"When the Supreme Court upended college athletics in 2021 and kicked off the Name, Image, and Likeness era, it created a torrent of loose cash. NIL collectives quickly formed to funnel that money to programs. Ostensibly, they worked as facilitators to help student-athletes find advertising deals and earn compensation. But the system had little oversight, with eager boosters and creative accountants willing to game the system."
"In this new world, if you were a local pontoon boat dealer or hot tub magnate, instead of under-the-table wads of cash, you could essentially give directly to your team's best players. And write it all off on your taxes. The IRS quickly determined these NIL collectives were not there to help the community. Because NIL collectives "distribute[d] the majority of funds received to student-athletes, and not for a charitable purpose," they weren't charities."
On April 10, 2025, reports revealed Tennessee quarterback Nico Iamaleava sought a larger NIL deal, signaling potential suitors before the transfer portal opening. That night, donors at the school that signed him pledged $60,000. UCLA's athletics department redirected pledged funds to a local charity for at-risk youth run by a Bruins for Life co-founder instead of routing them through the Bruins for Life collective. After the 2021 Supreme Court decision enabling NIL, collectives formed to channel money to athletes. The IRS ruled beginning in 2023 that most NIL collectives did not qualify for 501c3 tax-exempt status because funds primarily benefited student-athletes rather than charitable purposes.
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