How to Start a Scholarship Fund for Free (5 Simple Steps)

Considerations for Starting a Scholarship Fund

Scholarships are a hugely impactful way to support the next generation. Creating them on your own can be tricky, but there are easy solutions available.

Scholarship funds are financial awards that help students pay for eligible educational expenses, ranging from tuition to student loans to textbooks and more.

The IRS has strict guidelines that specify how to ensure that scholarships are awarded based on merit (and not as a lottery) and clearly defines the permitted expenses for which scholarship funds can be used.

In short:

• If you start a scholarship fund on your own, you'll need very careful planning. You’ll need to clearly define eligibility criteria, outline how applications must be submitted and how they must be evaluated, and establish a fair selection process for winners. You'll also need to work with a sponsor 501(c)(3) non-profit if you'd like the donation to be tax deductible and to avoid creating an income tax burden for your scholarship winners.
• However, there are reputable scholarship management platforms that make this easy, including some that are actually free. (They don't charge donors any extra fees beyond the tax-deductible donation.)

The great news is that anyone can create a fully compliant, tax-deductible scholarship in a matter of minutes—though it will take you longer if you choose to do it all on your own.

Here's a quick look at the five steps:

1. Determine Your Scholarship Budget
2. Define Your Scholarship Details
3. Set Up Your Scholarship Fund
4. Market Your Scholarship
5. Award Your Scholarship

Keep reading to learn the exact steps for creating your own scholarship, along with the pros and cons of the different approaches.

Our top overall recommendation is to speak with our Bold.org Donor Team today. Here's why:

• No extra fees — you won’t be charged beyond your donation.
• Donations are 100% tax-deductible.
• 100% of your donations go directly to deserving recipients.
• You can easily create a fundraising page for tax-deductible donations from friends, family, and your community.
• You'll work with real experts to define and publish your scholarship.
• You'll automatically receive strong applications from qualified applicants.

In short, working with a trusted, free scholarship management service means you’ll have dedicated support to handle the heavy lifting every step of the way.

Now, without further ado, here's how to start a scholarship fund in 5 easy steps.

Step 1: Determine Your Scholarship Budget

Remember: you don't have to break the bank to create a scholarship.

The first step is to decide how much you'd like to donate, how much you're willing to spend in fees, and how much you're expecting to fundraise with your friends, your family, and your community.

Here are the common options for creating a scholarship, along with how much they typically cost:

Endowing a Scholarship at a Specific University:

• Donation Minimum: $50k-$100k, depending on the school's requirements
• Fees: Administrative / setup fees up to 5%
• Supports fundraising: No

Creating Your Own Non-Profit:

• Donation Minimum: Typically $1k+ to fund the new entity.
• Fees: Typically, $5k-10k in legal fees to set up a new entity and achieve non-profit status. Keep in mind this will typically require 20-40 additional hours of your time.
• Supports fundraising: Yes

Traditional Scholarship Services:

• Donation Minimum: Typically $10k+
• Fees: Typically 5%+
• Supports fundraising: No

Bold.org:

• Donation Minimum: $500
• Fees: None
• Supports fundraising: Yes

Make sure you choose an option that meets your criteria for how much you're looking to spend, whether you're ok paying fees, and whether you'd like your friends and family to have tax-deductible donation options as well.

Lastly, don't underestimate the time investment that could be required. While scholarship management services do the hard parts for you, it can take 40 hours or more to set up everything you need if you're going to do it alone.

Step 2: Define Your Scholarship Details

Now it’s time to shape your scholarship and make it clear who it’s for.

The next step is to define the important details that will guide applicants and ensure the scholarship is awarded to the right person. Here’s what you need to do:

1. Define scholarship eligibility criteria (e.g., field of study, financial need, community involvement).

2. Specify selection criteria (e.g., grades, personal story, extracurriculars)

3. Write a thoughtful scholarship description explaining its purpose and who it aims to help.

4. Create a clear and engaging application prompt.

These details will help applicants know what’s expected and give you a solid framework for selecting the most deserving candidate.

Step 3: Set Up Your Scholarship Fund

This is where you'll bring your scholarship to life.

The next step is to establish how you’ll collect applications, handle different submission types, and ensure your donations are tax-deductible. Here's what you'll need for a successful setup:

1. Create a clear, easy-to-follow process for applicants

2. Make sure you can accept different submission formats (e.g., essays, images, videos, or other creatives).

3. Partner with a 501(c)(3) non-profit or use a scholarship management service to ensure tax-deductible donations.

Setting these pieces up will make the process simple and stress-free for you and welcoming for applicants.

Step 4: Market Your Scholarship

Spreading the word is key to attracting the right applicants.

The next step is to promote your scholarship and ensure it reaches your target audience. Here’s what you can do to get started:

1. Reach out to schools (e.g., high schools, colleges, universities)

2. Leverage social media to share your scholarship (e.g., Instagram, Facebook, LinkedIn).

3. Connect with local organizations (e.g., community centers, libraries, student groups).

4. Work with scholarship management services to help amplify your reach and connect you with qualified applicants.

Marketing your scholarship will help you reach qualified, deserving students who will appreciate the opportunity you’re providing.

Step 5: Award Your Scholarship

Choosing your scholarship recipient is the most fulfilling part of the entire process!

The final step is to select the winner and distribute the funds while following legal guidelines. Here’s what you need to do:

1. Ensure your selection process is fair using an objective and nondiscriminatory basis and meets legal standards.

2. Review each submission thoroughly, using your criteria to identify the most deserving candidate.

A thoughtful review and fair selection process will help you find a deserving recipient and make a meaningful impact with your scholarship.

Benefits of Creating a Scholarship Program

Creating a scholarship fund benefits donors and students. Donors experience the gratification of making a lasting impact on individuals striving for education, which fosters a sense of social responsibility.

For students, the benefits are life-changing. Scholarships help ease financial pressures, opening doors to educational opportunities that might otherwise be unattainable.

Making it Easy with Bold.org

There are many ways to set up a scholarship fund, but at Bold.org, we're the only scholarship fund platform that makes the process easy for donors while maximizing their impact. Here's a full list of how we can help you start a scholarship fund:

• You can customize everything about the scholarship – from the eligibility criteria to the topic and application prompt to your selection criteria.
• You can create essay, video, or image application prompts.
• Your scholarship will be automatically matched to exceptional candidates and bring in highly qualified applicants that meet your scholarship's criteria and goals.
• Your donations (and those of your friends, family, and community) are 100% tax deductible.
• 100% of your donations go directly to deserving recipients. There are no administrative fees.
• You'll get dedicated support reviewing applications.
• You'll work directly with a team that has set up scholarship funds for thousands of donors.
• By working with Bold.org, we ensure your scholarship is compliant with all nonprofit and grant-making regulations.

It's completely free. You won't pay anything beyond your donation.

Frequently Asked Questions About Scholarship Funds

1. Who can start a scholarship fund?

Anyone can start a scholarship fund! Whether you’re an individual, family, business, or nonprofit organization, you have the ability to create a scholarship that aligns with your goals and values.

2. What exactly is an endowed scholarship?

An endowed scholarship is a permanent fund established to provide financial support to students for years to come. Unlike regular scholarships, endowed scholarships use interest earned from an initial donation (the endowment) to award scholarships each year while the principal amount remains invested.

3. When creating a scholarship, what selection criteria can I require?

Choosing your eligibility requirements starts with finding a great idea for your scholarship. Once you figure out what community you want to help, you can design any eligibility criteria. At Bold.org, our expert Donor Team can help guide you in determining your selection criteria.

4. Can I set up a company scholarship?

Yes, any company or organization can create a scholarship by setting up company scholarship programs or by utilizing scholarship management services.

5. Is my scholarship fund tax deductible?

One important question to ask is whether your contributions will be tax deductible. The answer depends on how you set up your scholarship and the type of organization (e.g., scholarship management organization or nonprofit organization) you partner with.

Partnering with a trusted organization also helps with tax reporting, ensuring that funds are allocated properly and used for eligible educational expenses, giving peace of mind to both donors and scholarship recipients.

Why Start a Scholarship Today?

Starting a scholarship fund is one of the most impactful ways to give back. With today’s tools and platforms, it’s simpler than ever to create a scholarship and start supporting students in need.

If you’re new to the process, we recommend reaching out to our Bold.org Donor Team. They can guide you through each step, making the setup simple and easy so you can focus on the rewarding experience of giving back.