If your booster organization awards scholarships the following IRS rules must be strictly followed:

Eligibility

Those eligible to apply for the scholarship must be from a fairly large group, such as students who attended a specific elementary or middle school or youth who participated in a specific sports club for specified period of time (i.e. 1 year or more.)

Selection criteria

Objective criteria must be used to select scholarship recipients, including but not limited to:

1. past academic performance,
2. performance on tests designed to measure ability or aptitude,
3. recommendations from instructors, and
4. financial need.

Selection committee

The selection committee may not consist of anyone related to (i.e., spouse, parent, grandparent, or great grandparent of) any of the applicants. The selection committee may not be in a position to receive any personal benefit, directly or indirectly, from selecting any applicant over another applicant.

Use of grants

Grants must be made in such a way to ensure that the grants are used for the intended purpose. For example, it is recommended that funds be distributed in the scholarship recipient’s name, directly to the college/university the student will attend. It also is recommended that your organization confirm that the scholarship recipient is enrolled, and in good standing, prior to distributing the scholarship funds.

Records

The following records must be kept on file: (i) the scholarship application and all materials obtained to evaluate applicants; (ii) the criteria used to evaluate applicants; (iii) names and contact information regarding the persons to whom the scholarships are made; (iv) the amount and purpose of each scholarship, and the steps taken to insure that the scholarship funds were used for the intended purpose.