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Will scandal deal a blow to Penn State fundraising?

The scandal surrounding former Nittany Lions defensive coordinator Jerry Sandusky and members of the Penn State University administration has weighed heavily on Bethlehem Township's Tom Flad, a major alumni donor who, with his wife Karen, have committed $4 million to the football, rugby, Italian language and literature and liberal arts programs.

A 1974 graduate who once dined at recently ousted Penn State football coach Joe Paterno's home, Flad said he was sickened and angered by the allegations of child sexual abuse contained in a state grand jury's report on Sandusky, but is convinced the university will bounce back, with "resolve, toughness and determination."

"It will take time," Flad said in an email. "It will take tremendous work. And, it will take continued support of time, energy, and money from its vast alumni base of hundreds of thousands. There are many faces to Penn State. I know the vast, overwhelming majority of Penn Staters will not allow their beloved university to do anything but become even greater."

Whether Flad's hopes are realized in the aftermath of the emotionally charged and scandal that has overtaken Penn State remains to be seen.

In 75 percent of cases they examined, NCAA scandals resulted in decreased overall charitable donations, researchers at Northern Kentucky University concluded in a 2008 article in the International Journal of Sport Management and Marketing.

But the study also found that alumni contributions to university athletic programs increased in 73 percent of the cases.

"Some donors will pause, just to see how the institution addresses the issue," said Rae Goldsmith, a vice president with the Council for Advancement and Support of Education, a marketing and fundraising resource for colleges. "They will likely return once they have been convinced the issue is being addressed appropriately."

For Penn State, the stakes are high. The school's endowment and similar funds increased by a record $392 million in fiscal year 2011 and the total market value reached an all-time high of $1.83 billion,, according to a report to the board of trustees in September.

This isn't the average NCAA scandal involving a booster giving players free cars or professors falsifying grades. The sex abuse charges make it somewhat unique, said Ellen Staurowski, a professor in the Department of Sport Management at Drexel University.

"There is an element here we haven't seen before," she said. "In some ways I'm not sure anybody could really predict what the fate of the institution is going to be relative to its peers."

The Duke University lacrosse team scandal, in which three players were accused of sexually assaulting a woman at an off-campus party in March 2006, might be the closest recent parallel, she said. The players were exonerated 10 months later.

But even in the year when the case was under investigation and in the media spotlight, Duke reported a record $341.9 million in philanthropic giving, according to the school's office of news and communications, and did not see a decline in enrollment applications.

Penn State could see donors rally around the university like they did at Duke, Staurowski said.

"With alumni who are as loyal to the institution as Penn State alumni are, they've got a lot of built-up loyalty there," she said. "My sense is they are not going to allow this to damage that institution in the long run."

Penn State alumnus Terry Pegula, who owns the Buffalo Sabres hockey team, released a statement Thursday saying that he and his family, who have contributed $88 million to build a hockey arena at Penn State, will continue to support the university.

"The events that are unfolding at Penn State University are deeply troubling and a matter of great concern to me and my wife Kim," Pegula said in the statement.

"Penn State's reputation has been severely tarnished. We are encouraged to see the university trustees have begun the process of restoring integrity and trust in the institution. This process will take a period of time and trust will need to be re-earned as a result of these recent disclosures."

Some corporate sponsors may react differently, Staurowski said. And the football program may take a hit if the scandal makes it difficult to recruit top high school prospects, she said.

Two years ago, North Dakota State University endured a scandal in which beloved longtime President Joseph Chapman resigned amid criticism of cost overruns at the president's house and questions about his fiscal management.

The home, which was to be funded by private donations, doubled in price and ended up costing $600,000 in public money. In the same year, five of the school's football players were sent packing after facing drug and drunken driving charges.

The university's mostly local donor base remained loyal, said new President Dean Bresciani, who took over in June 2010. Restoring the university's reputation with lawmakers and the public, however, required a major public relations offensive.

"The first few weeks I was here, I wasn't here," Bresciani said. "I was out and about around the state meeting with those civic and legislative leaders, making it OK for them to vent."

Penn State's next president will need to demonstrate that the college also is turning a page, he said.

"The reality is, Penn State is a great institution," Bresciani said. "This was something that was limited to a handful of people who showed poor judgment on an extreme level. The next person, I think, will be able to come in and get that context focused on."

scott.kraus@mcall.com

610-820-6745

Reporters Adam Clark and Daniel Patrick Sheehan contributed to this story

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