In 2006, voters in Michigan approved Proposal 2 which banned preferential treatment based on race or ethnicity in college admissions. The law also prevents universities from accepting donations for race- or gender-specific programs. Proposal 2 effectively outlawed U-M’s practice of using race as one of many factors it considered in the admissions process. The fall after the law was passed, the Ann Arbor campus saw one of the least diverse first-year classes enrolled in recent history. In response, the Alumni Association established the LEAD Scholars program in 2008 to ensure every student who dreams of attending U-M that the climate is welcoming and their success is supported.

The scholarship is given to those who embody leadership, excellence, achievement, and diversity. Once an underrepresented minority student has been admitted to U-M, they are eligible to apply for a LEAD scholarship. The LEAD scholarship provides a four-year renewable scholarship with a minimum $5,000 award annually. In addition, the LEAD program provides a comprehensive community experience for all students. The Alumni Association — independent from the University — takes full financial and administrative responsibility for this program, with the help of donors and the Alumni Association Board of Directors.