Why Funding a Scholarship is the Worst Charity You Could Donate To

When you fund a scholarship (usually by donating to your college or to a charity) you are making terrible use of your charity dollars. Here's why:

• You're probably NOT enabling a kid to attend college who otherwise wouldn't. Contrary to the sales pitches that many fundraisers use or imply, very few students would be unable to attend an appropriate college in the absence of your money. You're merely substituting your money for the government's or college's. (The college's money heavily comes from such sources as tax dollars and government- or corporate-paid overhead payments.) The kid would have attended college, probably the same college, and almost certainly an equally appropriate college without your money.
  

• Usually, your donation makes college only minimally more affordable to a student. The amount of your scholarship dollars is usually deducted dollar-for-dollar(!) from the financial aid the student would otherwise get from the government or the college.

Usually, the best a student can hope for is that the college will convert his taxpayer- or college-subsidized low-interest loan into a grant. So, for every dollar you donate, only a few cents actually gets to the student. We'd never donate to a charity that had even 30% overhead, yet here, you're donating to a charity that is almost all overhead!

• A student's receiving your scholarship reduces his or her motivation to select the most cost-effective college.

• You incur a huge opportunity cost. There are so many uses of charity dollars more likely to lead to greater societal good. For example, I have given money to a blue-collar school district that provides little or no special programming for its high-ability elementary school kids. (The funding and attention in most schools has been diverted to low achievers, to meet the government's No Child Left Behind mandates.) That donation enables those kids, with so much potential to make a difference in the world, to get appropriate education and co-curricular experiences they otherwise would not get. I've also donated money to the Population Council, which makes birth control and reproductive education available to third-world women, and to The National Organization for Rare Diseases, which funds research on diseases too rare for the drug companies to invest in.

Think three times before saying yes to your college's or charity's highly sophisticated pitches for your money to fund scholarships. Your charity dollars will do much more good elsewhere. Besides, you've already paid your college a fortune for an education that many thoughtful people conclude does not yield sufficient benefit for all the money and time.