Penn State fundraisers quietly running defense on Sandusky scandal

McClatchy NewspapersDecember 1, 2011 

STATE COLLEGE, Pa. — Penn State Nation has a stealth army of alumni, a half-million strong stretching from the Florida Keys to Alaska.

They always have given their alma mater their loyalty, gratitude and money — lots of it.

But after the appalling revelations of the past month, some Penn State benefactors big and small are snapping shut their checkbooks. It's a critical problem for a school that already is reeling and doubtless faces more bruising headlines in the months to come.

In response, the school in recent days has launched a quiet outreach effort to deep-pocketed alumni, aimed at ensuring the university's most important donors remain on board.

December always is the top month for giving, and the next few weeks can make or break many non-profits' entire year.

But this year, instead of closing the deal with many alumni, Rodney P. Kirsch, the school's top fundraiser, is engaged in full-fledged damage control.

Since news erupted about allegations that former Penn State football coach Jerry Sandusky sexually abused eight boys — and questions arose about whether Penn State officials ignored one instance of abuse — more than a dozen people who had planned to leave inheritances to the school have changed their wills to exclude Penn State, Kirsch said. Another donor canceled a $300,000 pledge.

"There are no ifs, ands or buts about it: This will hurt the school, as far as fundraising," said Patrick Malloy, class of 1965.

In 2007, Malloy gave Penn State $5 million for the creation of an endowment in the name of his longtime friend Joe Paterno, the iconic coach who was fired Nov. 9.

No surprise, then, that Malloy received a call from one of new President Rodney Erickson's top lieutenants last week, seeking his continued support. Penn State got the answer it wanted: Malloy, of Key Largo, Fla., said he "won't think twice" about giving again.

Buffalo Sabres owner Terry Pegula, whose $88 million gift for the creation of a Penn State hockey team in 2010 was the largest in school history, voiced similar support to the university during an interview with a Canadian television station two weeks ago.

But others have been far more restrained, if not downright dismissive of Kirsch's overtures. They gave voice to the shame and anxiety that still permeates Penn State, from administrators to faculty down to the student body.

Erickson, who replaced besieged predecessor Graham Spanier on Nov. 9, wants to begin moving forward. But how does the school, with 96,000 students at campuses across the state, build for the future when it seemingly is paralyzed by crisis?

"I don't know if there's been a scandal like this before," said Mark Dyreson, a professor in Penn State's Department of Kinesiology. "Image is an important thing in American universities. There's still an undercurrent of deep unease.

"I think people here are truly nervous about what else might come out."

Cut through the emotions and stigma, and Penn State's fundamentals remain strong. Erickson told some 400 students at a town-hall meeting Wednesday night that Penn State is trending ahead of last year's record number of applicants (55,411) and employers still covet the school's graduates.

Major corporate partners such as Pepsi are, by and large, hanging tough.

And while short-term fundraising will surely suffer, in most years, donations only make up 6 percent of the university's roughly $4 billion annual budget. Furthermore, the school's multi-year fundraising initiative had generated $1.38 billion as of July, and to date remains ahead of schedule.

However, any charitable losses would come on the heels of a huge drop in state support.

The state's 2011-12 budget cut the school's taxpayer contributions by nearly 20 percent. Penn State still received $279 million, including money for its medical center, from the state this year. Hoping to recoup some of those cuts, the university is asking lawmakers for $294 million next year.

Pennsylvania state Sen. Jake Corman, who is chairman of the Appropriations Committee, said it is probably too early to gauge the scandal's potential impact on state funding. But he has heard concerns about the university's expected steep legal fees and who will pick up that tab.

"I'm sure that during the appropriations hearing that will be a topic of discussion," Corman said. "Depending on the answer, we'll see how significant it is."

And state Sen. Mike Stack on Thursday released a letter he sent to Erickson questioning how the university intends to handle potential settlements in civil cases arising from the Sandusky allegations.

Dried-up fundraising would only make matters worse.

While gifts rarely are used for basic operating costs, they do go to faculty endowments, grants for new construction and academic scholarships.

Which means Penn State might not be able to grow as much as planned, could struggle to hire the best and brightest, and could disappoint promising students in need.

The news doesn't get much better for the athletics department.

Of its roughly $90 million annual budget, 28 percent comes from the Nittany Lion Club, the department's fundraising arm. A significant drop-off in giving would hurt not just the football program, but also the school's non-revenue sports that rely on football money to survive. Efforts to reach Ken Cutler, the Penn State athletics' director of development, were not successful.

"This is like the mother of all (scandals)," said Pete Garcia, the athletic director of Florida International University in Miami. "You're not talking (about) it taking a couple of months to get out from underneath. You're talking a couple of years.

"For the next five, 10 years, people will still be bringing it up."

And while the true fundraising shortfall won't be known for at least six months, the news hasn't been all grim for Kirsch. Now that the darkest days have apparently passed, the school has received two substantial gifts from still-supportive alumni in the past few weeks.

"They basically said, 'We're staying the course with the university,'" Kirsch said.

(Beasley writes for the Miami Herald and can be reached at abeasley@miamiherald.com. Danahy writes for the Centre Daily Times and can be reached at adanahy@centredaily.com.)

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