Family and friends contributed to a scholarship fund in our loved one's name. What is the best way to respond to this in a thank you note?

Thank you for your contribution to XYZ in memory of {my son/husband/whatever} XYZ.

We appreciate your generosity.

I like JudyKayTees and would also suggest you add something a little more personal about the person you've lost to the note. For example, something like, "As you know, David's great passion was English Literature, and it means the world to us to know that another student can pursue that same passion in his honor."