First, organizations are legal entities which can act with some of the same rights a person, like entering contracts and making binding agreements. They can't exactly be convicted of crimes or locked up in jail, but they can face civil penalties and other
legal consequences laid out in contracts their representatives have signed.

Penn State had a deeply flawed culture that knowingly enabled child molestation. That taint sticks to everyone in the athletic department whether they were involved or not. To fix that culture, the university or the NCAA could take away college sports for a few years while the people in the athletic department leave to new jobs or careers, and then a few years later the university starts over from scratch with a completely new staff with no connection to the Sandusky coverup.

The NCAA couldn't do anything more than prevent Penn State from competing against other NCAA members. They could not send anyone to jail or take eligibility from anyone not involved in covering up the sexual abuse. Rather than completely cleaning house, the NCAA just reduced the number of football scholarships Penn State had available to give out, barred them from competing in NCAA sanctioned post-season play, and gave players the option to transfer. The NCAA targeted the university for punishment and tried to spare the players and give them a chance to switch schools.

The NCAA is a legislative body with lots of rules voted on by member schools, and member schools agree to self-report violations as soon as they uncovered or the school will face sanctions. You probably won't get a hold on all the rules schools agree to as members or know any of the expensive lawyers the NCAA employs to back them up, but I'm pretty sure that they have rules about putting sexual predators in positions of authority over 17 and 18 year old students living on their own for the first time, and for disclosing serious crimes committed by staff to the NCAA. They are also in the middle of a major initiative to reduce sexual abuse on college campuses and prevent schools from enabling sexual violence like Penn State did with Sandusky (http://www.ncaa.org/about/resources/media-center/news/ncaa-convenes-commission-sexual-violence).