Guide to Establishing

a Corporate Scholarship
 Table of Contents

Contents
Table of Contents ............................................................................................................................ 2
Preface............................................................................................................................................. 3
Basic Steps to Establishing a Corporate Scholarship ..................................................................... 5
Determine how your company will fund the scholarship award(s) ............................................ 5
EndowedScholarships..........................................................................................................................5
AnnualScholarships..............................................................................................................................5
Determine amount available for scholarship award(s) .............................................................. 5
Determine the duration of scholarship award(s) ........................................................................ 5
Establish scholarship criteria ..................................................................................................... 6
TrustDocument....................................................................................................................................6
Committee............................................................................................................................................6
TheCriteria............................................................................................................................................6
Write Your Application ............................................................................................................... 6
Beyond the Application ............................................................................................................... 7
Promote your scholarship ........................................................................................................... 7
Select and monitor scholarship recipients .................................................................................. 7
Administration of Scholarship Funds ............................................................................................. 8
What the IRS Needs You to Understand ........................................................................................ 9
Foundations ................................................................................................................................ 9
Selection committee .................................................................................................................... 9
Do not discriminate..................................................................................................................... 9
The scholarship check should go to the institution ..................................................................... 9
Addendum A ................................................................................................................................. 11
Sample Criteria Establishment Form for an Academic Scholarship ........................................ 11
Addendum B ................................................................................................................................. 15
Sample: Academic Scholarship Application ............................................................................. 15

Preface

The PMA Foundation for Industry Talent (PMA FIT) has recognized the need for
guidance in the development of corporate scholarships. Members of the produce
industry have spoken and weve responded by presenting you with this Guide to
Establishing a Corporate Scholarship.

From selecting the type of scholarship funds to establishing criteria for student
selection, this Guide will explain the general steps involved with setting up your own
scholarship. A bonus What the IRS Needs You to Understand section will explain
some of the intricacies involved from a tax standpoint to make sure you prepare
accordingly. Completing the Guide is a sample application that you may use as a
reference for creating your own scholarship application.

We hope that this Guide to Establishing a Corporate Scholarship will assist you in
reaching the ultimate objective of helping students reach their educational goals.

Please Note: PMA FIT is providing this Guide to Establishing a Corporate Scholarship
for general information purposes only. PMA FIT makes no representations or
warranties regarding the accuracy, completeness, or reliability of any information
contained herein, and nothing herein is intended to constitute legal, accounting, tax, or
other advice or opinions. This Guide references third parties for informational purposes,
but nothing herein constitutes an endorsement by PMA FIT of such parties or their
products or services.

Basic Steps to Establishing a Corporate Scholarship

Determine how your company will fund the scholarship award(s)

There are two basic types of scholarship funds: endowed and annual. Your company
will need to choose the one with which to establish its scholarship.

Endowed Scholarships

Endowments are large amounts of money that form the fund and are invested. The
amount invested is never spent on the scholarship awards. Rather, a portion of the
money earned in this investment is awarded for scholarships. An investment broker
can advise your company on the best ways to invest the endowment.

Annual Scholarships

Unlike the endowed scholarship described above, an annual scholarship is not a

permanent fund. The annual scholarship is awarded only as long your company
chooses to contribute to the fund. They may either be a one-time gift or replenished
each year through an endowment.

Determine amount available for scholarship award(s)

Once your company has accumulated the amount of capital needed to establish a
scholarship, it must determine the amount available to be paid annually in
scholarships. Your company can decide on this amount on a year-by-year basis
which provides flexibility in determining the number of scholarships awarded each
year.

Determine the duration of scholarship award(s)

Your company will need to decide whether the scholarship will be renewable each
year or a one-time award. If the scholarship is renewable, consider setting a
maximum number of years a student may apply for and be awarded the scholarship.
Generally, renewable scholarships have a condition that requires the receiver to
complete the scholarship application annually.

Establish scholarship criteria

Establishing selection criteria will help your company to decide who the scholarships
are ultimately awarded to. Basically, the selection criteria are the standards your
company will use when reviewing applications from potential scholarship award
winners. To best define the profile of the scholarship recipient, your company should
prioritize the criteria. It is recommended that the selection criteria be as flexible as
possible.

Trust Document

The selection criteria will become part of a document called the Trust Document.
This document will also contain the duration and provisions for renewal mentioned
above.

Committee

It is quite common for companies to set up a committee to establish the Trust

Document policies, set criteria and select recipients. These items would then be
approved by select members of your companys staff and/or board of directors as
well as legal counsel, as necessary.

The Criteria

The criteria selected by your company should maintain the purpose of the
scholarship. It also must not contain restrictions or discriminatory provisions by law.
Many factors must be considered when establishing scholarship criteria for
applicants, including financial need, achievement, geographic location and
demographics. To help get you started, weve created a sample form for establishing
your companys scholarship criteria. (See Addendum A Sample Criteria
Establishment Form for an Academic Scholarship Application.) Please note, you
may wish to consider more criteria than what is listed in the on this form - it is not
meant to be all-inclusive.

Write Your Application

Once your company has set the criteria for your scholarship recipients, you will need
to create your scholarship application. Examples of scholarship applications can be
found online and used as a template in designing your own forms. (We have also put
together a sample see Addendum B.)

Beyond the Application

In order to gain additional insights into those who are applying for your companys
scholarship awards, you may decide to have them also present one or more of the
following:
Personal interview
Letter(s) of reference
Character evaluation form
Student essay
Letter of acceptance from the institution
High school or college transcripts
Financial information summary form

Promote your scholarship

You must determine how to reach the desired population for your specific
scholarship program, the most likely options being your companys employee
newsletter or an internal e-mail campaign. Be sure to supply the answers to the
following questions:
Where and when are applications available?
Where should applications be sent? How many copies are needed?
When are applications due?
What additional information/documents must accompany the application?
How and when will the award winners be notified?
How and when will the awards be disbursed?

Select and monitor scholarship recipients

Typically, a selection committee reviews the scholarship applications submitted and
selects the most appropriate recipient(s) based on the established criteria. The
selection committee must be made up of individuals who are independent from your
company.

Once the scholarship recipients are selected and notified, you must decide how their
progress will need to be monitored, if at all. The level of monitoring your award
recipients need will depend upon your established selection criteria. For example, if
your selection criteria call for the maintenance of a minimum GPA, then a process
for periodic reporting may be necessary.

Administration of Scholarship Funds

Administration of all of the above steps as well as the on-going fulfillment activities
involved in a successful scholarship program can be very time consuming. Your
company must ensure that sufficient resources are available to support the process.

Many companies use third-party vendors to handle all or some aspects of their
scholarship program. The following are a few of the organizations that administer
scholarships for corporations:

Citizens Scholarship Foundation of America, Inc.

www.scholarshipmanagement.org
(800) 279-2083

National Merit Scholarship Corporation

www.nationalmerit.org
(847) 866-5100

Scholarship Managers
www.scholarshipmanagers.org
856-616-9311

What the IRS Needs You to Understand

Foundations
Many companies create private foundations to administer scholarship programs.
Scholarship grants awarded by private foundations are taxable expenditures unless the
grant programs meet the requirements for individual grants and receive advance
approval from the IRS. Corporate foundations have to follow a special set of guidelines
and rules established by the IRS. For example, when companies offer scholarships for
the children of their employees, the scholarship program must do so with the intention of
allowing these students to obtain an education solely for their personal benefit, and not
for the benefit of the employer.

On the other hand, a company that wants to support promising students with the goal of
recruiting them (or that wants to give its employees tuition reimbursement), is free to do
so from corporate funds and not through a foundation. The corporation can
subsequently write off the cost as a business expense.

Selection committee
The committee that selects the scholarship recipients must be totally independent and
separate from the foundation and employer.

Do not discriminate
IRS rules are designed to make sure that scholarship programs are not discriminatory in
any way, and that the selection of recipients is based on objective criteria unrelated to
the employment of the recipients or their parents.For example, your company can not
set up a scholarship fund to award only certain families. The penalty for noncompliance
could be a large excise tax or the loss of tax-exempt status. The scholarship also
cannot be rescinded if the students parent leaves the company.

The scholarship check should go to the institution

Scholarships cannot be given directly to a student without complying with some very
stringent IRS rules. Since the IRS requires tracking of how the funds are spent (in other
words, on the individual), the student must spend time submitting receipts to the IRS.

For more information on IRS tax laws, visit the IRS Web site at www.irs.gov.

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Addendum A
Sample Criteria Establishment Form for an Academic Scholarship

1. What qualifies an employee to be eligible for this program?

Full-time employee
Part-time employee
Employed for ___ months/years (circle one)
Other ___________________

2. What type of scholarship would you like to establish?

A one-time award, or
Renewable for ___ years and the student must re-apply each year, or
Renewable for ___ years; if a GPA of ___ is not maintained,
The student is ineligible to renew their scholarship that year, or
The student is no longer eligible for their scholarship, or
The student will be issued their scholarship with a warning letter
indicating that subsequent payments will not be made if the above
GPA is not achieved in the next academic year, or
The student will be sent a warning letter indicating they will not
receive this years payment and they will not receive further
payments until the above GPA is achieved for one full academic
year.
There are no GPA requirements for renewal.

3. What would you like the amount of the award to be? ________________
Does this differ for Community College versus a 4-year institution?
Yes
No
Does this differ for a two-year degree versus a 4-year degree?
Yes
No

4. How many awards would you like to make each year? _______________

5. Must the college attended by the recipient be accredited?

Yes

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 No

6. What type of college may recipients attend?

Any, including community, four-year or vocational
Four-year only
Graduate school
Private
In _____________ (designate state, such as your companys headquarter
state)
Anywhere
Other _______________________

7. How many units must the student enroll in each quarter/semester?

Part-time (six units or less)
Part time (a minimum of six units)
Full time
No requirement

8. From what high school must the student have graduated?

Any
Any in _____________ (designate county)
Did not graduate from a high school but obtained a GED
The following specific high school(s)
____________________________________

9. With regard to college enrollment,

The student must be a graduating high school senior at the time of
application
The student may have graduated high school in any year in the past as
long as they meet other eligibility requirements
Other ________________________________________

10. Does the student need to be a United States citizen?

Yes
No

11. With regard to the applicants residential status in __________ (designated)

county, the student must
Be a County native

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 Be a ____________ (designate state) native

Have lived there for __________ years
No requirement

12. In order to be eligible for this scholarship, the student must demonstrate financial
need.
Yes
No
If financial need is a determining factor for eligibility the following will be
taken into consideration:
Parents income, savings and assets
Number of siblings
Number of siblings attending college concurrently
The cost of the college chosen
All of the above
Other ___________________________________

13. In order to be eligible for this scholarship, academic merit is a factor.

Yes
Students must graduate from high school with a minimum GPA of ____
No

14. Often the most successful college students are those who are well-rounded
students during their high school years. Eligibility for this scholarship includes an
assessment of the students other activities during their high school years.
Yes
Such an assessment includes consideration of the following:
The student had to work a part time job while enrolled in high
school
The student had to assist with family care
Community involvement
Involvement in sports
Volunteer work
All of the above
Other _____________________________
No requirements
No

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 15. Are there other circumstances that should be considered when making the
award?
Yes
Family situation
Disabilities or illness
Other _________________________________
No

16. To whom should communication from any recipient be forwarded?

________________________________________________________
________________________________________________________
________________________________________________________

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Addendum B
Sample: Academic Scholarship Application

Typically,thisinformationwillbepulleddirectlyfromyourCriteriaEstablishmentFormandmaylooklikethe
followingsamplecriteria,awardsandapplicationprocess.

(CompanyLogo)

(CompanyName)ispleasedtoofferanacademiccollegiatescholarship
forthedependantsof(CompanyName)employees.

Eligibility
Studentswhomeetthefollowingcriteriaareeligibleforthescholarship.Thecandidate:
isadependantofafulltime(CompanyName)employeewhohasbeenemployedforthreeyearsormoreat
(CompanyName)
isacitizenoftheUnitedStatesofAmerica
hasaminimumgradepointaverageof2.75andeitherisenrolledfulltimeinanUShighschool,hasgraduatedfroma
UShighschoolorhasobtainedtheirUSGEDatthetimeofapplication(attachtranscriptsorofficialrecord);ORis
enrolledfulltimeasacollegestudentattheundergraduatelevelwithaminimumgradepointaverageof2.5atthe
timeofapplication(attachtranscriptsorofficialrecord)

ApplicationProcess
Applicationmaterialsmustbereceivedby(DeadlineDate),inordertobeconsidered.Thefollowingmaterialsshouldbe
submitted:
1.Completedapplicationform
2.Atypedessay(nomorethanonepagedoublespaced)addressingoneofthefollowingtopics:
a.Describeanaccomplishmentyouhavebeenrecognizedforanditsinfluenceonyou.
b.Whohasbeenmostinfluentialinyourlifeandwhy?
c.Whatistheimpactoffreshfruitsandvegetablesonsociety?
d.Whatareyourcareeraspirationsandwhy?
3.Oneletterofreferenceorrecommendationfromateacher,coach,orotheradultwhoisnotanimmediaterelative.
4.LetterofAcceptanceataccredited4yearorcommunitycollege.

SelectionProcess
Recipientswillbeselectedby(WhomorWhatGroup?)basedonapplicationmaterialsprovided.Allscholarshipapplicantswill
benotifiedofthecommitteesdecisionby(NotificationDate).Paymentwillbemadetotherecipientsschoolofchoiceupon
notificationandinaccordancewiththeschoolsscholarshipguidelines.

PurposeofScholarship
Toprovidefinancialassistancetoastudentwithaninterestinpursuingcontinuingeducationinanyfield

Award
Uptofiveannualtuitionscholarshipspayabletotherecipientseducationalinstitutionsfortuitionwillbeawardedasfollows:
$1,000peryearforaccreditedcommunitycolleges
$2,500$4,000peryearforaccredited4yearschools

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Questions
Ifyouhavequestionsorneedfurtherinformation,pleasecontact(ContactName)at(Phone/EmailAddress).

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(CompanyLogo)

(CompanyName)ScholarshipApplicationForm

Pleasecompletethisform.Informationmustbetypedorprinteddirectlyonthisform.Pleaseputanasteriskbyyourpreferred
mailingaddress,ifapplicable.

Name_____________________________________________ Age________________
Accredited4yearorcommunitycollegename_________________________________________________________________
Accredited4yearorcommunitycollegeaddress,city,state_______________________________________________________
_______________________________________________________________________________________________________
Accredited4yearorcommunitycollegeAdmissionsOfficetelephone_______________________________________________
Homeaddress___________________________________________________________________________________________
Hometelephone_________________________________________________________________________________________
Emailaddress___________________________________________________________________________________________
ParentorGuardiansNamewhoisanemployeeof(CompanyName)___________________________________________
Numberofyearsyourparentorguardianhasworkedfor(CompanyName)______________________________________
ParentorGuardiansemailaddress___________________________________________________________________________

OverallGPA_____________________________________
MajorGPA,ifapplicable___________________________
Major,ifapplicable_______________________________
Expectedgraduationdate__________________________

Honors__________________________________________________________________________________________________
________________________________________________________________________________________________________
Activities/Sports__________________________________________________________________________________________
________________________________________________________________________________________________________
Jobs/VolunteerWork______________________________________________________________________________________
________________________________________________________________________________________________________
FamilyCareResponsibilities_________________________________________________________________________________
________________________________________________________________________________________________________
CommunityInvolvement___________________________________________________________________________________
________________________________________________________________________________________________________
Arethereothercircumstancesthatshouldbeconsideredwhenreviewingyourapplication?_____________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________

Applicationmaterialsmustbereceivedby(DeadlineDate),inordertobeconsidered.

Sendcompletedapplicationmaterialsto:
(CompanyName)
Attn:(ContactName)
(ContactInformation)

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