Some nonprofit NIL collectives may not qualify as tax-exempt

NT80 · July 1, 2023

"The rapidly expanding landscape of nonprofit, donor-backed collectives paying college athletes to promote charities has been hit with a potentially seismic disruption.

A recent 12-page memo from the Internal Revenue Service determined that, in many cases, such collectives may not qualify as tax-exempt if their main purpose is paying players instead of supporting charitable works."

"Opendorse, a company that partners with schools to help initiate, track and monitor NIL deals, projected nearly $1.2 billion flowing through the industry in 2023."

https://www.espn.com/college-sports/story/_/id/37939005/some-nonprofit-nil-collectives-not-qualify-tax-exempt

greenminer · July 1, 2023

To my understanding, the intent of NIL was never charitable: it was to pay players for their Name, Image, and License.

NT80 · July 1, 2023

8 hours ago, greenminer said:

To my understanding, the intent of NIL was never charitable: it was to pay players for their Name, Image, and License.

The whole thing has just turned into bribery....buying and stealing players.

97and03 · July 1, 2023

14 hours ago, greenminer said:

To my understanding, the intent of NIL was never charitable: it was to pay players for their Name, Image, and License.

Correct, but it would have to be charitable to receive the tax designation. Light the Tower might be in better shape due to how they do their arrangements with players.

GrandGreen · July 2, 2023

NIL should be deductible if it is a legitimate business expense. Meaning that the payee would have to provide something of value for the NIL money.

First the payor would have to actually have a business that benefits from the NIL. Any kind of collective should not qualify when they are not providing goods or services to a customer base.

Because the NIL should not be connected to the school, it is not a charitable donation.

It will be very interesting, how the IRS handles NIL.

peanuts104 · July 2, 2023

On 7/1/2023 at 12:25 AM, NT80 said:

"The rapidly expanding landscape of nonprofit, donor-backed collectives paying college athletes to promote charities has been hit with a potentially seismic disruption.

A recent 12-page memo from the Internal Revenue Service determined that, in many cases, such collectives may not qualify as tax-exempt if their main purpose is paying players instead of supporting charitable works."

"Opendorse, a company that partners with schools to help initiate, track and monitor NIL deals, projected nearly $1.2 billion flowing through the industry in 2023."

https://www.espn.com/college-sports/story/_/id/37939005/some-nonprofit-nil-collectives-not-qualify-tax-exempt

Players wanted to be treated as employees, fine. Actions meet consequences. And I hate the IRS, but if they didn't see stuff like this coming with the change, well, maybe it was a bit short sighted.

outoftown · July 3, 2023

Productive but not great College players have never been better paid than right now. And likely never will make more than right now. Donor fatigue is real and when folks figure this out it will reduce the amounts going to NIL.

Add the enrollment cliff and the problems in linear tv probably stopping the limitless increase that has been coming in revenue, and I think schools will fight hard for some of that donor money to come back to them, where donors don't have to worry about whether it counts as charitable.

Edited July 3, 2023 by outoftown

UNTethered Eagle · July 3, 2023

But what about the kids?!? Won’t anyone think about the kids?!? How will they every make any money as a student athlete if donor fatigue and tax hurdles slow NIL donations down?!?!?

NT80 · July 3, 2023

4 hours ago, outoftown said:

Productive but not great College players have never been better paid than right now. And likely never will make more than right now. Donor fatigue is real and when folks figure this out it will reduce the amounts going to NIL.

Add the enrollment cliff and the problems in linear tv probably stopping the limitless increase that has been coming in revenue, and I think schools will fight hard for some of that donor money to come back to them, where donors don't have to worry about whether it counts as charitable.

I think there has to be some sibling jealously going on also within these programs. Football players and men's basketball stars have all the NIL spotlight for $. How about the star softball pitcher or the stud track, soccer and golf athletes. The marching band and cheerleaders want some of the $$ action too. There will eventually be pushback from team to team within a program about who gets a piece of the pie.

NT93 · July 3, 2023

33 minutes ago, NT80 said:

I think there has to be some sibling jealously going on also within these programs. Football players and men's basketball stars have all the NIL spotlight for $. How about the star softball pitcher or the stud track, soccer and golf athletes. The marching band and cheerleaders want some of the $$ action too. There will eventually be pushback from team to team within a program about who gets a piece of the pie.

I agree.

The argument some people make for NIL is that the athletes are being taken advantage of by the schools. “The schools make millions and the kids don’t get any of it.” That’s only the case in football and men’s basketball. Probably every other sport operates in the red or with minimal profit. I just don’t see how anyone other than football or basketball players (as a general rule) can expect to be paid NIL $$.

Glory to the Green · July 3, 2023

1 hour ago, NT80 said:

I think there has to be some sibling jealously going on also within these programs. Football players and men's basketball stars have all the NIL spotlight for $. How about the star softball pitcher or the stud track, soccer and golf athletes. The marching band and cheerleaders want some of the $$ action too. There will eventually be pushback from team to team within a program about who gets a piece of the pie.

I believe we just lost a male track athlete to this. I can’t recall his name, but from the vague tweet, it seemed like he wanted some NIL money and was not receiving what he felt he was worth.

greenminer · July 3, 2023

4 hours ago, NT80 said:

The marching band and cheerleaders want some of the $$ action too.

Lol what a curve ball

marching band does not operate under the budget of athletics, and I doubt anyone cares enough to fork over any amount of money to keep Jeff Leadsmith to play the trumpet solo on Malagueña.

even if there’s intere$t, it won’t fall under the cares or give-a-shits of the NCAA since they are not competing NCAA athletes.

Edited July 3, 2023 by greenminer

DentonLurker · July 3, 2023

Giving $'s to a player is not charity. As such, the money given to these collectives is not and should not be considered a tax benefit to the "donor."

Dannymacfan · July 4, 2023

On 7/3/2023 at 11:02 AM, NT80 said:

I think there has to be some sibling jealously going on also within these programs. Football players and men's basketball stars have all the NIL spotlight for $. How about the star softball pitcher or the stud track, soccer and golf athletes. The marching band and cheerleaders want some of the $$ action too. There will eventually be pushback from team to team within a program about who gets a piece of the pie.

Yes but they generate all of the revenues genreally.

NT80 · July 5, 2023

On 7/3/2023 at 3:14 PM, greenminer said:

Lol what a curve ball

marching band does not operate under the budget of athletics, and I doubt anyone cares enough to fork over any amount of money to keep Jeff Leadsmith to play the trumpet solo on Malagueña.

even if there’s intere$t, it won’t fall under the cares or give-a-shits of the NCAA since they are not competing NCAA athletes.

It's all part of the AD's "production" of a football game. It's atmosphere and noise = crowd participation = home field advantage = winning. Everyone should have a piece of the pie.

Monkeypox · July 6, 2023

What sucks about this is that it wouldn't be that hard to do it correctly.

So boosters want to pay the athletes to visit a local hospital or put on a clinic for kids or something like that. Set up a charitable collective to do that. The problem is that too many of them had a very narrow scope and weren't/aren't really spending their money on the charitable work and instead all the money is going to the players to maybe show up at an event once or twice a year. That's not really a charitable organization.

It COULD and SHOULD work, but your focus should be on the charitable work, with the bonus of using NIL to pay the athletes to be taking part in the charitable work. But of course, that's not what these wealthy d-bags are doing.

But you'd have to get boosters on board with some of their money being used for administrative and overhead costs of ACTUALLY running a charity, not just them rubbing elbows with athletes on social media.

NT80 · July 6, 2023

Yes, what it should be is donors paying to fund a charitable situation for the athletes to participate in and earn some extra funds to help pay for their college life...

What it actually is at many large programs are greedy donors who want to buy players (wins), and mercenary players that will play for anyone that bids high enough for them. Charity is not even a consideration.

Jonnyeagle · July 6, 2023

43 minutes ago, NT80 said:

Yes, what it should be is donors paying to fund a charitable situation for the athletes to participate in and earn some extra funds to help pay for their college life...

What it actually is at many large programs are greedy donors who want to buy players (wins), and mercenary players that will play for anyone that bids high enough for them. Charity is not even a consideration.

But if the coaches can make millions and the ADs get rich why can’t the players expect a little extra?

Also if NIL is based on name image and likeness, why do some teams like SMU pay 30k salaries to every scholarship player? Are all of those players truly earning that NIL?

Monkeypox · July 6, 2023

3 hours ago, NT80 said:

Yes, what it should be is donors paying to fund a charitable situation for the athletes to participate in and earn some extra funds to help pay for their college life...

What it actually is at many large programs are greedy donors who want to buy players (wins), and mercenary players that will play for anyone that bids high enough for them. Charity is not even a consideration.

Well, my point is these are two separate things.

You want to pay players for NIL. Fine. But don't try and create a non-profit and act like you're running a charity when you're running a payer-playing scheme. Run a legit charity or pay players for "NIL" and pay taxes on it, you greedy c*nts.

outoftown · July 7, 2023

8 hours ago, Monkeypox said:

Well, my point is these are two separate things.

You want to pay players for NIL. Fine. But don't try and create a non-profit and act like you're running a charity when you're running a payer-playing scheme. Run a legit charity or pay players for "NIL" and pay taxes on it, you greedy c*nts.

Agree. If you 'donate' money in exchange for a tangible return to your personal interest, usually that is not called donating, its called buying.

If in a ptw mobile phone game I 'donate' money in exchange for a tool/character/player and pay through googlepay, don't I pay a sales tax? Why should the donors who 'donate' money in exchange for a player not have to pay a tax?

Edited July 7, 2023 by outoftown