The $12 million payment is the first installment in a $60 million penalty for university officials' failure to report the allegations of sexual abuse against Sandusky.
Sandusky was a longtime assistant football coach on Joe Paterno's staff who was convicted of molesting young boys for several years, sometimes on school property.
The pending Dec. 20 payment will be put into a money market fund at the request of the NCAA, the Centre Daily Times in State College, Pa., said Sunday. The funds will become part of an endowment benefiting charities to be determined.
The NCAA pledged to keep at least 25 percent of the endowment inside Pennsylvania; however some officials and civic leaders in the State College area want it spent closer to home since that is where the crimes occurred.
2014: The Year in Music [PHOTOS]