You can set up a scholarship directly with a university or through a community foundation. Thinkstock By Kimberly Lankford, Contributing Editor From Kiplinger's Retirement Report, April 2013 Perhaps you had a wonderful college adventure that you want students today to experience. Or you would like to help local low-income students with their college costs. If you're charitably inclined, consider setting up a scholarship fund, either directly with a university or through a community foundation.See Also: Give the Gift of a Roth IRA Thomas Sternberg was among a small group of students in the late 1960s to major in Chinese language and literature at the University of Wisconsin–Madison. One of the professors, Chou Kuo-ping, organized an eight-week study program for six juniors to live with host families in Taiwan. "That experience was life-changing for me," says Sternberg, now 64. As principal at a large insurance agency in White Plains, N.Y., Sternberg decided he had the money to help current students embark on a similar transformative journey. He met with the university's dean of international studies to discuss setting up a scholarship program to help students study in Chinese-speaking countries. The dean suggested dividing Sternberg's $10,000 contribution into 10 to 20 awards of $500 to $1,000 that students could combine with other scholarships and savings. Since Sternberg started the program eight years ago, more than 100 students have traveled to China, Taiwan and Hong Kong with help from the Chou Kuo-ping Awards. He now gives $20,000 annually. The best part is the letters he receives from the students. "I have gotten such wonderful responses," he says. "Some of the students never had a passport, and this changed their lives." He receives a tax deduction for the cash or appreciated stock he contributes. Advertisement Besides working directly with a university, a person who wants to set up a scholarship can work with a community foundation, a nonprofit group that addresses local issues. Patricia and Michael Welborn of Phoenix had been involved in Arizona Community Foundation programs to support public education and charter schools. Earlier this year, they decided to use $25,000 in their donor-advised fund to endow a scholarship of about $1,000 for a low-income student to attend college in the Phoenix area. With an endowment, annual income from an investment is used to fund a scholarship in perpetuity. "That didn't seem like a lot of money given the cost of higher education, but it really is powerful for people who have low income," says Patricia, a management consultant for nonprofits. The foundation places the $25,000 in an investment pool. The Arizona Community Foundation told the Welborns to expect about 100 applicants. Under foundation rules, the couple cannot be the sole decision-maker but can sit on a committee that selects the student. The committee was expected to review the applications this spring. (To find a community foundation in your area, go to the Web site of the Council on Foundations at www.cof.org/locator.) You can work with the college or community foundation to set the criteria for applicants. The Community Foundation for Greater Atlanta manages about 30 scholarships. Some focus on grade-point average, while others are based on the high school or college a student attends. "It runs the gamut," says Christy Eckoff, director of gift planning. Advertisement Before choosing a foundation, says Diana Hunter, membership manager of the National Scholarship Providers Association, a trade group of scholarship sponsors, ask how it spreads the word about scholarships, chooses the selection committee and invests the money. Also ask about the number of scholarships it manages and fees it may charge. Many colleges and community foundations set minimum contribution requirements of $20,000 to $25,000 to endow a $1,000 scholarship. San Diego State University, for example, requires $50,000 to endow a $2,000 scholarship, or you can commit to finance a $5,000 annual scholarship for three years. Also, ask how much contact you'll have with the scholarship recipients. Michelle Jacobson, director of development for UCLA health sciences scholarships, sets up one-on-one lunches for donors and recipients each year. "The students love to meet the donors and thank them in person," she says.