If you donate a term life policy to a charity, you can deduct the cost of the premiums from your taxes. If you donate a whole life policy, you can deduct the cash value of the policy as well as the cost of the premiums. According to folks who work in university development offices, most charities would rather be able to make use of a donation right away. Assuming that your goal is to fund scholarships and educate, then a life insurance policy is not going to immediately serve that purpose. Chances are that such an organization's endowment fund would be better off investing the money you spent on the policy.
Insurance companies are in the business of making money.
The money they make off these policies is money the charity could be using instead. Conn. By canceling the policy and keeping and investing the cash value, the school will come out significantly ahead. So it's clear that larger charities can put that money to better use by investing it themselves. But smaller, local charities may not have those resources. And those charities are more likely to welcome any kind of contribution you offer.