How to Start a Scholarship in Memory of Someone: Steps, Costs and Three Ways to Do It

The short answer: you do not need to start a charity to start a memorial scholarship. Most families do it by opening a named scholarship fund at an organization that already handles donations and awards — the school your loved one cared about, or your local community foundation. You decide who the scholarship is for; they collect the money, pick or help pick the student, send the check, and give donors a tax receipt. An annual scholarship can start with whatever you raise this year. An endowed one, which pays out every year from investment earnings, usually needs a minimum balance — $20,000 and $25,000 at the two community foundations whose published rules we checked, with some schools and smaller foundations asking for less.

The rest of this guide is the detail behind those two sentences.

Why a Scholarship, and Not Just a Donation

When someone dies, the first wave of giving is usually "in lieu of flowers" — gifts to a hospice, a research charity, a church. We covered that side in memorial donations and "in memory of" funds.

A scholarship is different in one way that matters to a lot of families: it keeps their name in circulation. Every spring, a new student reads the name, learns a sentence or two about who they were, and says it out loud at an awards night. For a teacher, a coach, a nurse, or a parent who never got to finish their own degree, that is often the most accurate tribute available.

It is also more work than a one-off donation. Being honest about that up front saves a lot of guilt later.

Three Ways to Run It

Route	Good for	What it usually takes	Who handles the paperwork
Through a school or college	A scholarship tied to one place — their high school, their alma mater, the nursing program they taught in	A conversation with the school's development or advancement office; many have their own minimums for named or endowed awards	The school
Through a community foundation	Flexible criteria, several schools, or a fund you want to outlive the family's involvement	A fund agreement, an opening gift, and an annual administrative fee	The foundation
Your own nonprofit	Large, long-running programs with a committee willing to run a small charity	Incorporation, IRS recognition, annual filings	You

For almost everyone, the first two are the right answer. Starting your own 501(c)(3) makes sense only if you expect to raise and give away a significant amount for many years — and you have someone who wants to be its treasurer.

Step 1: Decide What the Scholarship Is For

Before you phone anyone, write down in one or two sentences who the award should go to and why. Good criteria come from the person, not from a template:

• A place — "a graduating senior from Lincoln High," or "a student at the college where she taught for 30 years"
• A path — nursing, welding, music, teaching, a first-generation college student
• A quality they valued — persistence, community service, the kid who helped everyone else
• A situation they lived through — a student who has lost a parent, a single parent returning to school

Keep it wide enough that there will be applicants every year. "A left-handed trumpet player from our street" is lovely and will be vacant by year three. Schools and foundations will usually push back on criteria that are too narrow — or that would discriminate in ways the law does not allow — so treat this first draft as a starting point.

Step 2: Choose Annual or Endowed

This is the decision that shapes everything else.

Annual (sometimes called "pass-through" or "non-endowed"). You raise money, and it is paid out as scholarships — often in the same year. A $1,000 award every year means raising $1,000 every year. It starts fast and has no big minimum, but it ends the year the fundraising stops.

Endowed. The gifts are invested and only a portion of the fund is paid out each year, so the principal keeps producing awards indefinitely. The trade-off is that it takes a lot of money to fund even a modest award: at a payout rate around 4–5%, which is common for endowments, a $20,000 fund produces somewhere near $800–$1,000 a year. That is why foundations set minimums before they will open one.

Many families do both in sequence: start annual so the first award goes out next spring, and put anything extra toward an endowment that can take over later. Ask whether the organization allows a fund to start annual and convert once it reaches the endowment minimum; the Mississippi foundation below, for example, gives a new fund three years to get there.

Step 3: Talk to the School or the Foundation

Call the school's advancement or development office, or search "[your county] community foundation." Things to ask:

1. What is the minimum to open a named scholarship fund? Annual and endowed, separately.
2. What is the annual fee? Foundations fund their work from a percentage of each fund; ask for the number and what it covers.
3. Who chooses the recipient? Can the family sit on the selection committee?
4. Can donors give online, and do they get a tax receipt automatically?
5. What happens if the fund stops growing, or the school closes the program?
6. When is the application deadline each year, and when would the first award realistically be made?

To give a sense of range from two published examples: the Eastern West Virginia Community Foundation asks for $20,000 to open an endowed scholarship fund and charges a 2% annual support fee; the Community Foundation for Mississippi asks for $25,000, charges 2–4% a year, and gives a fund three years to reach that balance before folding it into its general scholarship pool. Yours will differ; ask.

Step 4: Sign the Fund Agreement

The organization will give you a short fund agreement. It names the fund ("The Maria Alvarez Memorial Scholarship"), states the criteria from Step 1, sets out who selects the student, and says what happens if the original purpose ever becomes impossible. Read that last clause carefully — it is what keeps the fund useful in 20 years when the program it names no longer exists.

One thing to know: once the money is given, it belongs to the charity, not the family. You advise; you do not control. That is also exactly what makes the gifts tax-deductible.

Step 5: Raise the Money

The same channels that work for any memorial gift work here:

• The obituary. "In lieu of flowers, gifts may be made to the Maria Alvarez Memorial Scholarship at the Hometown Community Foundation," with the link. Our obituary guide shows where that line usually goes.
• The funeral or memorial service. A card with the link or a QR code at the guest book.
• The memorial page. A permanent page with the scholarship link sits alongside the photos and stories, so people who find out months later still know where to give.
• An anniversary appeal. A short note on the first anniversary saying who received the first award is the most effective fundraising letter you will ever send. There are more ideas for marking that day in our first death anniversary guide.

A caution on crowdfunding. Sites like GoFundMe are good at raising money quickly, but money given to a personal fundraiser is generally not tax-deductible for the donor, and the organizer is responsible for getting it to the school. If you use one, be clear on the page about where the money is going, and move it into the scholarship fund promptly. We compared the main platforms, including their fees, in best memorial fundraising sites.

Step 6: Pick the First Recipient

If the school or foundation runs selection, they will publish the scholarship alongside their others and send you the shortlist or the winner. If the family is involved, a few things help:

• Read applications blind to names where you can. It is easier than it sounds and removes a lot of awkwardness in a small town.
• Write down why you chose the student. Next year's committee — possibly not you — will want to know.
• Meet the student if you can. Many families say the first awards ceremony was the first good day they had after the death.

Step 7: Tell People What Happened

Donors gave because they loved the person. Tell them what their money did: the student's name (with permission), where they are studying, one line in their own words. Post it where people will look for it — a newsletter, a social post, the memorial page. This is the step families skip most often, and it is the one that brings the next year's gifts in.

If You Do Want Your Own Nonprofit

Some families outgrow the school-or-foundation route. The broad shape, in the United States, is: incorporate a nonprofit in your state, apply to the IRS for 501(c)(3) status, then file an annual return every year after.

The IRS application fee is $275 for the streamlined Form 1023-EZ, which is only available to small organizations (roughly, those expecting gross receipts of $50,000 a year or less), and $600 for the full Form 1023. A private foundation that gives scholarships to individuals also generally has to get its selection procedures approved by the IRS in advance. This is where an accountant or a nonprofit lawyer earns their fee — and it is the main reason most families let a community foundation do this part for them.

How Much Is Enough?

There is no minimum for doing something good. A $500 book award at their old high school, given every June, is a real scholarship. So is a $2,500 award that runs for five years and then stops. Families sometimes delay for years because they cannot fund an endowment — and the one thing a scholarship needs, more than money, is a first recipient.

If the scholarship is one of several things you are planning, our list of meaningful ways to honor a loved one has others that take less organizing.

Frequently Asked Questions

How much money do you need to start a memorial scholarship? For an annual scholarship, only enough to fund the first award, though schools may set their own floor for a named award — ask. For an endowed scholarship that pays out every year from earnings, community foundations commonly set a minimum in the tens of thousands of dollars ($20,000 and $25,000 at the two we checked), and some let you build up to it over a few years.

Are donations to a memorial scholarship tax-deductible? In the US, gifts to a scholarship fund held by a school or a community foundation that is a 501(c)(3) charity generally are, and the organization issues the receipt. Money given directly to a family, or to a personal crowdfunding page, generally is not.

Can the family choose who gets the scholarship? Usually the family can help write the criteria and often sit on the selection committee, but the school or foundation makes the final decision. That is what keeps the gifts deductible.

How long does it take to set up? With a school or community foundation, the paperwork itself often takes a few weeks. The real timing constraint is the school year: if you want the first award at spring graduation, start talking to them in the autumn or winter before.

What is the difference between a memorial fund and a memorial scholarship? A memorial fund is any pool of money given in someone's name; it might support a charity, a park bench, or the family's funeral costs. A memorial scholarship is a specific kind of memorial fund whose purpose is to pay for a student's education.

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GetMemorial helps families build beautiful, lasting online memorials in minutes — a permanent home for their story, their photos, and the scholarship that carries their name. Create an online memorial for them whenever you are ready.