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February 5, 2015; New York Times
The NCAA and Penn State settled their two-year dispute over the distribution of a $60 million fund for victims of sexual abuse weeks before trial was scheduled to start and days after a federal judge refused to rule on the constitutionality of the NCAA sanctions imposed on Penn State. Under the terms of the settlement, not only did the NCAA agree to the key demand that the fund would be spent exclusively within Pennsylvania, but also that Penn State and football coach Joe Paterno would have their football victories restored in the official NCAA records. In addition, the expiration of NCAA penalties involving bowl games and football scholarships took effect immediately.
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The lawsuit was initiated by state Senate Majority Leader Jake Corman, whose district includes Penn State. Corman also introduced a bill, later enacted into law, which mandated that the $60 million fund be spent in Pennsylvania, based on the assertion that the funds were derived from state subsidies of the nonprofit university.
Why did the NCAA reverse itself and agree to a settlement? Corman believes the key event happened in April 2014, when a Pennsylvania appeals court judge issued a ruling calling into question the authority of the NCAA to impose the sanctions against Penn State. Documents released late last year indicate that NCAA officials themselves were split over whether the NCAA could actually impose sanctions against Penn State. A court decision finding that the NCAA violated the terms of its charter and enforcement due process policies could be devastating to its role in overseeing college athletics—and the lucrative media and licensing contracts associated with sports like college football. The statement by Penn State that the NCAA had “legitimate and good faith interest and concern regarding the Jerry Sandusky matter” is a far cry from conceding NCAA authority to impose sanctions.
The good news, according to Matthew Haverstick, attorney for Sen. Corman, is that the long-delayed disbursement of the $60 million fund to help prevent sexual abuse and support sexual abuse victims will begin soon. Corman’s advocacy in both legal battle and legislative efforts reaped significant benefit for his constituents, especially including Penn State. The bad news, according to victims’ advocates, is that the settlement appears to let Penn State off the hook. Celebratory statements by Penn State fans and discussions of restoring Paterno’s statue to its location outside Beaver Stadium seems like a slap in the face.
The Penn State-Sandusky-Second Mile scandal is notable for the involvement of multiple nonprofit entities: a state-sponsored nonprofit university (Penn State), a charity (The Second Mile), and a nonprofit body regulating college athletics (NCAA). NPQ has reported on the lessons to be learned from analyzing the governance of The Second Mile and Penn State. It’s nothing short of amazing that one man’s sexual abuse of boys could lead to exposing the leadership deficiencies of multiple tax-exempt entities with extensive resources and capacity to model best practice governance and management, much less conduct effective risk management through effective—and followed—policies and procedures. Nonprofit sector professionals may be especially quick to criticize the actions of the organizations involved and their leaders, but the same professionals should pause to consider how their organizations, and especially their leaders and policies, might be tested should a scandal erupt in their midst.—Michael Wyland