September 17, 2020 - "I will not be turning the items in, (my school) has already helped me." This was a recent email we received from a parent who had applied for aid but did not turn in any of the requested documentation necessary for us to verify her application. This is not the fist time we have heard this sort of reply from a parent and yet it raises serious concerns of which your school should be reminded.
Grant and Scholarship Procedures
The main laws affecting the awarding of scholarships are the laws relating to private foundations and non-profit organizations. For example, section 4945(g)(1) of the Internal Revenue Code 1 specifies that all grants (read scholarships or tuition aid) are awarded on an objective and nondiscriminatory basis using a procedure that has been approved in advance by the board of directors of the sponsoring organization and that has been designed to ensure that all such grants meet the IRS requirements for scholarship programs found in paragraphs (1), (2), or (3) of section 4945(g) of the Internal Revenue Code.
Requirements for Scholarships/Tuition Aid
Accordingly, the following are IRS requirements for the awarding of scholarships or financial aid:
Our advice to private schools offering tuition aid is to have written procedures for awarding such aid. This should include that your school will utilize a third-party vendor such as CFS-BeneFAQ who will provide the same application and verification processes to all applicants BEFORE any award is determined by the school. Once verification is complete, the school may proceed to award aid to the applicant family. To provide assistance without following IRS requirements may mean consequences imposed by the IRS such as fines or disqualification of 501(c)3 standing.
Consider circumventing the proper process not worth the potential penalty should you ever be audited regarding tuition aid you have granted.
July 7, 2020 - As you might imagine, we encounter a myriad of reasons that slow down the processing of applications from incorrect forms being submitted, to missing information on an application, to red-flagged excessive expenses be reported. Here is a list of some of the most common reasons an application sits with a "partially" or "unverified" status:
Those are just a few of the examples that can hold up the verification process of an application. If a parent calls you wanting to know why there is a delay, always check "Review requested items" to see what might be missing, and also "Admin notes" where we often indicate what we are still waiting on. As always, feel free to refer a parent to us. Their best course of action is to email us so we can assist them most promptly. We have several email addresses which will all reach our desks, but email@example.com is an easy one to hand out.
June 8, 2020 - Now is a great time for school leadership to have conversations with financial support partners and "others of means" about helping "cover the the COVID gap" of financial shortfalls through lost enrollment, additional tuition aid to help more needy families, drop off in donations, etc., as the result of the shutdowns and shifts in the economy. There are many individuals who have not suffered financial loss like others have and may be inspired to give generously to help your school at this time. One of the most compelling campaigns for financial support has always been scholarship dollars. It may now be time to consider how to embark on this wisely, efficiently, and quickly. Please contact us for help. This is one of our key areas of competence and expertise.
May 12, 2020 - StarkMedia, out of Milwaukee, Wisconsin, is fast at work on the re-design of the CFS platform which will make the parent and school experience much more intuitive, cleaner, and modern. We are excited about the new roll-out which will be done in phases in early October. There will be no changes in how we determine the anticipated amount each family can contribute to their tuition. Our process will remain thorough and comprehensive and best of all... NO PRICE INCREASE to schools or families! We anticipate the new system being fully functional for all schools by December. With the new system comes a new name, BeneFAQ, (Benevolent Financial Aid Qualification). The new name reflects our goals and purposes to serve Christian ministries desiring to provide financial assistance to families in a prudent manner. We will provide regular updates on progress, screen shots, and more in the months ahead.