There are scholarships at my University that have been around for a few decades. Do people top them up constantly?
In: Economics
Scholarships are typically based on an endowment. This is a large amount of money that is invested, and the returns from the investment are used to pay for a recurring expense like a scholarship. So for example, if you wanted to endow a scholarship worth $30,000 per year, you could donate a $1 million endowment, which would get a yearly return in the stock market of 3% (at least) on average, and you would use that 3% of $1 million to pay for the scholarship.
This is the main way that places like universities budget for any recurring expense. That’s why they have such large endowments and why they are willing to give professors such strong job security.
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