Today I wanted to talk a little bit about NIL, name, image, and likeness.
Over the last couple of years, college athletes and, in some states, high school athletes, have been able to cash in on their name, image, and likeness. This essentially allows them to get paid while playing amateur athletics.
Since then, it has been like the wild west regarding NIL deals, with many athletes making good money while playing sports. They should be able to cash in on their athletic prowess, which generates a lot of money for a lot of people. It was a long time coming.
Initially, boosters were paying athletes, but now, NIL collectives have been created to pool money and pay out NIL deals to athletes as an incentive to come to the school. These collectives were created as nonprofits, allowing boosters or supporters to contribute and deduct those contributions as charitable deductions.
However, the IRS has recently ruled that these collectives are not considered nonprofits. So, the play of contributing to these collectives and getting a write-off is now dead.
For those who want to continue attracting talent and contributing money, the advice is more for business owners. If you operate a business, you can pay whichever athlete you want, and they will be an endorser of your business. It would simply turn into a marketing expense.
Make sure you have proper documentation, contracting with the athlete, and ensure they are doing something in return for the money, like social media posts. This should give you the legitimacy to deduct it from your business income as a marketing or advertising expense.
So, that should be the play going forward now that these collectives are no good on the charitable contribution side.
