How Even Small Businesses Can Start a College ScholarshipYou don't have to be a huge company to make a big difference in a student's life.
Looking for a way to give back to the community and promote the future of your industry? Build a lasting legacy with a college scholarship program.
“Offering a scholarship will always reflect positively on your business,” said Tiffany Turner, director of client relationships for scholarship management services firm International Scholarship and Tuition Services, Inc. “It shows you are invested in your community as well as in the leaders of tomorrow.”
Think only large companies can offer scholarships? Think again. It’s relatively easy for businesses of any size to do. Here’s how.
Set a budget
“At least one year in advance, you should start prioritizing actual scholarship funds as well as administration costs,” said Turner. When creating your scholarship program, decide how much you’re willing to set aside in your annual budget, including the award amount, legal and financial review fees, etc. You’ll want to have a lawyer and CPA review your program to make sure it’s in compliance with local, state and federal regulations and to see if it meets IRS requirements for tax exemption.
Scholarship funds can be any amount you choose, but the bigger the award, the more applicants will want to compete, bringing you greater brand recognition.
If you want to get a lot of applications, set aside money for promotional expenses, said Kevin Ladd, COO of Scholarships.com. Of course, if you limit eligibility to your own employees, you won’t have to spend as much on promotion.
The hardest part of creating a scholarship is determining your criteria, said Turner. “While it can be challenging, it is critical. You should have the profile of an ideal recipient in mind, then design your application to ask the questions you will need to identify that group of people.”
Businesses have freedom to choose whatever scholarship criteria they wish. The most common qualifiers are based on the student’s grades, financial need, abilities or interest in a certain field and/or their submission of an essay or creative project.
If you’re wanting to leverage the scholarship as a marketing tool, make sure the criteria “thematically makes sense for your company,” said Ladd. A restaurant might ask applicants to create a recipe that can be made in a college dorm room, for instance, or an animal hospital could limit applications to students going into animal science.
Turner noted this caution: “To keep scholarships tax-free to the donor, they should only be awarded to students attending non-profit, accredited colleges and universities in the United States.”
Decide how the money can be used
You’ll need to decide if you want to limit the types of expenses your scholarship can be used for. Will it apply only to tuition, or are students free to use it toward other expenses like room, board, books and other supplies? This should be clearly defined upfront to avoid issues down the road.
Promoting the scholarship
After determining your criteria and submission deadline, you can start accepting applicants. To promote your scholarship and increase the number of applications, tell area high schools and colleges about the award and list it on scholarship search websites. Many sites, like Scholarships.com, let you pay to push your scholarship to the top of search results, similar to a Google ad.
Choosing the winner(s)
Once all the applications are in, Turner advised creating a small committee to determine the winner or winners. “Be as objective and agnostic as you can when selecting your award recipients. We recommend removing any identifiers that could introduce bias into the evaluation process — such as name and demographic data — before providing applications to your committee for review. Focus only on the core components that are related to, and required for, selection.”
After a winner has been selected and notified, issue a press release and publish a statement on your website congratulating him or her on the achievement. Then all that’s left is to write the check.
The logistics of payment
To ensure the money is used for educational expenses, most scholarship awards are paid directly to the student’s account at his or her college of choice.
Scholarships can also go directly to the student, but you’ll want them to sign an affidavit saying they will be using it as stipulated by the scholarship guidelines.
Whether you’re creating a scholarship out of pure altruism or as a marketing tactic, you’re contributing to the success of future generations, said Turner. “With college costs rising, students who are invested in their future are always looking for someone who might also be willing to invest in them.”
And who knows, you might even get something back besides a good feeling and free publicity. “Those students whose education you help fund now could come back to be employed with you five years down the road.”