News and analysis
November 21, 2011

Penn State Grapples With Angry Donors

Gene Puskar/AP Images

Penn State’s president, Graham B. Spanier, and its legendary football coach, Joe Paterno, were both fired by Pennsylvania State University's board after Jerry Sandusky, a former assistant football coach, was charged with 40 counts of sexual crimes against young boys.

The child-molestation scandal at Pennsylvania State University isn’t just affecting the institution’s reputation, but is scaring away donors and alumni, who are either delaying contributing to Penn State or aren’t planning to give to their alma mater at all.

Last month, Diane DiPiero, a freelance writer from Cleveland Heights, Ohio, received a solicitation call from Penn State.

“I said I would support them,” says Ms. DiPiero, a 1986 alumna who gives the university $50 to $100 per year. “I don’t think I turned in that check yet. I was going to send it to them, but I’m going to hold off a little bit.”

Matt Barto, a 27-year-old software engineer in San Francisco who graduated from Penn State in 2008, says it’s unlikely he’ll donate to the university for the next 10 years, “until they’re able to turn the administration around.”

These sentiments aren’t a surprise to Rod Kirsch, Penn State’s senior vice president for development and alumni relations. He and his fund-raising staff have been deluged with calls and e-mails from concerned alumni these past few weeks.

“Donors are sad, shocked,” he said. “They’re angry. Some feel betrayed.”

'Severely Tarnished’

But he said it’s unclear what kind of impact the sex-abuse charges leveled against Jerry Sandusky, a former assistant football coach, will have on Penn State’s fund-raising efforts now and in the future. (Mr. Sandusky was charged this month by a grand jury with 40 counts of sexual crimes against young boys; subsequently, Penn State’s president, Graham B. Spanier, and its legendary football coach, Joe Paterno, were both fired by the university’s board.)

The scandal comes at a crucial time for the university, as it seeks to close a $2-billion capital campaign. At this point, the more than seven-year fund-raising drive has about $600-million more to go before the campaign closes in June 2014.

Some of the university’s biggest donors have voiced their displeasure with the crisis in public.

For example, Terry Pegula, owner of the Buffalo Sabres hockey team, in upstate New York, donated $88-million to his alma mater last fall, the largest gift by an individual in the university’s history, in order to build an ice arena for the men’s and women’s hockey programs.

While he and his wife say they still plan to support Penn State and its hockey programs, Mr. Pegula has taken the university to task. “The events that are unfolding at Penn State University are deeply troubling and a matter of great concern to me and my wife Kim,” he said in a statement. “Penn State’s reputation has been severely tarnished. ... This process will take a period of time and trust will need to be re-earned as a result of these recent disclosures.”

Losing Bequests

Some major donors, though, have indicated they no longer want any association with the university.

At least nine individuals have called the university’s planned-giving office and informed officials that they were going to take the university off of their estate plans, Mr. Kirsch said. Some of these bequests were valued at $25,000 to $100,000.

But the amount of potential loss is “pretty negligible,” Mr. Kirsch said.

“There’s certainly some fall off from some of this,” he said. “You have to bear in mind that we have 550,000 living alumni from Penn State. Those were fewer than two handfuls with that particular message for us. It’s really modest in the grand scheme of things.”

Many donors are taking a “wait-and-see attitude,” Mr. Kirsch said. The university has been informed of a couple of donors, who were ready to sign before Thanksgiving on a six-figure gift and the other on a seven-figure commitment. But, he said, those donors requested a few more months to review their giving before making their decisions.

Mr. Kirsch says there hasn’t been any donors who have canceled an existing pledge yet, but some have discontinued their contributions through monthly payroll deductions.

Reassuring Messages

Despite these troubling signs, Penn State fund raisers have also fielded encouraging messages from the university’s supporters. Mr. Kirsch says he’s been informed that of four or five potential major donors, who’ve never made a commitment to the university before, who say they are ready to give now as a show of support in the scandal’s wake.

And Penn State’s ongoing annual-giving campaign has continued to proceed at a healthy pace despite the the university’s recent troubles.

Phone calls to hundreds of potential annual-fund donors every evening during the past two weeks of November indicate a 10-percent increase in the amount of pledges to $514 per hour this year, versus $466 in the first two weeks of November 2010. The average pledge this year rose 18 percent to $85.81, from $72.63 in 2010.

Still, about 11 percent to 20 percent who did not give cited the scandal as a big issue on why they don’t plan to donate, Mr. Kirsch said.

This past week, he gathered 300 of his employees, talked to them at length for 45 minutes, and answered questions. He told them he doesn’t plan to cancel any fund-raising events or efforts. He told his fund raisers to actively contact the 10 most important donors on their list to reassure and listen to them.

Mr. Kirsch said, “We’ve told them we just need to proceed more cautiously in the next two to three months, which might not be quite as productive.”