So, you’ve decided you want to start a scholarship or grant program to support students pursuing higher education. We might be biased, but we think that investing in students’ futures is one of the best ways to put your funds to good use. However, it can be overwhelming to figure out how to get started. That’s why we’ve compiled a guide that will walk you through how to create your program from the ground up.
Step 1: Funding – where does your money come from and where is it going?
You can’t start a scholarship without funding, so you will have to decide how much you want to provide and where those funds come from. Also, think about if you want your scholarship to be renewable and how you’ll allocate funds for future years. Additionally, consider what costs you want your funding to pay for. Do you only want to pay tuition expenses? Or do you want to give students the option to use their funds for other expenses such as books or housing? Once you’ve decided, you have a few options for how you can fund your program. You can choose to fund it all yourself, seek out donors, or pay it out from an endowment. To give you a ballpark of how much you may need to get started, Kiplinger estimates that you’ll need an endowment of about $25,000 to pay out $1,000 annually.
Next, you must ensure you’re making the greatest impact possible with your funds. The cost of creating a scholarship goes beyond just the award itself; also consider the cost of managing your program – for example, websites, management services, and administration. Large foundations have teams dedicated to marketing the scholarship, reviewing applications, and handling finances. If you’re starting a smaller fund or want to save on those overhead costs so you have more money available for students, consider the available digital solutions that can make the process easier. To give you an idea, with Kaleidoscope, managing the entirety of your program will never cost you more than 5% of your total disbursement costs to host your scholarship.
Step 2: IRS compliance and tax exemption
Scholarship programs benefit more than just the students; they can also create tax benefits for you or your organization. You’ll need to establish a tax-exempt organization to reap these benefits. Generally, funds that are used to pay for tuition and required fees, books, supplies and equipment are tax exempt. However, if you also plan to provide scholarships or grants for room and board or a stipend for living expenses, these amounts will be taxable. The details are too much to go into here, but you can find all the info on the IRS’s website.
Step 3: Determine who you most want to support and define eligibility criteria.
Next, think about who you want to give your scholarship money to. For example, some programs support women around the world pursuing education. Or some focus on giving back to their own community. Based on your decision, you can define the eligibility criteria that will guide you to locate those individuals.
As you decide on your eligibility criteria, think about what screening questions you will ask to determine if an applicant is eligible. To keep your application concise, avoid asking unnecessary questions if you don’t plan to use them to filter out applicants. Here are some eligibility factors you might find helpful to ask for:
- 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 your scoring criteria to prepare for when applications will need to be reviewed for selections
Now that you’ve decided who’s eligible to apply, you need to decide how you will select the best candidate to receive your scholarship. To make selection fair and objective, you’ll need to decide what criteria your review team will be scoring, and how to weigh the importance of each of those factors. As with the previous step, consider what questions you will need to ask in order to score for these factors, and avoid asking questions that you don’t intend to consider for scoring.
Also think about who will be reviewing applications. Is it you, a team of people, or a specific review board? If more than one person is part of making the decision, be sure to make the process and scoring clear.
Step 5: Build your application
Now that you know your criteria and what questions you will need to ask, the next step is to create the application questions and forms that your applicants will need to submit. Consider if you want your applicants to submit any documents, such as transcripts or essays, or videos. If you require an essay or another form of open-ended submission, be sure to make your prompt clear and set a word count/length to make it clear to applicants what you are expecting. Additionally, if you choose to request recommendations, be sure to make it clear to recommenders what factors you’re looking for and how to submit their recommendations.
Next, you’ll have to decide how you’ll create the application and receive them from applicants. Some of the most common ways to build your application are:
1. Paper-based applications – this method requires students to mail or scan back the application by a designated deadline.
2. Form builder tools – using a form builder tool is a cost-effective and easy way to build your application. It’s important to note that this method will still require you to enter the application data on your own if you hope to leverage digital tools to streamline review, scoring and selection.
3. Scholarship marketplace – an all-in-one scholarship platform allows you to build out your application form on the same platform that will be hosting them. This simplifies the process by ensuring your applications follow tried and true best practices. They also mitigate some of the other costs, such as marketing fees, as you are hosting your scholarship application where applicants are already searching for programs like yours.
Step 6: Collect your applications
Now that you’ve got your application set up, it’s time to open it up to applicants. As we discuss in another post, billions of dollars of education-based funding are left on the table each year, in part because the perceived barriers to locating or applying for funding are too high. To find students who are seeking funding, it can be helpful to host your scholarship where students are already searching.
One option is promoting your application on a scholarship listing website that aggregates open programs. The only issue with using an aggregator website is that they are not often regulated, meaning that your listing can easily contain a broken link or outdated information.
To mitigate this and improve your application completion rate, you can host your application on a platform that is designed with the applicant’s experience in mind. Your platform should make all relevant information visible to applicants before entering the application and provide them with a direct link to the application. It should also enable you to brand your scholarship pages, collect documents and recommendations, and automatically notify applicants of their status. These features remove friction from the application process and give applicants transparency into their progress, making them more motivated to complete their applications.
Step 7: Review applications and select your winner(s)!
Once you’ve reached your application deadline, it’s time to review and select your winner(s). As we discussed above, your review process should be designed to fairly and objectively score applications based on the goals and criteria you’ve set. The review stage is often slowed down by the need to clean up a vast amount of data, inefficient collaboration, and the need to consolidate and calculate application scores. An all-in-one scholarship platform can solve these problems by maintaining clean data before review allowing your reviewers to easily sort and filter through applications. Your platform should also provide features that enable reviewers to monitor their progress and collaborate easily on the same platform that they will be scoring. And finally, with scorecards built-in to your review module, reviewers can fill out their scores as they review, and have their scores automatically weighted and have their totals automatically calculated.
For more review board best practices, check out our on demand webinar about managing your review process.
Now it’s finally time to select and alert your recipient(s). At this point, think about how you plan to notify the winner(s) and announce the selection publicly. You’ll also need to decide how you will disburse funds to them. Here are some of the most common options for disbursement:
- If you’re sending a check directly to the school, you may need the student to submit the address for the office that will be handling the payment. Another downside is the possibility of scholarship displacement. In short, when students receive private funding, their institutions often withhold financial aid that they would have otherwise received.
- Another option is to send the check directly to the students, but the downside to this is that the payment to the student would now be considered taxable. Additionally, you can’t control what the funds are spent on once they’re in the students’ hands.
The decision you make about disbursement is not an easy one and will depend on the needs of your program. Kaleidoscope has been trusted by numerous programs to disburse millions of dollars of scholarship and grant funds and could help your program figure out how to best get funds to students based on your goals.
Conclusion
Hopefully, this guide has helped you start thinking about the roadmap to starting your own scholarship program. If it seems like the process is still far too complicated to wrap your head around all from one article, you’re probably right! Organizations providing education-based funding have to contend with many difficult and complex decisions every day. Luckily, Kaleidoscope is here to help! If you’d like to learn more about how we can help you manage each step of your scholarship cycle, we’d be glad to get in touch.
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