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Scholarship Checks Payable To Whom?

Question:
A church would like to award a scholarship to a young person attending a Christian College. Should the check be made payable to the student or the institution?

Answer:
The check should be made payable to the institution. We recommend that additional information be communicated to the institution including the name of the student and a note related to the scholarship with wording such as:

"The accompanying check is awarded to a student of the University or College as a scholarship subject to Internal Revenue Service filing instructions for Form 1098-T as cited here:

Form 1098-T, Box 5 'Scholarships and grants generally include all payments received from 3rd parties (excluding family members and loan proceeds). This includes payments received from governmental and private entities such as the Department of Veterans Affairs, the Department of Defense, civic, and religious organizations, and nonprofit entities.'"

Here's the problem: 
A check made out to the student could be viewed as compensation for services rendered by the student to the church. It also has the potential for abuse in the management of charitable donations.

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