The foundation that supports Texas A&M athletics announced Wednesday it is closing the branch set up for donors to support endorsement deals for Aggies athletes, an effort that has pushed the boundaries of how closely a school's traditional fundraising and booster groups could get involved in payments to players.
The 12th Man Foundation said it will still engage in name, image and likeness activities with Aggies athletes using “unrestricted donations.” But it noted “external advisers” recommended shutting down the 12th Man+ Fund, which had just been launched in February.
The foundation cited a June memo from the Internal Revenue Service that said nonprofit “collectives” that were created primarily to pay players are likely not exempt from taxes, meaning donations would likely not be tax deductible.
Charity organization experts have noted the IRS memo could upend a rapidly growing market of collectives that have become a primary source of NIL deals for athletes. If donations to athletics-specific collectives are not tax deductible, experts have warned that money could dry up.
The 12th Man Foundation is a private organization that raises money to fund scholarships, programs and facilities for Texas A&M athletics. The June IRS memo said the NIL collectives "may face future examinations or enforcement action by the IRS” but did not elaborate.
“This decision was made to ensure the 12th Man Foundation meets its high standards for compliance and to protect the organization’s mission,” the foundation said in a statement.
The 12th Man Foundation will still be a player in athlete deals, but it is changing how they are done and paid for, said Mit Winter, a sports business attorney in Kansas City, Missouri, who tracks college NIL developments.
”(Donors) will just donate to the foundation generally and the foundation will use those dollars to enter into NIL deals with athletes to promote the foundation," Winter said. “(It) will be a marketing expense for the foundation."
The 12th Man+ Fund was seen as a trailblazing effort to bring an NIL collective under the umbrella of a major athletic booster program. It was pitched as a way for Aggies fans to directly support NIL deals for athletes and earn points from the foundation for various perks, such as event tickets and parking.
The NCAA sent out a memo to its Division I member schools soon after 12th Man+ was launched that said “entities acting on behalf of the institution” cannot pay athletes for NIL.
Texas, Arkansas and a handful of other states have passed laws to allow school athletic departments to be more closely involved in deals for athletes, and to provide legal protection from NCAA enforcement over NIL activities.
___
AP college sports: https://apnews.com/hub/college-sports
