In the biggest donation made in recent years to a Washington area university, the estate of a Fairfax County businessman has agreed to give $20 million to George Mason University.

The bequest comes from the estate of Shelley Krasnow, who founded Georator Corp. of Manassas in 1950 and manufactured generators and alternators for General Electric, Rockwell International and the Pentagon.

Krasnow, who lived in a historic house built around a log cabin in Fairfax, died there of cardiopulmonary arrest on Sept. 25, 1989, at the age of 82.

The money will be used to establish the Krasnow Institute for Advanced Study, which had been a dream of Krasnow's for more than 20 years, officials of the university in Fairfax County said. The George Mason center is envisioned as a place where prominent scholars will gather, read, write and think without bureaucratic restrictions, as they do at the 60-year-old Institute for Advanced Study in Princeton, N.J., where Albert Einstein once worked.

Although each of the scholars would be obligated to either teach or advise students at George Mason, their contact with undergraduate classes would be limited to free them for personal projects, officials said.

The university plans to begin construction this summer on a $4 million, six-building cluster for the center on a five-acre tract at Shenandoah Lane and Roberts Road on the outskirts of the George Mason campus.

Krasnow's gift dwarfs any other received in the 18 years since George Mason became an independent university, and it equals two-thirds of the school's previous endowment of $30 million.

"It comes at a very, very good time for us, at a time when we're going through potentially calamitous budget cuts which would slow our momentum and just wreck so much of the feel of the place," said George W. Johnson, president of the 20,000-student university.

By tapping into an extensive network of well-heeled supporters, including prominent Northern Virginia developers such as John T. "Til" Hazel Jr., Johnson has secured enough money to lure big names such as former judge Robert H. Bork and sociologist Seymour Martin Lipset to the George Mason faculty. His strategy paid off in 1985, when economist James M. Buchanan won the Nobel Prize and won the school a bonanza of national attention.

The Krasnow bequest could have the same effect, educators said yesterday.

"It's the same thing that Nobel Prizes do. It brings a certain amount of luster to a school, particularly one on the rise like George Mason," said Robert Atwell, of the American Council on Education.

In the months before Krasnow's death, his friend Sidney O. Dewberry, a prominent engineer, introduced Krasnow to Johnson and George Mason Senior Vice President J. Wade Gilley.

Krasnow was initially skeptical, according to friends, because he wanted no limitations on the scholars brought to the institute. But Johnson and Gilley impressed him with their willingness to encourage academic experimentation, friends said.

Gilley sent an assistant, Steven Diner, to Princeton to research the institute there and presented a report to Krasnow in the summer of 1989. Gilley recalled that Krasnow was particularly receptive after reading a magazine article about George Mason's entrepreneurial spirit.

"He became excited about who they were and where they were going," said lawyer Mark P. Friedlander Jr., a friend and next-door neighbor of Krasnow's who is acting as executor of the estate.

The possibilities were discussed during three or four breakfast meetings, but Krasnow died before the deal could be settled. His wife, Alice, had died in 1981, and he had no children.

Friedlander said the will was flexible enough to allow him to decide to pursue the project with George Mason, and after more than a year of discussions with Gilley, a memorandum of understanding was signed late last month.

The $20 million is to come largely from the sale of 39 acres of land that Krasnow owned along Pickett Road straddling Fairfax City's eastern border with Fairfax County.

Friedlander and Gilley say they will apply to the City Council and Board of Supervisors for town house zoning density, which would make the land more valuable.

The land then would be sold to a developer to provide the money for the institute; the exact amount of the donation will depend in part on the selling price of the land.

After construction and administrative expenses are paid, the rest of the donation is to be used for an endowment to bring prominent scholars to the institute for terms of up to 10 years.

Krasnow had no heirs. Georator Corp. will be sold. A $3 million bequest will go to the Richmond-based Virginia Foundation for Independent Colleges.

"I'm lucky to have met Mr. Krasnow, and it's a real opportunity to have helped a visionary man like Shelley Krasnow make his dream come true -- even after he died," Gilley said.