The Percentage Test - Scholarships for Corporation Employees and Dependents
I'm having difficulty with the language around our corporate scholarship percentage test. (Long story.) Does anyone have a good source for the percentage test requirements? Particularly for employees?
Also, does anyone have a scholarship that combines eligibility requirements for dependents of employees along with employees?
Thanks in advance!
Tom
Best Answer
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Hi @TomWickersham! Lynsie here, Solutions Engineer at Foundant but former scholarship manager at The Dallas Foundation. I had good familiarity with the percentage test during my time in Dallas because we offered a few scholarship programs that were for dependent children of employees. IRS states you can award to no more than EITHER 25% of the applicants who applied, or 10% of the eligible applicant pool, regardless of application.
These rules meant that our first few years in our corporate partnerships we were giving to 25% of the applicants, then over time we worked with the HR teams to gather data around eligible applicant pool, and were able to award more students using the second rule.
Here is the detail from the IRS website: https://www.irs.gov/charities-non-profits/private-foundations/taxable-expenditures-by-private-foundations-percentage-test-employer-related-educational-loans-to-children-of-employees
If you want to connect about this let me know!
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Answers
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Hi @TomWickersham! Reviving your question here to see if any of our Compass members have resources or examples to share!
Kara Adams, M.Ed., CAE (she/her/hers)|Community Manager|kara.adams@foundant.com
Headquartered: Bozeman, MT| Remote Location: Chicago, IL | Direct: 312-802-1374 |www.foundant.com|
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Hi @TomWickersham! Lynsie here, Solutions Engineer at Foundant but former scholarship manager at The Dallas Foundation. I had good familiarity with the percentage test during my time in Dallas because we offered a few scholarship programs that were for dependent children of employees. IRS states you can award to no more than EITHER 25% of the applicants who applied, or 10% of the eligible applicant pool, regardless of application.
These rules meant that our first few years in our corporate partnerships we were giving to 25% of the applicants, then over time we worked with the HR teams to gather data around eligible applicant pool, and were able to award more students using the second rule.
Here is the detail from the IRS website: https://www.irs.gov/charities-non-profits/private-foundations/taxable-expenditures-by-private-foundations-percentage-test-employer-related-educational-loans-to-children-of-employees
If you want to connect about this let me know!
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Thank you, @LynsieLaughlin!
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