imo this is just the next step towards college football becoming a minor-league NFL. NIL and collectives still matter but the playing field will be much more level. Think about the NFL - why doesn't every free agent go to NYC or LA? Why don't random fans donate money for player salaries? Because the money directly from the team is the biggest factor by far.
What's interesting is to see how different schools allocate the $20mm. First of all, no one seems to know for sure if Title IX applies yet. Beyond that, do some schools go all-in on smaller sports (ie Duke with basketball, Vandy with baseball) or do those same schools use this as an opportunity to actually get good at football (ie Duke/Vandy putting all $20m to football would suddenly make them a serious contender).
As for the "where will schools get the money from when their athletic departments are losing money" question...schools will just lose more money in athletics and subsidize it from other places. Sticking with Duke and Vandy examples, both are small schools with endowments in the $10 billion range. $20mm/year is a drop in the bucket, especially if it is partially offset by additional revenue from winning.
Bottom line - this feels like a complete ground-shift in the college sports landscape. We're gonna see random P5 schools suddenly pop up as contenders in a variety of sports depending on how each one decides to allocate this.