If, however, your gift is in some form other than cash, the tax consequences are different. For example, if you gift stock, you can only deduct 30 percent of AGI, Cumming says.
Additionally, the rules on total deductions for individuals earning more than $250,000 per year recently changed, Cumming says. If you fall in that group, your deduction will depend on the amount your AGI exceeds certain thresholds.
Giving at death, through a trust or will, provides an unlimited charitable deduction, says Cumming. But if the estate falls under the current $5.25 million exemption, you might consider gifting during life so you can enjoy an immediate income tax deduction.
The right way to endow a scholarship for tax purposes is determined "case by case," Cumming says, "depending on your adjusted gross income and your federal gross estate."
How will you enjoy your gift?
"The benefit to endowing a scholarship now versus at death is that we can thank you for it," says Nesmith. Donors also enjoy the benefits of seeing their gift in action, so to speak.
At both the University of Delaware and UC Santa Barbara, donors are treated to various university events and receive special publications from the university. They have the opportunity to name the scholarship and meet the students, faculty and the university president. The size of the gift will determine the level of appreciation from the university.
"The idea is that you're able to interact with the university in a way that others are not," Nesmith says. But perhaps the greatest gift is the knowledge that you've made a difference for students now and in the future, she adds. "Scholarship endowments create a gift that will last a lifetime and beyond if managed properly."