What is a Stipend?

What is a Stipend?

A stipend is a set sum of money that is paid to an individual to help defray expenses. Common recipients of stipends include students, interns, researchers, and clergy.

Stipends are distinct from salaries or wages, as they are not directly tied to work performed and are customarily given to someone performing a function that is usually unpaid.

How a Stipend Works

A stipend is often offered to individuals as a fixed sum rather than an hourly wage or salary. This type of compensation is sometimes called an allowance and is normally provided on a daily, weekly, or monthly basis. Stipends are usually offered as compensation for training instead of salaries for employment purposes. That being said, it allows people to pursue work that is normally unpaid by helping defray living expenses.

Interns, apprentices, fellows, and clergy are common recipients of stipends. Rather than being paid for their services, they’re paid stipends to provide financial support while engaged in the service or task. A stipend often includes other benefits, such as higher education, room, and board.       

Characteristics of Stipends

The most common types of stipends are those given to help someone with the costs of room and board or travel. Graduate schools sometimes offer students general stipends or special purpose stipends to help with the cost of specific materials or equipment needed for school. Stipends from employers are commonly given to temporary interns or offered to employees to help with specified expenses, such as health care.

Stipends received from employers do not have to be for any minimum amount and may not be equal to receiving minimum wage when hours worked are calculated. Internship stipends enable an individual to gain valuable knowledge and experience from working in a field they are interested in pursuing as a career.

Types of Stipends

As mentioned above, stipends are not hourly-based pay and are often used by employers as a lower-cost option to pay interns. In fact, stipends can vary depending on the company or organization that pays them. Some companies pay stipends to help cover housing, food, or travel expenses. Here are just a few of the types of stipends that are offered.

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Academic Research

Stipends are commonly offered to researchers at academic institutions or other related organizations to help them focus on their projects. Much like grants, these stipends may be furnished by third parties who wish to see a particular study or form of research advance further without fiscal distractions that may otherwise hamper the researcher.

Foundations and comparable entities might also offer stipends on similar terms to support the work of researchers and the projects they are developing.

Expense Related

Stipends might also be offered to cover very specific costs and expenses. For instance, students could receive a stipend that must be used toward the purchase or lease of computers during academic semesters.

 Alternatively, stipends may be issued to help defer the cost of transportation incurred by the recipient to and from the company for training purposes.

Health Insurance

Since employers don’t have to offer health benefits to interns, some of them may offer their workers extra money by adding it to their paycheck to help them with health insurance costs.

Individuals can then use this extra cash to put toward paying for their insurance premiums for coverage that can be purchased either through the health care exchange or directly from private insurers.

Wellness Programs

Health and wellness are now an important part of the work-life balance that many employers promote. So it’s only natural that a lot of companies also offer stipends for employees that can be used for a variety of fitness expenses, such as gym memberships, yoga classes, or even personal trainers, as part of a wellness program.

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Job Training

Some companies offer stipends to employees who wish to take additional training and classes that may assist them with their jobs and career development. The employee may enroll and pay for classes or additional training, for which the employer provides a reimbursement.

Stipends for Various Purposes

Different individuals engaged in various types of endeavors receive stipends for a variety of purposes. However, the vast majority of stipends are given to support some kind of educational purpose, whether it be a stipend granted to a student to help them pursue higher learning or a stipend granted to an intern at a company receiving on the job training.

The following are the most common areas in which stipends are used:

1. Education

Stipends are very common in the area of higher education, although the individuals they are given to and the purposes of the stipends may vary widely. They are frequently given to faculty at universities to defray research costs.

Such stipends may be provided by the university where the faculty member is employed or by outside sources, such as government grants or stipends given by companies, foundations, or non-profit organizations that are interested in the research being conducted.

Educational stipends are given to students from a variety of sources, such as fellowship grants, to help shoulder the cost of continuing their education.

2. Internships or Apprenticeships

Stipends that accompany internship or apprenticeship programs may be offered to either students or to employees of a company who are seeking to expand their job skills. Summer internships for students to work at a company in the career field they wish to pursue commonly offer a stipend of some sort.

For example, many investment banks offer summer internships with stipends to students, which serves two purposes – they enable the student to receive valuable on-the-job training, and they enable the company to evaluate the student for possible future employment offers.

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3. Employee Benefits

Employers may offer stipends to help their employees defray certain expenses, such as health insurance or commuting costs. Employees may also be offered stipends to pursue additional education, such as a post-graduate degree, or to obtain professional certifications.

4.. Religious Stipends

Stipends may also be offered to clergy for specific purposes. For example, in the Catholic Church, it is customary for church members to offer a stipend to a priest for performing a Mass that is not part of the ordinary course of his duties.

In addition, stipends may be given by a church to volunteers doing charitable work – for example, students or other church members who agree to spend time doing disaster relief work in a designated area of a country.

Example of a Stipend

The National Endowment for the Humanities offers grants in the form of stipends to support individuals who conduct advanced research that may be of interest to the general public or scholars. The organization has given out $5.6 billion in more than 64,000 grants.

The types of research projects eligible to receive such stipends may include books, translations, articles, digital publications, or site reports on archeologic digs. In order to receive a stipend like this, the recipient must ensure the project does more than collect data. Analysis and interpretation of the gathered information must be included.

Health and wellness stipends are growing in popularity. Microsoft offers full-time employees $1,200 per year for wellness-related expenses, such as gym memberships, fitness classes, financial advising, debt management, or massages, for example. The cost of the chosen services is reimbursed to the employee in addition to other healthcare benefits, such as medical, dental, or vision care.