based funding are left on the table each year, partly because students find it challenging to locate or apply for available opportunities. To reach students actively seeking funding, consider hosting your scholarship where they are already looking.
One option is to promote your application on a scholarship listing website that aggregates open programs. However, be aware that these sites can sometimes be unreliable, with potential issues like broken links or outdated information.
To enhance your application’s visibility and completion rate, consider using a platform specifically designed to improve the applicant experience. Look for a platform that presents all relevant information upfront, provides a direct link to the application, and offers features like branded scholarship pages, document and recommendation collection, and automatic status notifications. These features streamline the application process, reduce barriers, and keep applicants informed, encouraging them to complete their applications.
Step 7: Review applications and select your winner(s)!
Once the application deadline has passed, it’s time to review and select your winner(s). Your review process should be designed to fairly and objectively score applications based on the criteria you’ve set. Often, this stage can be hampered by data cleanup, inefficient collaboration, and complex score consolidation. An all-in-one scholarship platform can address these issues by maintaining clean data and allowing your reviewers to easily sort and filter applications. Look for a platform that enables reviewers to track their progress, collaborate seamlessly, and fill out scorecards directly within the system. Built-in scorecards should automatically weigh and calculate scores, streamlining the review process.
For additional tips on managing your review process, check out our on-demand webinar on review board best practices.
When it’s time to notify and award your recipient(s), consider how you will communicate the selection and publicly announce it. You’ll also need to determine how to disburse the funds. Here are some common options:
- Send a Check to the School – You may need the student to provide the address for the office handling payments. Be aware that private funding might lead to scholarship displacement, where institutions reduce other financial aid.
- Send a Check to the Student – While this method offers flexibility, it makes the funds taxable and you have less control over how they are spent.
Choosing the best disbursement method depends on your program’s needs. Kaleidoscope has helped numerous programs disburse millions of dollars in scholarships and grants, and we can assist you in determining the most effective way to get funds to students based on your goals.
Conclusion
We hope this guide has provided you with a solid foundation for starting your scholarship program. If the process still feels overwhelming, you’re not alone—managing education-based funding involves many complex decisions. Fortunately, Kaleidoscope is here to assist you every step of the way. If you’d like to learn more about how we can support you in managing your scholarship program, we’d be delighted to connect. Feel free to reach out, and let’s explore how we can make the process smoother and more effective for you.
Explore more resources
Read more
Read more
Read more
Read more
Read more
Read more
Read more
Read more
