Question
: Do you have to have a constitution to set up a Scholarship Fund in the ASB account? What are the appropriate steps to set up a scholarship account?Response: Schools often receive donations specifically for the purpose of establishing a scholarship. They often come in the following two forms:
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The scholarship funds are donated from an outside individual or organization. These funds should be accounted for separately and used specifically for scholarships. If the donor does not set criteria for the award for the scholarship, the principal should work with an appropriate committee, including at least one student representative, to determine the criteria for the scholarship. A donor may not donate toward a specific student’s scholarship. If a donor would like to fund a specific student’s higher education, the donor should transact directly with the student, and such donations are not considered tax deductible.·
A student group works with a national nonprofit organization whose express purpose is offering scholarships and other incentives that encourage students to participate in higher education. In these limited cases, the nonprofit status of the organization expressly allows participating student groups to raise money toward scholarships, and is allowable.Scholarships and trusts like the above may be accepted by the student council with the approval of the governing board or authorized designee. The acceptance must be made in writing, with all conditions the donor is requesting clearly described. A statement should also be included regarding the disposition of any remaining balance at the close of the period for which the fund is established. A separate account must be established within the student organization’s accounting system (called a trust account), and the requirements of the scholarship must be documented and retained at the school site.
Scholarships from student body fund-raising proceeds are generally not allowable as they do not benefit a group of students, but can be allowable if the governing board of the school district approves an expenditure in this category. If they are going to be allowed from fund-raising proceeds, the district should set guidelines regarding how many scholarships will be allowed annually from the proceeds. A good rule to follow is that no more than a total of $1,000 should be awarded each year in high school, with no more than $250 awarded to any individual student. There must be established selection criteria for all scholarships. Cash awards are not allowed; rather, scholarship checks should be made payable to an institution of higher learning or a college bookstore, to be used toward tuition or books and supplies.
The normal pre-approval rules apply to scholarship disbursements as all other ASB expenditures. The pre-approval would be documented by the signatures of the student representative, advisor and principal on the expenditure pre-approval form used by the ASB. A constitution, although required for all clubs within ASB, would not be required for a scholarship account as there is no club associated with it.
5/6/08
