Financial Planning How to make an impact through scholarship funds

Was college made possible for you thanks to scholarships, grants, or gifts from family members? If so, establishing a scholarship fund could be a meaningful way for you to return the favor.

Education has the potential to change the future and financial stability of not just an individual, but their entire family and generations to come. But the cost of higher education remains a significant obstacle for families to navigate, many of whom require financial assistance for their college-bound children.

Establishing a scholarship fund is a way for purpose-driven donors to fill that need. It’s an opportunity to put your own spin on values-based giving by funding someone’s education—whether college or private K–12 tuition.

A Truist advisor can walk you through the process of creating a scholarship fund, but here are a few things to consider when you’re planning.

Figuring out how much to contribute to a scholarship fund requires being realistic about the cost of higher education—which reached an average of more than $38,000 per year in 2024^{Disclosure 1} but could be much more per year, depending on the institution a student attends.

There are options when it comes to funding a scholarship. Cash may be king, but you can also tap into other types of assets.

Instead of selling high-value stock and incurring hefty capital gains taxes, you can transfer stock directly to a trust, university, or foundation. You might also gift valuable works of art, real estate, or life insurance policies as a means of funding.

Truist Wealth advisors can help you select appropriate assets and vehicles for establishing a scholarship fund while guiding you through the overall planning process.

There are three primary frameworks for creating a scholarship fund, each with its own benefits. State-specific laws could also impact the rules around scholarship funds in your area, but your advisor can help you navigate any relevant legislation.

1. Community foundation: Board-led community foundations are public charities that play a critical role in identifying and alleviating community problems. There are more than 750 community foundations nationwide that manage financial gifts, vet scholarship applicants, handle disbursements, and perform the administrative tasks associated with the scholarship funds. Benefactors need only provide their financial contribution. Additionally, up to 60% of the benefactor’s adjusted gross income (AGI) on cash given to community foundations is tax deductible.
2. Private foundation: Individuals, families, and corporations can use private foundations to offer charitable endowments. This option gives benefactors more control over the management of the scholarship funds, but these foundations must clearly establish their own standards and processes for objectively vetting recipients as well as disbursing funds. They must also adhere to IRS rules and best practices. As a 501(c)(3), a private foundation can provide tax deductions up to 30% of the AGI on cash gifts.
3. Institution-based: Benefactors can work directly with a college or university to establish a scholarship fund. The school can manage the selection process, disbursement, and administrative tasks associated with scholarship funds. And your Truist Wealth team can work with the school to help guide your involvement and any tax strategies involved with the fund.

The right way to establish a scholarship fund is simply a matter of personal intent. Whatever beliefs or values lead you to creating a scholarship fund for your community, Truist advisors can guide the planning to ensure your financial gifts are thoughtful, impactful, and lasting.