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Reverse Scholarships

Reverse Scholarships. Review Concept Legal Aspects COF Comments What Audience is Doing in This Area. Reverse Scholarships: Randy Maiers Stclairfoundation.org. Sounds Easy enough…. Competitive scholarship program providing “back end” financial support for recent graduates

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Reverse Scholarships

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  1. Reverse Scholarships • Review Concept • Legal Aspects • COF Comments • What Audience is Doing in This Area

  2. Reverse Scholarships:Randy MaiersStclairfoundation.org

  3. Sounds Easy enough… • Competitive scholarship program providing “back end” financial support for recent graduates • Applicants must be willing to move back home to be eligible • Applicants must be graduates of a STEAM program/degree • Scholarships help pay off student debt

  4. Go climb that hill…

  5. But first……Why?

  6. Why a Reverse Scholarship? • You first have to understand the context of the conversation • How did we arrive at this idea? • How does it fit in with our strategic priorities? • Why should non-donors and non-foundation friends care? • How did this conversation begin?

  7. Step #1: Ask “What’s Important to You”?

  8. “What’s Important to You?”then“What can we do about it?”

  9. What’s Important? • Having our kids come back home • Having them take over the family business • Or work on the farm as engineers, scientists, chemists, farmers and business owners • Today’s farms are big, high-tech businesses • Or start up their own business • Craft Agriculture…craft beer….hops farming…

  10. And some brutal honesty…. • Why do we send kids away to school? • Why do you give out so many scholarships to kids who don’t come back? • How do you know those scholarship dollars are a good investment? • What % of your kids drop out, change majors, or don’t do what they said they would?

  11. Traditional……Front end Scholarships….Are they really a good investment?

  12. So we got our friends together….

  13. If this is so important…..What can we do about it?

  14. Our solution…. • We’ll give donors a choice….front end scholarships or back-end…. • We’ll invent: Reverse Scholarships • We’ll pay recent college graduates to come back home instead of paying them to go away • We’ll have a greater degree of certainty that our dollars will be invested wisely

  15. How does it fit in? • Downtown Revitalization • Slowing down or reversing the “talent drain” • Bringing skilled, educated and trained professionals back to small towns • Increasing entrepreneurship • Filling skilled & educated job openings • Giving farmers & small shop owners a hope that a family member will take over their business

  16. Reverse Scholarship? • Never been done before by a community foundation • No model to follow • Is it legal? • Is the income taxable? (for now it is) • Is it charitable? • We’re going to need some help….

  17. More questions than answers.. • Does it run like a normal scholarship? • How do you define a “recent college graduate?” • Why STEAM? • How long do they have to live back in their “hometown? • What if they move? • What is the dollar amount of the scholarship?

  18. Possible Legal Challenges…. • Can we prove it “ lessens the burden of government?” • Can it be operated under the auspices of local government….or…. • Sanctioned by a local unit of government • How can our EDA’s and local municipalities help? • Some unit of government must consider the lack of STEAM grads as a “burden”

  19. Answers….so far…. • We think it can work…. • Especially here in the Midwest • Create a pilot program via a new Supporting Organization • Working concurrently with our local units of government & Economic development organizations

  20. We’re excited….

  21. Focus group surveys with donors and community groups…..Responses as high as 95% prefer a Reverse Scholarship over a traditional, front-end scholarship

  22. Questions?

  23. Legal AspectsDave Lindbergdlindberg@michiganfoundations.org

  24. Charitable Issues to Consider • Programs to attract medical professionals or teachers to underserved populations or areas experiencing shortages are charitable • Attracting college graduates to a particular community in itself is not charitable. • Economic development is not “per se” charitable

  25. Charitable Aspects of Econ. Dev. • Has the effect of relieving the poor, distressed or underprivileged, or combatting community deterioration • Lessens neighborhood tensions, eliminating prejudice & discrimination, defending human & civil rights or combatting juvenile delinquency • Lessens the burden of govt. in community suffering financial distress or disinvestment

  26. What would make the reverse scholarship program charitable? • Promoting economic development in a financially distressed community • Local unit of government acknowledges the program lessens the burden of govt.

  27. Key Indicators for Area Suffering Financial Distress • Unemployment Rates • Poverty Rates • Vacant Housing • Income Levels • Mich State Housing Dev. Authority has criteria for distressed areas

  28. Support For Lessening Burden of Govt. • Identify broad charitable class that will benefit • Local govt show interest in meeting need to be addressed through legislation or ordinance • Document economic benefit to community or savings to govt.

  29. Support For Lessening Burden of Govt. Continued • Document relationship between community foundation & govt. agency • Business owners who benefit from program should not be involved in management of program • 1 or more public officials serve on committee administering program

  30. Graduate Student Income Issues • Scholarship would be taxable income

  31. What’s Next • Community Foundation of St. Clair County will be establishing a supporting org. to administer program • Nationally pursue a private letter ruling with help of COF

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