Unintended consequences: How NIL in college sports has raised questions about nonprofits

Associated Press

NEW YORK (AP) — The entrance of name, image and likeness deals in college sports has raised questions about what it means to be a tax-exempt charitable organization. It’s just one of many consequences of a Supreme Court decision in 2021 that allowed college players to get sponsorship deals or otherwise be compensated for endorsements. After the decision, some donors and fans set up nonprofits to facilitate NIL deals with players and successfully applied for tax-exempt status from the Internal Revenue Service. But last June, the IRS advised that in most cases, paying players isn’t a charitable cause. More than a year later, some nonprofit NIL continue to operate.