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<p>The difference is that Michigan has an endowment of $7.7 billion, while Penn State has an endowment of $1.8 billion. That’s more than 4-to-1 in favor of Michigan. At a standard payout of 5% on endowment, Michigan would generate $385 million a year from its endowment, while Penn State would generate $90 million from its endowment. In that context, the $10 million raised annually by THON is more or less chump change. </p>
<p>If THON adversely affects Penn State’s own fundraising, it would much more likely be in annual giving (which goes directly into this year’s operating budget), not in endowment. Like most universities, Michigan and Penn State aren’t very transparent about how much they generate in annual giving, but there doesn’t appear to be much difference between the two schools on that score. US News reports Michigan’s average annual giving rate is 17%, #61 among national universities, while Penn State’s annual giving rate is 16%, good for #71. Neither school does particularly well in that regard, but no surprise there; public universities generally don’t do terribly well in annual giving, partly because they have such huge alumni bases, partly because they don’t have the administrative machinery to cultivate annual alumni giving, partly because the cultural norm, especially among older alumni, is that this is something the state should pay for, and “I already paid through my tax bill” (even though states have actually drastically cut back their subsidies of public higher education).</p>
<p>Michigan also brings in about 60% more in federal research dollars than Penn State-- roughly $750 million annually for Michigan v. about $465 million for Penn State. Most of that money is spent on research, of course, but that funds a portion of faculty salaries and student research assistantships, and on top of that universities typically take a cut known as “indirect cost recovery” to pay for part of their general overhead.</p>
<p>Because it has a stronger and more diversified financial base, Michigan has been better able to weather the reduction in state funding. That also explains why Michigan is able to give out about $135 million annually in institutional need-based and merit aid, while Penn State gives only about $42 million to a substantially larger undergraduate student body (about 39,000 at Penn State v. 28,000 at Michigan).</p>