Philanthropy Puzzler: Establishing a Scholarship Fund | Sharpe Group
Posted July 22nd, 2020

Philanthropy Puzzler: Establishing a Scholarship Fund

The “Philanthropy Puzzler” features gift questions fundraisers may encounter in the field, followed by solutions from our panel of experts. If you would like to send us your own “puzzler,” please email us at with “Philanthropy Puzzler” in the subject line.

Philanthropy Puzzler

Marsha’s family didn’t have the money to send her to college when she was younger. She wants to help others who would like to obtain a college degree but lack the funds, so she consulted a college in her area about establishing a scholarship fund. Marsha has numerous grandnieces and grandnephews living in the area who could use the scholarships. She asked the college whether her family could be given preference.

Puzzler Solution

In general, a gift to an individual does not qualify as a charitable contribution. However, contributions to establish a scholarship fund may be deductible if the class of potential recipients is not limited to members of the donor’s family, although the class may include family members [Est. of Robinson v. Comm’r., 1 T.C. 19; Ltr. Rul. 9338014]. The scholarship restrictions cannot be so narrowly drawn as to limit the scholarship to a private class (TAM 9631004). ■

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