Scholarship endowments have the chance to gift many deserving students with the financial aid necessary to get their college education. On the contrary, if that same donation was not part of an endowment fund, it would only last 10 years rather than lasting in perpetuity.Īside from the apparent financial benefits of creating a scholarship endowment, it is also important to understand the effect this kind of donation can have. Going back to the example from above, endowment funds are so helpful because if someone wanted to give a $10,000 scholarship each year, a $100,000 donation can last forever with a 10% interest rate. Benefits of an endowed scholarshipĪ one-time donation large enough to qualify for an endowment fund is also beneficial, because that contribution can last a lifetime if invested. The amount the fund makes each year is considered its investment income. If the college takes only the $10,000 made from interest for that year, the investment will still have the $100,000 it began with and will continue to earn more interest each year. Scholarships, available only on .įor example, if an endowed fund has $100,000 in it and the investment generates an interest rate of 10% a year, the fund will make $10,000 in interest during that first year. The university then takes out scholarship money from the fund each year, only giving the percentage of the fund that was earned as interest.Ĭreate your profile to access thousands of exclusive When a large, endowed sum is gifted to a college, the university manages the funds, investing the amount. To understand how endowed scholarship funds can continue giving to scholarship recipients year after year, you must first understand where that money comes from and why the endowed fund is not drained over time. The interest earned on the invested money can then fund scholarships for years to come.īegin your search for unique, exclusive scholarships by making a profile at. When a large amount is donated to an endowment fund, the money isn't given directly to students all at once. With an endowed scholarship, a donor makes a large initial donation, creating an endowed scholarship fund. These scholarships are created to help fund higher education for many students over a long period of time. endowment noun King’s School received generous new endowments.Endowed scholarships are a unique form of financial aid, known for being a bit more complex than regular scholarships. From Longman Business Dictionary endow en‧dow / ɪnˈdaʊ / verb to give a sum of money to a college, hospital etc in order to give it an income He planned the museum and helped raise the $55 million to build and endow it.
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