The IRS is monitoring the use of an increasingly popular method for funneling cash to college athletes, declaring that so-called name, image and likeness (NIL) collectives generally can’t be structured as charities.
Since the NCAA changed its rules in July 2021 to let college athletes sign endorsement deals, scores of collectives sprung up alongside universities, some claiming charitable status so they can solicit tax-deductible donations from rich supporters to pay athletes.
A recent memo from the IRS’s Chief Counsel’s office, however, stated that donations to nonprofit NIL collectives are not tax-exempt because many of the benefits given to college athletes serve those players’ private interests.
The IRS's position does not challenge the collectives' ability to pool money and disperse it for NIL purposes — only the tax-exempt nature of the donations. Read more.