Beginning this year, donations to colleges and student groups exceeding $5,000 will take a pit stop at the Office of University Development for 90 days while Penn State pockets the interest, a university official said.
"It's not something, to be perfectly frank, that we wanted to publicize," said Peter Weiler, vice president for university development.
Now in its "quiet phase," the For the Future campaign, which aims to raise $400 million in student scholarships over seven years, will use the collected interest from donations to defray the operational costs of fundraising.
"It costs money to make money," Weiler said. "The argument is not a difficult one to make."
For the Future began its "leadership gifts phase" on Jan. 1, 2007, according to Penn State Live, live.psu.edu.
Though the Penn State Board of Trustees approved the initial campaign, Weiler added that he didn't think they "got into details" like this policy.
Penn State President Graham Spanier and Jean Songer, chief financial officer, approved this policy, he said.
Stanley Degler, Class of 1951, who regularly donates scholarship money to the College of Communications, said he wasn't aware of the policy.
"It's news to me," he said. "I'm not sure what I think about it. It doesn't sound like a good idea. Once Penn State gets my check, they've got the money in any event. It ought to go immediately where the donor intended it to go."
Another donor, Marvin Krasnansky, Class of 1952, said the "gift holding" initiative caught him off guard.
"I wasn't aware of this. I have mixed feelings," he said. "I understand the need for it, but, as a contributor, I would feel more comfortable if the organization got the money in a more timely basis."
Deeming it the least intrusive method, Amber Krieg, director of development for Student Affairs, said bearing "gift taxes," which entails seizing a percentage of donations up-front, was considered by the Office of University Development.
"We also looked at [holding it for] six months or a year, but to hold the money that long would impact an organization," Weiler said. "Most of the money is going to the colleges, and most of the colleges can get by on what they have. It will still affect the way they do business, but in the course of a fiscal year, they will get that money."
Other state-related schools in Pennsylvania handle matters differently.
"Unless we are directed by the donor to put it in an interest-bearing account, we donate the whole amount to the specific fund immediately," said Kris Domingo, assistant director of advancement services at Temple University.
At Lincoln University, Janice Lombardo, manager of gift processing and records, said she has 24 hours to deposit donations in the accounts for which they were intended.
No policies similar to Penn State's exist at the University of Pittsburgh, either.
"We don't keep any piece of it to support our fundraising," said Karen Whitehead, director of advancement operations at Pittsburgh. "It all goes to the allocation that the donor asked for. The university pays our budget, not the donors."
Though the policy is geared toward the millions of dollars received by the academic colleges each year in scholarships, some student groups who have received donations in the past seemed suspicious of the policy.
"This policy is a grave threat to our operation within Student Affairs. If the university can simply withhold money that's rightfully ours for as long as they want, how is there a guarantee they won't just decide to keep it even longer someday?" Tom Shakely, vice president of the Lion 90.7 FM, said of the campus radio station that has been struggling for funds since its contract with Student Affairs expired in 2003.
Others said the effects would be conditional.
"I hadn't been made aware of this," said Aaron Kaufman, director of Penn State Hillel. "The impact would depend on the circumstances in terms of the size of the gift and when it comes in."
As an alumnus and contributor, Peter Tombros, chairman of For the Future, said he doesn't think the "donor-friendly" policy will negatively impact the university, calling it a "non-issue."
"I'd be willing to even pay a tax or a fee, so we can have good fundraising activities," Tombros, Class of 1964, said. "If we don't increase our contributions, we will have to put more pressure on tuition."
