An Education in Giving

Paige and Ron felt lucky. Both had good jobs unaffected by the financial downturn. In a few years, their 15-year mortgage would be paid off, leaving them completely debt-free.

They didn’t have children, so were not facing college tuition payments, and had been diligent about keeping up with their 401 (k) plans. They were cautious investors and expected to have sufficient retirement funds when the time came to stop working.

The couple knew they were very fortunate, and wanted to share their good fortune with others. Though they regularly donated to a few charities, they wanted to do more. They weren’t rich, but they were comfortable, and hoped that there was some way to help others that had a long-lasting effect. After doing a bit of research, Paige and Ron realized that they could set up a scholarship fund to help kids in need attend college. And they didn’t need to donate a million dollars to do it.

They considered a wide range of options, from getting a financial adviser to help them to contacting their local community foundation to set something up for local high school students. But since Paige and Ron met as students at Emerson College in Boston, they decided to establish their scholarship fund there. They called their alumni association about their plans.

An endowed scholarship would remain in place in perpetuity, but required a hefty upfront investment that was beyond their abilities at the time. They were pleased to discover that they could set up what the school called a Term Scholarship for a few thousand dollars a year, as long as they committed that amount for five years. They could name the scholarship, and it would stay active for as long as they donated funds. There was also the option to endow the scholarship later, if they were financially able.

Ultimately they did want to set up and endowed scholarship, which would continue to help others beyond their own lifetimes. They went to their local Community Foundation to help them plot out the details. Establishing the scholarship through the Community Foundation eliminated the need for Paige and Ron to start from scratch in figuring out IRS regulations and application procedures.

They worked with the advisers and determined that they wanted their scholarship money to go to local high school students who needed financial aid and planned to study the arts. While their old college required about $100,000 for an endowed scholarship, they could establish a local scholarship for less than half that amount. Though it was still a significant sum, the couple decided to fund the endowed scholarship by changing their wills to leave money to the foundation with the stated intent of starting a scholarship. They also agreed to name the foundation as one of the beneficiaries on their life insurance policies.