How to Start a Scholarship Fund in Minutes (2024)

Have you ever wondered how starting a scholarship fund can transform lives despite the high cost of education? I have, which is why I’ve personally created and funded around 145 scholarships. My experience with scholarship creation and fundraising has shown me just how transformative scholarships can be.

Having set up scholarship funds myself, I know both the joy of helping students and the challenges involved. It’s incredibly rewarding to see students pursue their dreams without financial worries, but I also understand that organizing a scholarship can feel complex and overwhelming.

That’s why I’m here to give you a behind-the-scenes look at how to start a scholarship fund and manage it effectively. I want to help you make informed decisions and explain why I chose Bold.org as the platform for my scholarships.

In the 2022-2023 school year, roughly 61% of families relied on scholarships to pay for college, with 57% relying on grants. It’s evident scholarships are more than just financial support. They’re lifelines that can fundamentally reshape a student’s future.

They don’t just cover tuition—they help with books, supplies, rent, food, and even help pay off existing student loans. By creating a scholarship, you’re not just donating money; you’re giving a deserving student a real chance to achieve their educational goals.

Create a scholarship fund today to give a gift that truly makes a difference! Your support can open doors and change students’ futures in ways they never thought possible.

My Methodology

I’ve raised and awarded nearly $100,000 in scholarships, and from that experience, I’ve learned a lot about what makes scholarship funds both successful and fulfilling. I’ve put together the best practices for each option to help you choose the most effective and practical way to start your own scholarship fund.

My evaluation went beyond the ease of setting up, the cost, and community involvement. I also considered important factors like donor impact, flexibility, customization, transparency, compliance, and minimizing the administrative burden.

For me, Bold.org is the best choice due to its ease of setup, strong support, flexibility, transparency, and cost-effectiveness, making it the ideal choice for donors’ needs and goals. Read my detailed insights behind this recommendation and see why Bold.org is the best option for creating a scholarship fund.

If you’re interested in creating a lasting impact, learning how to start a scholarship fund can be a transformative way to support students and help advance their education. Start your scholarship fund with Bold.org today!

What You Need to Know About Scholarship Funds

To navigate the process of starting a scholarship fund, it’s important to understand that while scholarship funds and scholarships are closely related, each plays a different role in supporting education.

• Scholarship Fund: A scholarship fund is a fundraising initiative where donations are collected, and the money raised through this fund is used to create and award scholarships. It acts as a reservoir that can support multiple scholarships over time.
• Scholarship: A scholarship is a specific financial award given to students. Each scholarship has its own application process, eligibility requirements, and award amounts.

How Scholarship Funds & Scholarships Work Together

Understanding the relationship between scholarship funds and scholarships clarifies how each supports education and helps you manage them effectively. Here’s a clear look at how they work in tandem:

1. Scholarship Fund: Donations are collected into a scholarship fund.
2. Scholarship Creation: From your fund, individual scholarships are created, each with specific criteria and goals.
3. Administration: The fund’s administrators (or platforms like Bold.org) handle the application process, compliance, and award distribution.
4. Awarding: Scholarships are awarded to deserving students, directly supporting their educational pursuits.

By setting up a strong scholarship fund, you provide steady and reliable support that helps students achieve their educational dreams, all while keeping your efforts organized and streamlined.

Scholarship Fund Creation Options

Setting Up a Foundation Yourself

Creating a scholarship fund on your own can be incredibly time-consuming and expensive. You’ll need to hire a lawyer and a financial advisor to ensure you complete the paperwork correctly and meet all the necessary IRS requirements. Additionally, you’ll have to pay for website costs and deal with various recurring legal fees.

To start, you must create a private foundation and submit the proper paperwork to the IRS to secure tax-exempt status. The IRS recognizes many types of tax-exempt organizations, and scholarship funds typically fall under grant-making foundations.

Next, you’ll need to ensure your foundation meets the requirements for tax-exempt status and gather all required legal documents. You’ll have to file registration paperwork with your state and the federal government. This process can vary based on the type of organization, the size of the foundation, and the amount of the scholarship fund.

Pros	Cons
✅ Build a legacy ✅Growth potential	❌ Complex setup  ❌ High cost ❌ Maintaining regulatory compliance with tax laws ❌ Resource-intensive ❌Demands substantial time

Bottom Line: Independently creating a scholarship fund involves significant time, cost, and complexity, including legal and financial expertise, ongoing fees, and extensive paperwork to meet IRS and state requirements.

Utilizing Bold.org

Many other options for establishing a scholarship fund proved to be either too expensive, complex, or not aligned with my objectives. Bold.org offered a practical solution by allowing me to set up a scholarship fund at no cost. The platform facilitates crowdfunding, manages administrative tasks, and ensures compliance, all within a single, user-friendly interface.

Moreover, the Bold.org platform, powered by the Bold Foundation, is designed with both students and donors in mind, offering a streamlined process for applying for and organizing scholarships.

Unlike other scholarship management services, Bold.org simplifies the process by handling the essential administrative duties and regulatory requirements, enabling you to concentrate on supporting students. Bold.org’s Donor Team also assists in collecting donations for your scholarship awards, drafting your scholarship, advertising it, and helping review applications to choose a deserving recipient.

Pros	Cons
✅Easy setup ✅Free ✅Administrative support ✅Compliance assurance ✅Direct involvement	❌ Minimum fundraising requirement of $500

Setting Up a Scholarship Endowment at a Specific School

Establishing a scholarship endowment at a specific school is another option, but it can be an arduous process, especially if your scholarship goals are not tied to a particular institution.

To start, you need to work closely with the school’s development office to understand their endowment requirements. Many schools have high minimum donation thresholds, often requiring substantial financial commitments to create an endowed scholarship. This can make it a less accessible option.

You’ll also need to draft a legal agreement detailing the scholarship’s terms, eligibility criteria, and administration. This process can involve multiple rounds of negotiations and revisions, adding to the complexity and time required. Once the endowment is set up, the school will typically manage the scholarship, which means you might have less control over the selection process and the scholarship’s administration.

While endowing a scholarship at a specific school can provide long-term stability and direct support to students at that institution, it may not be the best fit if your scholarship goals are broader or if you prefer a more hands-on approach.

Pros	Cons
✅Direct impact ✅Institutional support ✅Recognition by the school ✅Stability for providing long-term support	❌High minimum donation requirements ❌Less flexibility ❌Dependency on the institution ❌Complex setup

Bottom line: Setting up a scholarship endowment at a specific school offers direct impact and institutional support but involves a complex process with very high upfront costs and less flexibility and control.

Paying a Scholarship Management Service

Another option is to pay a scholarship management service to handle the process for you. While this can save time, it often comes with high costs. These services handle the administrative work and ensure compliance with legal requirements, but you may find yourself less involved in the selection and management of the scholarship. Additionally, the costs associated with these services can be substantial, upwards of thousands of dollars, reducing the funds available for the scholarships themselves. 

Pros	Cons
✅Time-saving ✅Compliance assurance	❌Dependency ❌Less involvement ❌High cost ❌Limited transparency

Bottom line: Paying a scholarship management service can save time and ensure compliance but comes with high costs that can reduce the funds available for scholarships. It also may limit your involvement in the selection and management process.

How Much Money Do I Need to Start a Scholarship Fund?

The amount of money needed to start a scholarship fund can vary widely depending on the type and scope of the scholarship you wish to create. Here are some general guidelines:

1. Minimum Requirements: Some organizations allow you to start a scholarship with as little as $500 to $1,000.
2. Endowed Scholarships: If you want to create an endowed scholarship, which is a permanent fund where only the interest is used to award scholarships, you’ll typically need a larger sum. Endowed scholarships often require a minimum of $10,000 to $25,000, though some institutions may require more, typically around $50,000 or more, to ensure a sustainable fund.
3. Administrative Fees: Keep in mind that managing a scholarship fund can incur administrative fees, which might be a percentage of the fund or a flat rate charged by the managing organization.
4. Annual Scholarships: If you prefer to fund scholarships annually rather than creating an endowment, you can decide on an amount that fits your budget and goals. For example, you could set aside $2,000 annually to be awarded to one or multiple students.
5. Partnering with Organizations: Some donors choose to partner with an educational institution, community foundation, or nonprofit that already has scholarship programs in place. These organizations can often help manage the fund and ensure that it is awarded according to your criteria.

Ultimately, how much you need to start a scholarship fund depends on your financial situation, your goals for the scholarship, and the guidelines of any organization you partner with. If you use Bold.org, you can start a scholarship fund for $0. To publish a scholarship, the minimum amount needed is $500. 

Because Bold.org is powered by a nonprofit dedicated to eliminating student debt, every dollar you contribute goes straight to scholarship recipients. There are no fees or additional costs from Bold.org, and you’ll get plenty of support throughout the process!

Creating a Scholarship Fund in 5 Simple Steps

1. Start by Establishing the Fund & Scholarship Goals

Start by identifying your ideal scholarship awardee and the impact you want to create. Determine if you want to support students who have reached specific academic milestones, maintained a certain GPA, or are pursuing majors that align with your interests or are in high-demand career fields.

Consider supporting nontraditional students, first-generation college students, or those with significant financial need. By clearly defining who you want to help, you can create a scholarship that aligns with your values and provides meaningful support.

Establishing these goals will also help you communicate your vision more effectively to potential donors, making your fundraising efforts more successful. Clear, well-defined goals make it easier to explain your scholarship’s purpose, which can enhance your fundraising efforts and attract more support.

2. Determine Your Budget & Select a Scholarship Fund Creation Option

Once you have a clear vision and goals, decide how much you want to dedicate to your scholarship fund. Consider whether you’ll accept donations from others to support your scholarship(s). You don’t need to spend thousands to create a scholarship. Working with a scholarship management service like Bold.org allows you to create a scholarship for as low as $500.

Independently starting a nonprofit organization or private foundation can be costly. You’ll need to cover legal fees, advertising expenses, and the significant investment of time and money in building a website. Ask yourself, would you rather spend your funds on administrative fees or directly help more deserving students? With a clear budget in mind, you can better plan your fundraising efforts and achieve your scholarship goals.

3. Wrap Up Your Paperwork

Once you’ve figured out your goals and criteria, it’s time to set up the necessary paperwork. Here are four ways to create a scholarship fund:

1. Start Your Own Nonprofit:
   • You’ll need to hire a lawyer and a financial advisor, build a professional website, and be prepared for significant legal fees and ongoing administrative costs. Additionally, you’ll need to file extensive paperwork with the IRS and your state to secure and maintain tax-exempt status.
2. Utilize Bold.org:
   • Donations to scholarship funds on Bold.org are tax-deductible, as they are classified as donations to the Bold Foundation, a 501(c)(3) nonprofit. The platform handles all administrative tasks, ensures compliance with legal requirements, and provides advertising support. You also have the opportunity to be directly involved in the selection process and engagement with recipients. The intuitive platform simplifies the setup, allowing you to crowdfund donations and launch your scholarship fund quickly.
3. Create an Endowed Scholarship:
   • Typically, establishing an endowed scholarship requires a substantial financial commitment, with high minimum donation requirements set by the institution. The setup process involves detailed legal agreements and coordination with the school’s development office, making it a complex and time-consuming option. Additionally, you may have less control over the selection process and scholarship management once it’s established.
4. Use a Paid Scholarship Management Organization:
   • These services can be costly, reducing the funds available for the scholarships themselves. You may also have less involvement in the selection process and overall management of the scholarship, leading to less control over how the funds are used. Additionally, there can be limited transparency in how funds are managed.

Choose the option that best fits your situation, and you’ll be well on your way to making a real difference in students’ lives!

4. Publish the Scholarship Fund to Get Donations

If the traditional methods seem too expensive and time-consuming, consider using Bold.org to simplify the process. The platform allows you to establish a scholarship fund for free, crowdfund donations, and launch your scholarship—all on the same intuitive platform.

Bold.org handles the administrative tasks, ensures compliance, and allows you to focus on the rewarding aspects of supporting students. Once your scholarship is published, Bold.org also takes care of advertising to attract applicants, making the entire process seamless and efficient.

Because Bold.org takes care of all the behind-the-scenes work for you, your focus can remain on the rewarding part—helping students.

5. Setting Up the Scholarship

With your fund established and donations coming in, it’s time to set up your scholarship. Choose a name for your scholarship, decide on the application deadline, and finalize the eligibility criteria based on the goals you established earlier. If you opt to create your own foundation, you’ll need to file the necessary documents with your state or federal government and get IRS approval for your selection and award procedures.

If you’re using Bold.org, the platform will guide you through this process, ensuring everything is in place for a smooth launch. Once everything is set up, you can begin accepting applications and ultimately select the deserving recipients. This step is where your vision becomes reality, and you get to see the tangible impact of your generosity on students’ lives.

By learning how to start a scholarship fund, you have the opportunity to profoundly change lives, offer hope and support to deserving students, and create a heartfelt legacy that will inspire future generations.

Your Impact as a Donor

Creating a scholarship fund is one of the most rewarding things you can do, not just for the students who benefit but for yourself as a donor. From my experience creating scholarships and fundraising on Bold.org, I’ve found it incredibly rewarding. There’s something really special about directly helping students with their educational and personal growth. Every thank-you message or video I receive from recipients sharing their achievements makes me feel deeply connected to their journey.

Giving in this way creates a lasting legacy and builds a supportive community. Seeing how contributions help turn dreams into reality brings a profound sense of joy and purpose that goes beyond financial rewards. It’s a powerful reminder that we all have the ability to make a positive impact and leave a mark on the world.

And, believe me, when you receive your first thank you letter from your scholarship recipient, it hits home just how much your support means. You’ll read about their dreams, struggles, and how your scholarship has opened doors they didn’t think possible. It’s a moving reminder of how your contribution is directly helping someone build their future and achieve goals that might have otherwise been out of reach. 

Is a Scholarship Fund Tax-Deductible?

When creating a scholarship fund, the IRS stipulates that grants or scholarships to individuals are tax-deductible if the following conditions are met: 

1. The scholarship is awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the IRS. This means your eligibility criteria for your scholarship should be inclusive enough to ensure that scholarship recipients qualify as members of a charitable group.
2. The scholarship is either:
   1. a scholarship or fellowship that is used for study at an educational institution. This means direct educational costs like tuition expenses, fees, course materials, etc.
   2. a prize or award that is excludable from gross income under Internal Revenue Code section 74(b). The recipient must be chosen from the general public, and they can keep the prize or award themselves.
   3. or to achieve a specific objective, produce a report, or improve a literary, artistic, musical, scientific, teaching, or similar capacity, skill, or talent of the grantee. This means your scholarship helps a student accomplish a specific goal, create a report, or enhance their abilities in these areas or similar fields.

Company scholarship programs are held to the same standards as scholarships to individuals and are taxable expenditures unless they meet the above requirements. Further, the IRS provides additional guidance for company scholarship programs on its website.

Proper documentation and adherence to IRS guidelines are necessary for scholarships to be considered tax-deductible, and the scholarship should further a charitable purpose as defined by the IRS to qualify for tax-deductibility. This is why platforms like Bold.org are super helpful in ensuring your scholarship meets IRS guidelines. For even more information, check the IRS website.

Tax Perks for Starting a Scholarship Fund

If you follow the IRS guidelines above or partner with a scholarship organization, the money you contribute to your scholarship fund will be tax-deductible.

You can also accept tax-free donations from other people who wish to donate to your scholarship fund. An easy way to do this is by using Bold.org. Check out scholarship funds on Bold.org to learn more.

Examples of Scholarship Funds

1. Larry W. Moore Memorial Scholarship Fund for Aspiring Engineers: This fund provides financial support to Michigan students pursuing engineering degrees, honoring Larry W. Moore’s legacy as a respected engineer and builder.
2. Craig Huffman Memorial Scholarship Fund:  This fund honors Craig Huffman’s legacy of exceptional leadership and generosity by providing financial support to aspiring pilots, encouraging them to embody the same dedication and excellence he demonstrated throughout his career.
3. WCEJ Thornton Foundation Low-Income Scholarship Fund: This fund aims to make education more accessible for underrepresented students and create positive change in the world by supporting those who lack the resources to excel.
4. Chris Jackson Computer Science Education Scholarship Fund: A fund that honors the memory of Chris Jackson with the aim of supporting students pursuing a computer science degree, helping them use their skills to make a positive impact through technology.
5. Chief Lawrence J. Nemec Jr. Memorial Scholarship Fund: A fund in memory of Chief Lawrence J. Nemec Jr. aiming to support the education of future volunteer firefighters and EMTs, honoring Lawrence’s dedication to community service and his passion for helping others.
6. Karla Johnson Memorial Scholarship Fund: A fund in memory of Karla Johnson that supports students from her high school alma mater in Gladewater, Texas, providing financial aid for either junior college or trade school to honor her legacy of generosity and dedication to helping others.

View more funds for further inspiration!

FAQs on Scholarship Funds

Can anyone start a scholarship? 

Yes. Any individual, family, foundation, or business can use a platform like Bold.org to fundraise and launch your scholarship.

How do I start a nonprofit scholarship fund? 

You can start a scholarship and fund it yourself, but another option is to create a nonprofit scholarship fund that allows others to donate. This process can be complicated, and the exact steps depend on your state laws for starting and running a nonprofit.

If you want to give others a chance to donate to your scholarship without the extra steps of creating a nonprofit yourself, you can go through a scholarship management organization like Bold.org. You don’t have to pay any extra fees, and the platform handles all the administrative work of managing your fund and accepting donations.

How to start a scholarship fund in memory of someone?

Starting a memorial scholarship fund is similar to starting any kind of scholarship program. You’ll need to determine how to fund and manage the award and establish the criteria. If you plan to accept donations to fund the scholarship, it’s easiest to partner with a nonprofit organization that handles the acknowledgments, receipts, and funds for you as opposed to starting a nonprofit or GoFundMe. Don’t forget to discuss potential tax issues with a financial advisor if you’re collecting the donations yourself.

Learn more about starting a memorial scholarship fund.

Why do people create scholarship funds?

People create scholarship funds for all sorts of reasons. Some want to help students who might not be able to afford school otherwise, while others do it to honor someone special or give back to their community. It’s also a way to support talent in specific fields and leave a lasting impact on future generations.

How can a business start a scholarship fund?

You can directly fund and manage a scholarship through your business, which involves several responsibilities: defining the fund’s criteria, forming a selection committee to review applications, promoting the fund, and overseeing its disbursement. This will include tasks such as creating scholarships from your fund, setting scholarship eligibility criteria, managing the review process, and maintaining records. Alternatively, you can use a platform like Bold.org to handle the administration and management of the fund, making the process simpler and allowing you to focus on your goals.

What is a scholarship management service?

A scholarship management service takes care of all the nitty-gritty details like processing applications, managing selections, and disbursing the money. They also keep track of records and make sure everything complies with IRS regulations. This way, organizations or individuals can focus on spreading the word about their scholarship and reaching their goals.

Unlike many other scholarship management services, Bold.org takes it a step further by actively promoting your scholarships to eligible students. This approach not only enhances visibility but also connects you with a diverse pool of motivated students, making it easier to find the best awardee for your scholarship.