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Policy 3116 – 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.