NIL-Based Fundraising Evolving Toward Extinction?NIL-Based Fundraising Evolving Toward Extinction?

The explosive growth of name, image and likeness (NIL)-based fundraising for student-athletes’ compensation over the past three years may be reaching a legal crossroads.

General Counsel Advice Memorandum (AM) 2023-004 (May 23, 2023) addressed whether organizations that develop paid NIL opportunities for student-athletes are tax-exempt. The AM concluded that these organizations aren’t tax-exempt because the private benefits they provide to student-athletes aren’t incidental both qualitatively and quantitatively to any exempt purpose furthered by that activity. 

PLR 202414007  

Private Letter Ruling 202414007 (April 4, 2024) gives greater insight into the IRS’ reasoning. It analyzed whether a NIL collective qualified as a tax-exempt organizat...