Guidelines For Establishing an Endowed Scholarship

Effective Date: 08/26/2000
Responsible Office: Vice President for University Advancement

Endowed scholarships require a minimum corpus of $10,000. An endowed scholarship fund specifies that the principal be held intact, invested, and the annual income used for specified purposes at Louisiana Tech University. Expendable (non-endowed) scholarships may be established with an amount not less than $500 with the gift amount less the 10% Foundation Administrative Fee available for use. The following information is necessary for the establishment of a scholarship account within the Louisiana Tech University Foundation.

NAME

The donor has the opportunity to name the Scholarship, i.e., the John L. and Jane C. Doe Memorial Scholarship in Music. A named scholarship is an excellent opportunity to honor or memorialize someone.

TYPE

The scholarship is either endowed or expendable. (See opening paragraph for explanation.)

AREA

The donor may choose to make the scholarship general in nature, or the donor may choose the academic area for the scholarship. For example, the scholarship may benefit a student majoring in engineering, or, more specifically, chemical engineering. Donors are asked not to be too restrictive in this area so that the pool of applicants for the scholarship is not unduly small.

AMOUNT

Scholarship monies available from endowments are determined by the amount earned by the principal in a given year. One year’s earnings accrue prior to the first award unless the donor makes other arrangements.

FEES

The administrative fee for establishing an endowment is 5% of the principal. That fee may be paid by the donor, or it is deducted from the earnings prior to the awarding of the first scholarship.

An annual management fee of 1% of the corpus is charged by the Foundation for the management of the account

REINVESTMENT

In the fourth year of the existence of the endowment and in all subsequent years, an amount equal to 3% of the corpus will be deducted from earnings and reinvested into the corpus as a hedge against inflation.

CRITERIA

Criteria for making awards of scholarships should be as broad as possible. Below are examples of some criteria:

Awards will be made to incoming freshmen with majors in the College of XXX or the XXX Department or School.

Recipient(s) must have demonstrated financial need as determined by the Financial Aid office.

Recipient(s) must have earned a cumulative grade point average of at least 3.0.

Preference will be given to students from XXX Parish, XXXX County of XXXX State though any student meeting criteria is eligible.

Other criteria to consider are status as a full or part-time student and whether the scholarship shall be renewable.

SELECTION

If the scholarship is designated to a particular academic area of the University, the scholarship committee of the college or school shall be the selecting body. General scholarships are awarded by the Scholarship Committee of the University.

PUBLICITY

The donor is asked to state whether publicity for the establishment of the endowment will be allowed.

PROVISION

The following provision should be included for endowments: In the event that the original purposes stated in the endowment agreement can no longer be carried out due to changing conditions, the Foundation, through its Board of Directors, shall have the power to modify the purposes to the extent necessary to enable the endowment to be used. Any such alternative use shall be for a purpose which most closely coincides with the donor’s primary original intent.

DOCUMENTATION

The final endowment agreement is created in duplicate and signed by the donor(s) and Foundation officials. One fully executed copy is for the donor; the other is kept on permanent file in the Foundation office.