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Set Up a New Scholarship

Setting Up a Scholarship Fund

Scholarship funds are established with a fund agreement that identifies the name of the fund and describes in broad terms the purpose of the fund.  Once a fund agreement is signed and the charitable gift is completed, the document may not be amended by the donor. We strongly encourage prospective donors to meet with the Foundation’s Executive Director before signing the fund agreement.

Establishing the Scholarship Process

The Frankfort Education Foundation awards scholarships to individuals for educational and/or skill enhancement purposes that are paid to the educational institution or service provider.

Criteria

Criteria must be established for the award that supports and are relevant to purpose as outlined in the fund agreement. Criteria can include, but are not limited to, such factors as academic performance, leadership skills, community service, teacher recommendation and financial need.  The eligibility and selection criteria must be BROAD enough to satisfy legal requirements and to attract worthy candidates.  The criteria must be narrow enough to be manageable in relation to the dollars available.  The Foundation retains the right to alter the criteria of a scholarship to keep it appropriate and uphold the donor’s intent.  Once the fund is established, the Foundation’s Board of Directors becomes the owner of the fund with ultimate responsibility for ensuring that its criteria and procedures are objective, non-discriminatory, in compliance with all regulations, and that donor intent is maintained over time.

Committee

The structure of the scholarship committees can depend on the purpose and intent of the scholarship.  They can vary in size and may consist of community members, members in the field of education, citizens from the local community, and representatives from the Foundation.   While donors and “related parties” may be involved in the selection process, they may not constitute a majority of the committee. Committees are required to follow the process defined in the scholarship description and are encouraged to provide feedback on the process to the Foundation so that both parties can work together to effectively carry out the donor’s intent.

Description

Once the purpose, criteria, and committee have been determined, the Scholarship Description is written and maintained by the Foundation. This document is reviewed annually and updated or amended if changes are needed to keep the scholarship relevant and in compliance with regulations. The Scholarship Description reflects the intent of the donor and the current administrative process. Scholarship committee members are required to abide by the Scholarship Description.

Donor Involvement

Individuals, organizations, or companies that establish permanent scholarship funds may be involved in a number of ways, such as presenting at award ceremonies, helping with publicity about the scholarship, receiving updates from  students, etc.  However, regulations passed in the Pension Protection Act of 2006 clarified the “donors and related parties” may not control the recipient selection process, and that no “donor or related party” may receive a scholarship (or any payment or compensation) from that fund.  “Donors” are defined as any individual, family, organization, group, or company that establishes or contributes to a scholarship fund.  “Related parties” are the immediate and extended family of the donor and their employees, advisers, attorneys, delegates, etc.

In order to operate legally while avoiding any fines or penalties, any fund with donor involvement must meet these requirements:

* The Foundation officially appoints all members of the committee (donor may ask that certain “related parties” be included in committee but may not make up a majority of committee) and the donor’s advice is given solely as a member of the committee.

*The donor and parties related to the donor do not control the committee directly or indirectly; and

*All grants are awarded on an objective and nondiscriminatory basis using a procedure that has been approved in advance by the Foundation Board of Directors and that meets the IRS-defined requirements for grants of this type.

The Foundation’s Board of Directors ensures that any involvement by “donors and related parties” is within legal boundaries.  For these funds, a list of committee members will be made in October each year and reviewed to ensure the committee is not donor-controlled.  Once the list is received and reviewed, the committee is officially appointed by the Foundation’s Board of Directors at their November meeting and can select recipients for the upcoming year.

Payment of Awards

Once recipients are selected, an official award letter outlining the amount of the award, the purpose for which it must be used, and requirements that must be met before receiving the award will be presented to the recipient at the annual Senior Honors Night held prior to graduation. Also included with the letter is an Academic Scholarship Agreement Form and Checklist for Frankfort Education Foundation Scholarship.

Scholarship awards for qualified educational expenses such as tuition, books, room, and board are paid to the educational institution or service provider. A letter accompanying the check is sent to the school outlining how the scholarship is to be applied to the student’s account.

Publicity

Information about scholarships administered by the Frankfort Education Foundation is available on our website, www.frankforteducationfoundation.org, and is updated regularly.  Additionally, potential donors are able to select scholarship funds to which their donation may be applied.

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