GUY: When scholarships are like ear muffs

Whether pink ear muffs or scholarships, this rule applies, literally:

“’Tis better to give than to receive.”

Some years ago, the two youngest opened gifts from Grandma, who was sitting in the corner chair. Out popped traditional ear muffs, pink—maybe suitable for a 2-year-old, but embarrassing for anyone older, especially boys.

Grandma was proud. Everyone smiled, said nice things and threw them away a few days later—the classic inappropriate gift, providing satisfaction only to Grandma, whom we disingenuously enhanced through smiles and compliments, another proof that giving is more satisfying than receiving.

Is the same true with scholarships? Do donors feel greater satisfaction than recipients? I think so, at least in the service club and trade association context.

Year after year, associations directed by volunteer boards give scholarships, often either side of $1,000 each. An association representative appears at a high school senior scholarship night to personally deliver one or two checks in company with a dozen other representatives giving similar amounts. These spokespersons represent service clubs, specialized trade associations, groups boosting a single sport, or supporters of a discipline in science, math, history or social studies. Commonly, the websites or printed literature of these groups prominently mention scholarships as one of their community services. They do not consider insignificance. In the context of annual higher education expenses of $15,000 to $60,000, these grants represent little more than lunch money and minor relief for parents.

Awarding scholarships starts with applications, the opportunity having been advertised on a website, bulletin board poster or messages to teachers. Only the most well-informed students, probably the most accomplished, see the opportunities and fill out applications using their already-advanced communication skills. One or two board members of the scholarship sponsor review the applications and either select “the best” or pass a few on to a larger group, which votes to name recipients. The process is exciting for these volunteers. They feel empathy and excitement, a satisfaction on reading the stories of young excellence and accomplishment. The denouement is delivering a check in public. This is the joy of giving.

Unlike ear-muff recipients, scholarship winners—and their parents—feel gratitude, for a day or two, until the check is deposited and disappears into the much larger pool of money required for education. Students smile, shake hands and write thank you notes. Parents feel justifiable pride in the public recognition. In a few days, the whole thing is forgotten, because these payments do not determine futures; they do not change decisions or give opportunities otherwise unavailable. They only buy a few extra tanks of gasoline. Always, ’tis better to give than to receive.

More effective programs are available, but groups cannot change. One-year terms for leaders, one-year budgets, established and prominent members invested in the scholarship process, limited funds and scarce fundraising opportunities contribute to paralysis, a status quo that cannot adjust for inflation, for ideas of new members, for accumulation plans that could generate $5,000 and $10,000 scholarships awarded less frequently but potentially more powerful, more life-changing. An effort to find the neediest seems too time-consuming, perhaps impossible. The result is an annual routine, a habit that never changes, because giving is more rewarding than receiving.•

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Guy is an investment adviser. His book is “Middle Man, A Broker’s Tale.”