Linda Norgrove, from Lewis, had been working in Afghanistan when she was seized by rebels in September 2010.
She was killed during a rescue attempt by US special forces the following month.
The Linda Norgrove Foundation has so far helped to establish a new school in Kabul in Afghanistan.
It has also awarded university scholarships to 44 girls, five of which are studying medicine, and provided assistance to women's projects.
The charity was set up by 36-year-old Ms Norgrove's parents John and Lorna, who still live in Lewis.
Mr Norgrove told BBC Scotland: "It took our minds off the tragedy of Linda's death.
"The pain does gradually go away with time although it never disappears."
He added: "Four out of 10 people in Afghanistan are under 15 years of age. It is a very young country and their only experience has been one of conflict.
"You cannot just stand by and not help."
Mrs Norgrove said many of the girls the charity had helped regarded her daughter as a role model.
She also said that she believed her daughter would have a mixed response to the idea of her parents setting up a charity.
Mrs Norgrove said: "I think Linda would be both surprised and pleased that we are doing something to help a place she grew to love."
A joint UK and US investigation found that Ms Norgrove was killed by a grenade thrown by one of the American special forces soldiers trying to rescue her.
Her parents spent seven hours with UK and US officers going through the findings, which included footage of the rescue mission.
They said watching the video of the rescue had been "harrowing".
A charity set up in memory of a Scots aid worker killed in an attempt to free her from kidnappers five years ago has raised £1m for good causes so far.