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#2100559 - 09/27/16 04:23 PM Endowment vs. Annual Scholarship
wblewis935 Offline
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Joined: Feb 2011
Posts: 53
I met with a regional foundation director for a local community college today to discuss other scholarship opportunities in our assessment area. We signed a gift agreement for a scholarship for low-income students earlier this year and she wanted to meet to discuss the possibility of setting up an endowment fund with the same income parameters as the previous scholarship.

I gathered from the Q&As that only the income used to distribute the scholarship from the endowment would be considered for CRA credit. For example, if the endowment was $10K at 5%, we would only get credit for $500 in a CRA qualified scholarship even though the endowment has 10K. Do I understand that correctly as far as any of you know?

If I do, I think it would make more sense, strictly for CRA credit, to do an annual scholarship rather than going through an endowment. I have never dealt with endowment funds before, so I am not very familiar with them, but I believe I’m on the right track here.

Could anyone speak from experience or expertise on this?

Thanks!

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#2100561 - 09/27/16 04:28 PM Re: Endowment vs. Annual Scholarship wblewis935
Darth HMDA, CRCM, CAMS Offline
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Darth HMDA, CRCM, CAMS
Joined: Dec 2013
Posts: 1,387
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That is correct. This was clarified in the Q&A's a couple of years back on investments and I assume it would apply to an endowment as well.

IMO you would only get credit for the interest income donated, not the full amount.
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#2100580 - 09/27/16 05:20 PM Re: Endowment vs. Annual Scholarship wblewis935
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,281
I agree. The typical endowment provides scholarships from the interest on the endowment. That is what you will receive credit for, the actual scholarships given, not the endowment that is generating the funds. You have to decide what is best for CRA purposes, especially if your funds are limited.
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#2100635 - 09/27/16 07:37 PM Re: Endowment vs. Annual Scholarship wblewis935
wblewis935 Offline
Member
Joined: Feb 2011
Posts: 53
Great, thank you so much for affirming that. I would rather just give an annual scholarship rather than tying up funds. Thanks again!

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