Scholarship
Administration
Overview
Many NCF Affiliated
Funds grant scholarships. There
are a number of Internal Revenue Service requirements that must be met
with respect to a scholarship award program.
The Nebraska Community Foundation has adopted a Policy for
Administering Scholarships that is designed to be in compliance with
federal tax law, including the Pension Protection Act of 2006.
In addition, our policy incorporates a number of “best
practices” with respect to scholarship programs.
Please read these materials regarding scholarship administration
carefully before beginning a new scholarship program or a new
scholarship award cycle for your Affiliated Fund.
Failure to follow these
procedures may mean that a scholarship grant that you have announced
cannot be paid – do not put your Affiliated Fund in this position!
IRS rules require
that scholarships be awarded on an objective, nondiscriminatory basis
and for a charitable purpose. Specific
restrictions apply to the use of criteria such as race, ethnic origin or
gender, so any scholarships your Affiliated Fund may wish to award with
such criteria must be approved by NCF in advance.
Scholarship eligibility may be limited based on geography,
graduation from a certain high school, field of study or other
nondiscriminatory basis, so long as the pool of eligible individuals is
large enough to ensure that there will be a competitive selection
process. Availability of
scholarships must be publicized broadly and scholarship applications (if
required) must be made widely available to potential applicants.
Family members of individuals involved in the scholarship
selection process or major donors to the scholarship fund are not
eligible to receive a scholarship.
In order to conform with the Pension Protection Act of 2006 and NCF
policy, NCF must appoint all Scholarship Selection Committees for our
Affiliated Funds prior to the start of the scholarship grant process.
The information below
summarizes scholarship administration.
More detailed information can be found by clicking on the links
at the bottom of this page.
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Scholarship
Selection Administration
-
Have
each proposed Scholarship Selection Committee (SSC) member read NCF's
"Policy for Administering Scholarships" dated February 7,
2007.
-
Submit
a "Nomination Form" for each Scholarship Selection Committee (SSC)
including a Member Information Form for each nominee, to NCF prior to
beginning the scholarship process. This must be done annually for each SSC and each
nominee; the forms for the 2008 scholarships grant cycle were mailed
in a packet
to affiliated funds in early February.
-
Remember
that an affiliated fund cannot begin the scholarship selection
process until your nominations have been approved by NCF. Wait
for notification from NCF that appointment of the SSC members
is complete before proceeding.
-
Complete the items on the
Scholarship Selection Committee
Checklist.
Scholarship
Selection
Committees (SSC)
Scholarship Selection Committees must be appointed by the Nebraska
Community Foundation prior to the beginning of the scholarship selection
process. Responsibilities of SCC members may include: determining
the purpose, selection criteria, number and amount of scholarships
awarded each year. Only the SSC can evaluate and select the
recipients. In
general, SSCs should represent and be familiar with the community and include individuals with expertise relevant to the selection
process such as high school principals and guidance counselors.
SSCs are responsible for promoting the availability of a
scholarship to the appropriate audience.
SSC members
cannot
be in a position to derive a private benefit, directly or indirectly,
from the selection process; as a result, scholarships may not be awarded
to a family member of a SSC member.
NCF
scholarship policy, in conformity with IRS rules, requires the following
with respect to scholarships:
-
Recipients
must be selected by a
Scholarship Selection Committee (SSC) appointed by NCF.
-
Recipients
must be selected by
the SSC on an objective and nondiscriminatory basis and consistent
with the purpose of the particular scholarship fund.
-
Criteria
such as religion, race, ethnic group or
gender cannot be used in the selection process unless
approved in advance by the Nebraska Community Foundation.
-
Applicants
related to members of the selection committee are ineligible for consideration by that committee.
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Be
awarded consistent with NCF's Policy for Administering Scholarships.
-
$500
minimum award.
-
No
awards may be made from an endowed scholarship account unless the
account balance is at least $10,000.
-
Any
award of $2,000 or less will be paid in one payment (i.e., not
split into separate payments for the fall and spring semesters).
-
Scholarship
awards must be reviewed by the Nebraska
Community Foundation based on information the Scholarship Selection
Committee provides on the Scholarship
Reporting Form and Disbursement
Request.
-
When requesting a scholarship
payment from
NCF, you must include both a completed Disbursement
Request form and a completed Scholarship
Reporting Form. For scholarships that will be paid in more
than one installment (only those in excess of $2,000 may be paid
in multiple installments), these forms must be submitted for each
disbursement.
-
Scholarships
will be paid by
check directly to the college or university for the benefit of
the recipient and are to be used for direct college expenses, such as
tuition, fees, textbooks, room and board.
Scholarships
that do not conform to IRS and NCF Policy will not be paid. If you
have any questions, please contact NCF prior to notifying the
scholarship winner.
Eligible
Educational Institutions
A
donor may restrict recipients’ attendance to certain colleges or
universities; however, the Foundation encourages donors to allow
recipients to attend any accredited postsecondary two and four-year
college, university, or vocational school in the United States.
Scholarship
Amount and Payments
The minimum award amount is $500 per scholarship. This assures that the
scholarship will be significant enough to provide financial assistance
and attractive enough to generate a competitive number of applicants.
Each
scholarship grant is paid by a check issued to the educational institution for the benefit of
the recipient.
Award
Displacement
Scholarships
awarded by funds of the Nebraska Community Foundation may impact the
financial aid package a student is receiving from an institution.
Financial aid
offices can better advise students on the impact of a private
scholarship.
Approval
of Recipients
The Nebraska Community Foundation, by law, must retain final responsibility
for all distributions made from the Foundation and has the right to
reject any award recommended by a Scholarship Selection Committee if information
on the Scholarship Reporting Form indicates that the recipient was not
selected by the SSC on an objective and nondiscriminatory basis
and consistent with the purpose of the fund.
Foundation staff are available to assist SSCs in developing
appropriate selection criteria and procedures. Each applicant should be ranked according to the stated selection
criteria for each particular scholarship. Documentation
of the selection process must be provided to the Nebraska Community
Foundation on the Scholarship
Reporting Form prior to payment.
If
you have any questions regarding approval of recipients, contact NCF
prior to notifying the recipient(s).
Taxation
Scholarship
awards apply to direct college expenses at the institution, such as
tuition, fees and books. The
recipient is responsible for any tax liability incurred as a result of
an award. Monies received for tuition, fees and books are generally not
taxable, while monies applied to room and board may be considered
taxable income. The
Nebraska Community Foundation is not required to report scholarship
awards to the student or the IRS, and the student is responsible for
determining his/her own taxability with respect to scholarships
received.
Links
to additional scholarship administration and resources:
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If
you have additional questions regarding scholarships, please contact the
Nebraska Community Foundation at info@nebcommfound.org
or call (402) 323-7330.
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