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The Power of Scholarship Programs

By Melanie Schnoll Begun, Managing Director at Morgan Stanley Wealth Management
Contributing Author: Christina Doherty, Morgan Stanley Wealth Management

The overwhelming cost of attending college—including tuition, housing, textbooks, class supplies, food, and transportation, among other expenses—is keeping many young Americans from pursuing a college degree. And, unfortunately, the price tag is only increasing. Yet college remains an indispensable investment; the average graduate from a four-year college earns 84% more than the average high school graduate. 1 At 18 years old, high school students are being forced to decide between taking on debilitating student debt or entering the workforce without a college degree, thereby jeopardizing the opportunity to reach their full potential.


The cost of college tuition reached an all-time high in the 2015-2016 academic year, with the average annual cost of in-state public colleges at $24,061 and private colleges at $47,831.2 The increasing cost is particularly devastating for students since families are contributing less than ever to their children’s college expenses. According to “How America Pays for College 2016,” an annual national study published by Sallie Mae, 33% of parents plan on contributing no more than $5,000 to their child’s college tuition.3 Although many colleges offer financial aid to students who meet certain criteria, it rarely covers the total cost. When a student’s expected family contribution and a school’s financial aid package do not equal the total cost of attendance, students are left with a financial gap. To fill this gap, most take out large student loans, which can be debilitating for many years after graduation. In fact, there are 2.1 million people above the age of 60 who live with student debt in the United States.4

As a donor, there is a variety of ways to support education, such as writing grants to a university or helping to fund an endowment.

Herein lies the importance of scholarships. Scholarships are grants made to support students’ education and to provide young students with the opportunity to pursue their passions without the often crippling financial burden of student loans. Entering the workforce with a college education gives young, talented and motivated students the opportunity to reach their full potential. In addition to profoundly impacting the individual lives of those students who receive them, scholarships also possess the ability to strengthen the global workforce. The Organization for Economic Cooperation and Development (OECD) reported that college graduation rates in the United States are continuing to slip behind, failing to keep pace with other advanced nations.5 An impressive 70% of the population actually matriculates in a four-year college,6 but research shows that more than a third quickly drop out, citing the impossibility of paying for school as the number one reason for not graduating.7 What’s particularly devastating is that these students have most likely already incurred a large amount of student debt to meet tuition requirements, but will not experience the benefits, such as higher wages and better career prospects, typically associated with a college degree.8 The fact that by 2020, two out of every three jobs will require at least a two-year college degree, underscores the necessity for students to attend college and the importance of scholarships to lessen the financial burden for young students of all socioeconomic backgrounds.9


As a donor, there is a variety of ways to support education, such as writing grants to a university or helping to fund an endowment. However, creating or donating to a scholarship program is unique; it allows a donor to make a restricted gift that must be used to benefit a particular group of students directly. Thus, donors feel more connected to the impact that they are having on the future of the recipient or recipients and, for this reason, tend to find investing in scholarship programs to be an extremely personal and fulfilling charitable act. Often, philanthropists decide to donate to scholarship programs because they benefited from a scholarship program themselves or wish they experienced the opportunities that scholarships provide.

Within the realm of scholarships, there are myriad options to create a customized scholarship program. Scholarships are often contingent on meeting certain expectations, such as achieving a high grade-point average, displaying a commitment to community service or demonstrating athletic ability. Two major types of scholarships exist: A full scholarship covers a student’s entire tuition, whereas a partial scholarship is designed to assist in reducing the student’s total financial burden. Regardless of the type of scholarship or whom it is designed to assist, scholarships are essential to filling the gap and allowing students to have a greater chance at reaching their full potential. The Philanthropy Management team at Morgan Stanley is made up of skilled professionals with experience in the development and implementation of all types of scholarship programs. Our team works with donors and philanthropists to facilitate the complete scholarship cycle.

In many cases, students who never would have applied to college for fear of graduating with overwhelming student debt are now encouraged to pursue careers they are truly passionate about.

The Phillips Foundation, a family foundation based in North Carolina, employs a unique strategy of geographically focused grant-making in Guilford County, North Carolina. In addition to supporting homelessness solutions, economic development, and family empowerment, the Foundation trustees understand the importance of education in achieving positive and systemic change in their community-based approach. Under the guidance of Morgan Stanley’s Philanthropy Management group, the Phillips Foundation assumed a leadership position in creating a Guilford County Chapter of Say Yes to Education’s nationally recognized scholarship program to provide college scholarships for every graduate of the Guilford County Schools District. This particular scholarship is unique in that it was not created through a single funder, but instead was made possible through collaboration among funders in Guilford County and a national nonprofit organization with expertise in this area of work. Elizabeth Carlock Phillips, Executive Director of the Phillips Foundation, explains: “We are thrilled to use our philanthropic platform to help lead the collective impact effort from government and corporate leaders, foundations, nonprofits and other institutions to bring the promise of higher education to every Guilford County Schools student. Implementing the Say Yes model locally will also have ripple effects nationally as the organization scales to impact many more lives. It is an honor to be a part of that vision.” Guilford County Schools District students now have access to a menu of support services including academic, social-emotional, medical and legal, to ensure that they progress successfully on the path to post-secondary readiness.

The story of the Cisneros Hispanic Leadership Institute, a new scholarship program at George Washington University (GWU), is particularly powerful. After Gilbert Cisneros won a $266 million jackpot in the California Mega Millions lottery, he knew he wanted to pay it forward. As an alumnus of GWU, Gil knows firsthand the limited number of Latino students studying at GWU, in part because of the steep financial burden associated with such a prestigious private institution. With guidance and insight from the Philanthropy Management team, Gil and his wife Jacki developed a distinctive scholarship program which grants funds to students who have demonstrated a commitment to leadership and mentorship within the Hispanic community. Gil believes that “Everyone, no matter their ethnicity, race, socioeconomic status, or gender, should have the same opportunity to get a world-class education. Our hope is that the Cisneros Hispanic Leadership Institute at George Washington University can act as a catalyst in helping make that a reality.” The Institute established a summer program for high school juniors that will provide mentorship and support programs, thereby fostering talented students who will excel as full-time students at GWU. Students who attend the summer program, who gain admittance to GWU and who have demonstrated financial need will be named Cisneros Scholars and will be given scholarship funds for tuition. Within four years, the university hopes to have 20 Cisneros Scholars. Gil created a custom scholarship in order to support a community of students with whom he feels personally connected. He hopes that through this custom scholarship program, future Cisneros Scholars will embrace a similar drive to give back and continue the cycle of philanthropic giving.

Student recipients of scholarships often feel more inclined to give back once they become financially able because they have directly experienced the benefits of another’s generosity.

The Barlovento Scholarship for Women in Games at the New York University (NYU) Tisch School of Arts Game Center is a unique scholarship program designed to provide young women interested in computer gaming with an opportunity to continue their education. Motivated by the lack of female game designers, Vanessa Briceño, in consultation with the Philanthropy Management team, designed a graduate-level scholarship program to send one female per academic year to NYU’s Tisch School of Arts Game Center through a grant from The Barlovento Foundation, a Morgan Stanley GIFT Donor Advised Fund. Vanessa was inspired to create this scholarship program by her love for game design and the stark underrepresentation of females in the field. She explains, “Our goal with the scholarship is to encourage women to pursue game design as a career and to see the industry as expanding and inviting. It is vital that we send the message that women are welcome and needed as diverse voices and creators within the gaming industry.” By covering the total cost of tuition of the two-year program, this scholarship provides women with the opportunity to pursue their passion of attaining a graduate degree in this field from a prestigious private university that they would not otherwise have been able to afford.

The benefits of enabling young people to have more satisfying and remunerative professions by developing or donating to a scholarship program can be better understood through the ripple effects these programs can create. In many cases, students who never would have applied to college for fear of graduating with overwhelming student debt are now encouraged to pursue careers they are truly passionate about. Additionally, because scholarships are almost always merit-based and require a competitive application, they serve to increase public school achievement and lead to higher graduation rates.10 Furthermore, scholarships teach and promote philanthropy. Student recipients of scholarships often feel more inclined to give back once they become financially able because they have directly experienced the benefits of another’s generosity.11 One of the unique qualities of funding scholarship programs, compared to other charitable gifts that promote education, is that it enables donors to appreciate their impact directly by witnessing the success and accomplishments of the students who receive scholarship dollars. These success stories offer a deep sense of satisfaction to donors who are committed to removing obstacles that would otherwise prevent students from achieving their full potential.

1 Porter, Eduardo. Dropping Out of College, and Paying the Price. The New York Times (June 25, 2013). Retrieved August 4, 2016 from http://www.nytimes.com/2013/06/26/business/economy/dropping-out-of-college-and-paying-the-price.html?pagewanted=all&_r=2

2 What’s the Price Tag for a College Education? COLLEGEdata. Retrieved August 4, 2016 from http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064

3 Scholarship America. 5 Reasons Why Scholarships Are Essential. U.S. News (July 7, 2011). Retrieved August 4, 2016 from http://www.usnews.com/education/blogs/the-scholarship-coach/2011/07/07/5-reasons-why-scholarships-are-essential

4 Barr, Cecillia. Student Loan Resources: Financial Aid & Loan Debt Management. Debt.org. Retrieved August 4, 2016 from https://www.debt.org/students/

5 Porter, Eduardo. Dropping Out of College, and Paying the Price. The New York Times (June 25, 2013). Retrieved August 4, 2016 from http://www.nytimes.com/2013/06/26/business/economy/dropping-out-of-college-and-paying-the-price.html?pagewanted=all&_r=2

6 Porter, Eduardo. Dropping Out of College, and Paying the Price. The New York Times (June 25, 2013). Retrieved August 4, 2016 from http://www.nytimes.com/2013/06/26/business/economy/dropping-out-of-college-and-paying-the-price.html?pagewanted=all&_r=2

7 How Scholarships Impact a Global Workforce. Scholarship Management Services (January 30, 2015). Retrieved August 4, 2016 from http://www.scholarshipmanagement.org/blog/entry/how-scholarships-impact-a-global-workforce

8 How Scholarships Impact a Global Workforce. Scholarship Management Services (January 30, 2015). Retrieved August 4, 2016 from http://www.scholarshipmanagement.org/blog/entry/how-scholarships-impact-a-global-workforce

9 How Scholarships Impact a Global Workforce. Scholarship Management Services (January 30, 2015). Retrieved August 4, 2016 from http://www.scholarshipmanagement.org/blog/entry/how-scholarships-impact-a-global-workforce

10 Five Benefits of Donating to an Educational Scholarship Foundation. AAA Scholarship Foundation (April 20, 2015). Retrieved August 4, 2016 from http://www.aaascholarships.org/five-benefits-of-donating-to-an-educational-scholarship-foundation/

11 The Impact of a Scholarship. University of Hawaii Foundation. Retrieved August 4, 2016 from http://www.uhfoundation.org/impact-scholarship

The Morgan Stanley Global Impact Funding Trust, Inc. (“Morgan Stanley GIFT, Inc.”) is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. Morgan Stanley Global Impact Funding Trust (“Morgan Stanley GIFT”) is a donor-advised fund. Morgan Stanley Smith Barney LLC provides investment management and administrative services to Morgan Stanley GIFT.

While we believe that Morgan Stanley GIFT provides a valuable philanthropic opportunity, contributions to Morgan Stanley GIFT are not appropriate for everyone. Other forms of charitable giving may be more appropriate depending on a donor’s specific situation. Of critical importance to any person considering making a donation to Morgan Stanley GIFT is the fact that any such donation is an irrevocable contribution. Although donors will have certain rights to make recommendations to Morgan Stanley GIFT as described in the Donor Circular & Disclosure Statement, contributions become the legal property of Morgan Stanley GIFT when donated.

The Donor Circular & Disclosure Statement describes the risks, fees and expenses associated with establishing and maintaining a Morgan Stanley GIFT account. Read it carefully before contributing.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters.

This material has been prepared for informational purposes only. Information contained herein has been obtained from multiple sources considered to be reliable, and Morgan Stanley makes no representation as to the accuracy or completeness of data from sources outside of Morgan Stanley.

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