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Does IRS Memo on Tax Deductions for NIL Collective Donations Have Local Ramifications?

The Philadelphia Inquirer

An IRS memo written in May, made public in early June, got noticed pretty quickly around the local college sports landscape.

“Did you read that Wall Street Journal story?”

“Saw it already on [another] site.”

The memo was written to address “whether developing paid name, image, and likeness (NIL) opportunities for collegiate student-athletes furthers an exempt purpose …”

The gist of it, can these new NIL collectives set up as nonprofits offer tax deductions to donors? La Salle and Temple both had such 501(c)(3)s. Interestingly, the two collectives are interpreting the memo in different ways, maybe based on how they promoted them to donors.


Most collectives are not set up as nonprofits. Villanova’s primary collective, Friends of Nova, is not, for instance. Cody Wilcoxson, an attorney at Blank Rome who has the Tuff Fund as a client and is looking closely at the entire NIL landscape, said he wasn’t surprised by the IRS memo.

Seeing state and federal entities jumping in to look at what is going on, Wilcoxson said the question was, “Who is going to be the first entity that is going to crack down on the collectives? I think a lot of people thought it would be the IRS.”

Wilcoxson said the nonprofit collectives will have to pass a test on how they were set up, “for public benefit and incidental private benefit. … This is not a new test. You always have been able to pay contractors and vendors and employees of your nonprofit a reasonable compensation. … It has to be necessary to what you’re trying to accomplish.”

To read the full article, please click here.

“Does IRS Memo on Tax Deductions for NIL Collective Donations Have Local Ramifications?,” by Mike Jensen, was published in The Philadelphia Inquirer on July 7, 2023.