True, the winners must demonstrate acutely above-average merit. Rhodes’ will spelled out the criteria in four points that say absolutely nothing, however, about socioeconomic or geographic origin, religion, field of study or grade point average—imperatives that schools frequently hear from present-day donors. Instead, he requested that Rhodes scholars are to be selected based on: “Literary and scholastic attainments; energy to use one’s talents to the full, as exemplified by fondness for and success in sports; truth, courage, devotion to duty, sympathy for and protection of the weak, kindliness, unselfishness and fellowship; and moral force of character and instincts to lead, and to take an interest in one’s fellow beings.”

Universities, of course, encourage donors to support efforts to welcome students who would not otherwise attend college, but they do insist that benefactors allow a broad definition of the term “disadvantaged.” The evolution of Funderburke’s stipulations displays this notion. When he first approached OSU, he wanted money to go to Fisher College of Business students who had participated in one of several mentorship programs at the Lawrence Funderburke Youth Organization in Columbus and to students who had consumed their athletic scholarships a few semesters short of graduation. Out of his protracted meetings with school officials, however, another approach emerged. He agreed that if there are too few applicants in either group, the university can open up the application process to other needy students.

One of the reasons OSU has been so pleased with Funderburke is that he has not balked at using the word “preference” instead of “requirement.”

One of the reasons OSU has been so pleased with Funderburke is that he has not balked at using the word “preference” instead of "requirement.” As it now stands, students who have been in his youth organization get first preference. If no applicant fits that description, the money can go to students who participated in one of two Boys and Girls Clubs in the Columbus area. In the past five years, 75 students have been involved in Funderburke’s youth organization, while hundreds have passed through the doors of the Boys and Girls Clubs. Even so, he has agreed that if this pool of applicants is small enough to leave further money available, it can go to any needy, deserving students in any program at OSU, at the discretion of the school’s scholarship selection committee.

Another reason that a tightly targeted scholarship endowment can put the school in a tight spot is that nine decades after Cecil Rhodes, universities in the United States found themselves under attack for affirmative action quotas, and indeed any evidence of favorable treatment toward certain groups. Today California, Florida and Washington prohibit scholarships available only to certain ethnic groups. The other concern that scholarship committees increasingly confront in a multicultural world is proving racial status. Must an “African-American” have two African-American parents, or just one?
 
Schools also face heightened IRS scrutiny vis-à-vis narrowly defined scholarships. Rebecca Dukes, vice president of university advancement at New Mexico State University, remembers a donor who wanted to set up a scholarship for a single mother who had a child enrolled at a particular day care center. “We thought there can’t be too many people who fit that profile,” Dukes says. “We checked with our attorneys on that one, and had to deny it.” The IRS is likely to rule that a scholarship that narrow is, in fact, a gift—in other words, an award that seems tailored for one particular student.

Even if you are giving a substantial endowment to set up scholarships for students, a college or university will likely want to meet with you several times to discuss the parameters of the scholarship. They will ask what you hope to accomplish with the gift. Is it to bring more accomplished scholars to the university? Is it to help students in financial need? The university will want to collaborate with you in designing a gift agreement that will meet your goals, as well as those of the university as a whole.

You have some say in the matter, of course. It is reasonable for you to insist, for example, that the school be amenable to reviewing the agreement periodically. Once you give a gift, the IRS stipulates that you should have no control over that money, but a savvy development department will give you the opportunity to tweak the scholarship requirements under some circumstances. If demographics or particular disciplines change over time, ideally the school should be willing to make changes to the agreement so that you can make certain you continue to support the students you really wish to help.

Funderburke expects to have some input in the process at OSU by participating on the scholarship committee. More often, this is the closest a donor can get to directing the funds, although by law there must be enough votes on the panel so that the donor can be outvoted. Benefactors on these committees, however, should be forewarned that slogging through the applications can devour hours and days. “We tell people to get involved when the finalists have already been chosen,” says Lisa Philp, head of philanthropic services at JPMorgan Private Bank in New York.
 
There are a number of approaches that donors can employ to streamline the endowment process and ensure funds are used effectively.
 
Like Funderburke, you can set up a tiered system of targeting scholarship recipients. It can work just as well for students from a disadvantaged side of town as students in a particular scholarly discipline. First, you earmark the scholarship for a particular group, such as those studying African history. If no students majoring in that subject apply, then the scholarship would be open to any applicants in the department at large. In the unlikely event that no suitable candidates apply, the recipients could be drawn from any discipline or school at the discretion of the dean.

Eastern University, a Christian school in St. David, Pa., has an endowment from a now-deceased donor that has been sitting idle for several years. Decades ago, the donor, whose name the school would not reveal, set up a full academic scholarship to attend Eastern for a Native American student who grew up on a reservation in one of a handful of Western states. (Pennsylvania does not have laws against race-based scholarships.) But as it happens no Native American applicant has stepped forward to apply recently.

No doubt the prospective winners would have been better served by the late benefactor if he had instead funneled his gift through an organization that serves Native Americans, or even created a private foundation offering a general scholarship to these students instead of one linked directly to a single university.

A donor at New Mexico State wanted to endow a $200,000 engineering scholarship for students who demonstrated a belief in Christianity. Rebecca Dukes, once again, had the delicate task of explaining that the restrictions he had in mind were problematic. First, it would be awkward for a state university to create a scholarship biased toward a particular religion. Second, even with all of the talented engineering students in need of scholarship funds, it might be difficult to find a large constituency willing to jump through this particular hoop. The donor agreed to recast his criteria, creating a scholarship process under which applicants must state their belief in a higher power, a conviction that is measured by the applicant’s volunteerism.

Donors who wish to sponsor a particular discipline in a particular community or even within a particular neighborhood may find that, rather than approaching a college outright, their goals might be better met by working with a community foundation. In this case, the foundation will take on the job of identifying deserving recipients. There are more than 600 community trust organizations around the country that can help donors set up named scholarships. The Foundation Center has a list of them on its website at www.fdncenter.org/funders/grantmaker/gws_comm/comm.html

Michelle Seaton, based in Massachusetts, is a senior correspondent for Worth.