Jocelyn Bell Burnell, who won a Special Breakthrough Prize in Fundamental Physics on Thursday for her work in discovering pulsars, wants the money to help people from underrepresented groups gain a foothold in the world of physics.
Bell Burnell, who was overlooked for the Nobel Prize in 1974 while her male colleagues received the award, has also been honored for her leadership.
"I don't want or need the money myself and it seemed to me that this was perhaps the best use I could put to it," she told BBC News on Thursday.
"I found pulsars because I was a minority person and feeling a bit overawed at Cambridge. I was both female but also from the northwest of the country and I think everybody else around me was southern English," she said.
"So I have this hunch that minority folk bring a fresh angle on things and that is often a very productive thing. In general, a lot of breakthroughs come from left field."
The 75-year-old, who was born in Northern Ireland, studied at Cambridge University where she made the groundbreaking discovery of pulsars as a graduate student in the mid-1960s.
The Breakthrough Prize selection committee's statement described pulsars as "marvels of nature. They are stars roughly the size of San Francisco with masses comparable to the Sun's. They are rich in neutrons (particles found in the nucleus of atoms) and can spin so rapidly that their surfaces move at a significant fraction of the speed of light."
Edward Witten, the chairman of the selection committee, said in the statement that Bell Burnell's discovery was "one of the great surprises in the history of astronomy."
"Until that moment, no one had any real idea how neutron stars could be observed, if indeed they existed. Suddenly it turned out that nature has provided an incredibly precise way to observe these objects, something that has led to many later advances."
Bell Burnell's work on pulsars "still stands as one of the most significant discoveries in physics and inspires scientists the world over," said Julia Higgins, president of the Institute of Physics,
which will receive the donation.
"Alongside her scientific achievement, Jocelyn has become a hugely respected leader in the scientific community. She has been instrumental in making sure the issue of access to science by people from under-represented groups is at the very top of the science community's agenda," Higgins added in a statement.
"We at IOP are delighted to receive this donation from Jocelyn and are looking forward to working with her to develop a programme that opens doors to physics for people from every walk of life."
Bell Burnell, a former IOP president, will receive her prize at a ceremony on November 4.