In other cases, scholarships alleviate the tremendous financial strain felt by many parents. In addition, they afford recognition and encouragement to outstanding students. If the benefactor chooses to stop making the annual gifts, the scholarship ceases to exist. Annual scholarships are significantly less expensive, but are inherently temporary. Endowed Scholarships Endowed scholarships draw funds once a year from the interest generated by the principal of a gift.
Endowments provide a reliable and permanent source of financial aid.
Endowments are initially more costly. However, only the interest is distributed, so endowments exist in perpetuity. The type of scholarship that you choose depends on your intentions and your financial resources. Annual scholarships can be established for multiple years through signed fund agreements. Some donors choose to establish an endowed scholarship through a bequest or planned gift while funding the scholarship on an annual basis during their lifetime.