You money is invested in Univ. Endowment which is managed like a mutual fund. You know how many shares you have all the time. If you specify a program you wish to endow (for example scholarships in Chemistry). Moreover, you can stipulate conditions how your endowment is distributed. After you done this, the program takes ownership. The program becomes the sole guardian. You can cover all your stipulations in a Trust that Penn State Admin. must sign off. Penn State allows you to fund scholarships for students in medical, law, science, or engineering colleges. Any other college will work just as well. I like Penn State over Ivy schools, Ivy schools are well endowed while Penn State Endowment is good but not robust enough to serve the needs of large student body. Penn State has many nation's best student who should be rewarded with scholarships. You can specify all of this ……….
All of this is true--but does not change the fact that the money is at least semi-fungible.
But I would say that if you endow a specific named scholarship (not the general scholarship fund), you are probably closest to the goal. It's not a scholarship they would have been funding anyway, so that reduces the fungibility quite a bit. Creating an endowed chair? That's a bit different, as whoever gets that Chair would have to have been paid anyway--making the funds quite a bit more fungible. Thon? Much as I respect the charity--it's fungible money. The researchers don't get a "bonus" if Thon brings in more cash.
BTW, and slightly off topic, I assume the OP, Bill is the Bill I knew in the Chem department back in the day??
Do either of you know what PSU charges fro managing the money and administering the endowment/scholarship? At the schools I've seen, the costs are ridiculous.