How To Create A Scholarship Fund with Humboldt Area Foundation (HAF)
HAF scholarship funds are most often endowment funds, meaning that the initial gift and future contributions are invested for perpetual growth. Donors can open a fund with any amount. We ask that you grow the fund to at least $10,000 within five years.
HAF recommends spending approximately 4% of the fund balance each year for scholarship awards. Although the market is volatile and we do not know what returns to expect over the next few years, returns historically average 7.5% over the long-term. This means a $10,000 endowment fund can support an annual award of approximately $400, pay for its own administrative fee of 2% and reinvest the remainder to cover the costs of inflation. As the fund increases, the amount of the award and/or the number of awards can be increased proportionally.
We are willing to manage expendable funds as well, meaning that you may expend principal as well as income earned. There is a minimum annual fee of $200 for expendable funds.
How the scholarship award process works:
Although some scholarships are offered at different times throughout the year, most are awarded in late May or June when students graduate. In January, HAF sends out information about our scholarships to schools and libraries throughout the area. If donors prefer to offer scholarships to students throughout Humboldt, Del Norte and Trinity Counties they may choose to have their scholarship applications included in a packet that we also send out in early January. We also post this application on our website at www.hafoundation.org. In general, students are asked to complete applications and return them by March 15.
During the months of March and April, HAF scholarship committees, service organizations and other groups and committees at local high schools and colleges all make their selections. Donors may participate on the selection committees but by law, may not control the selection process or outcome. Awards are presented in May and June and are often announced in the press. During the summer, the Foundation hosts small gatherings for those donors who would like to get acquainted with their scholarship recipients.
Creating the fund:
Foundation staff look forward to working with you to define and describe your new fund. With your instructions we will compose a “new fund agreement letter” that will provide the Foundation with specific direction so that we can administer the fund in accordance with your intentions as the years go by.
You may choose to write a description of your fund and have it included each year in the HAF Donor Yearbook. We also would be glad to include a photo if you like. The Yearbook is distributed in November to approximately 9,000 residents throughout the United States.
Scholarship recipient Elizabeth McCormack and her nephew
|Thank you for considering the creation of a fund to provide scholarships to deserving students. At present there are approximately 200 scholarship funds within the Foundation. We do our best to provide a variety of options so that you can choose whatever services you want and create a fund that meets your individual preferences.
To set up a new fund, you’ll need to decide:
1. What will be your fund’s exact name or title?
2. What will be your criteria for scholarship recipients?
3. Which selection committee would you prefer?
4. Would you like to participate in the selection process?
It may be useful to look through the fund descriptions in our most recent Yearbook for some examples. If you do not have a copy, it too can be viewed at our website www.hafoundation.org, or we will be glad to mail you a copy. There are several donors who prefer to remain anonymous, so of course the funds they established are not included in the Yearbook.
Perhaps the following lists of questions will be helpful as you set criteria for your fund.
1. What would you like to name the fund?
Would you like the fund to be named in honor or in memory of someone who is important to you? Do you want to include such words as “memorial,” or “endowment?”
2. What criteria would you like to establish to select a scholarship recipient?
By law, this has to be a fair and open competitive process, available to all qualified applicants. However, you can list the attributes or qualifications that you would like your recipient to have.
For example, you may want them to be a:
and you want them to have:
- Resident of a specific geographic area
- Current high school student
- High school graduate
- College undergraduate
- Returning student
- Student at a particular school
- Full-time student
- Part time student
- Representative of a particular ethnic or cultural group
- Work history
- Grade point average of ___ or above
- Volunteer service
SAT or other test score of ___ or above
- Community activities
Academic interest and/or achievement
- Participated in a particular activity
- Athletic interest and/or achievement
- Received an award or recognition
Other interests and/or achievements
- Specific career goals
3. Who will select the scholarship recipient each year?
- Have one of the HAF Scholarship Committee make the selection?
- Have a school, church or 501c3 organization make the selection?
- Would you like to participate in the selection process?
After you’ve had some time to think about your goals and intentions, give us a call or stop by to talk with staff. We will draft the fund agreement and send it to you for your revision. When it’s just the way you want it, we will formalize it with your signature and the signature of HAF’s Director.
Any questions? Please feel free to get in touch with our Director of Donor Services, Chris Witt. HAF staff look forward to working with you.
Director of Donor Services & Planned Giving
Humboldt Area Foundation
373 Indianola Rd.
Bayside, CA 95524
Services for Scholarship Funds
• Advice on establishment and structure of scholarship fund
• Distribution of applications to schools and students
• The services of a selection committee
• Congratulatory letters sent to all award recipients
• Letters of regret sent to all applicants who did not receive awards
• Press release upon request
• Disbursement of awards
• An opportunity to meet your scholarship recipient at the Foundation
• Statements for each fund, including investment activity and itemized lists of donations and disbursements
• Acknowledgment of gifts made to the fund, receipts meeting current IRS regulations, and donor thank you letters
• Independent audit of all financial transactions
• Required IRS annual tax returns filed on behalf of the fund’s activity
• Inclusion of fund description in HAF’s Yearbook with annual circulation of 9,000
• Upon request, assistance with press conference at fund’s inception and/or press release at time of grant award
• Professional charitable estate planning assistance for potential donors to the fund
The Humboldt Area Foundation (HAF) manages $55 million in assets and currently pools investments for over 600 funds. Investing on a pooled basis produces significant economies of scale, including: (a) enhanced diversification of assets across investment styles and money managers; (b) enhanced access to money managers that might otherwise be unavailable due to account size minimums; and (c) reduced costs due to the application of size-sensitive fee schedules to an expanded asset base. Fiscal oversight of investments is provided by the HAF Investment Committee and Board of Directors in alignment with California Prudent Investor Rules. Angeles Investment Advisors, Inc. provides an in-depth third party review of HAF’s investment strategy each year with results available to the public on the HAF website at www.hafoundation.org
The Humboldt Area Foundation also offers non-risk fixed income investments for short-term expendable funds. These returns vary in alignment with prime rate fluctuations.
This asset allocation has produced the following total net returns. All returns are reported NETof investment fee
The annual rate of support for Foundation services is two percent (2%) of the principal balance, a portion of which is taken from the income generated by your fund each quarter. There is a minimum fee of $200 per year.