College athletes are now eligible for big time payments. Will nonprofits benefit?
Summary
College athletes can now earn money from endorsements due to a 2021 Supreme Court decision. While nonprofits initially hoped to benefit from this change, most of the large payments have gone directly to the athletes. Some nonprofits have gained from partnerships with athletes, but their financial benefits remain small.Key Facts
- The 2021 Supreme Court case NCAA v. Alston allowed college athletes to receive payments for their name, image, and likeness (NIL).
- Payments to college athletes have grown to nearly $2 billion annually.
- Some nonprofits partnered with athletes for mentorship and community programs, such as Maryland's Youth Leadership Foundation.
- Many NIL collectives were formed as nonprofits and allowed tax-deductible donations.
- The IRS ruled in 2023 that NIL collectives do not qualify as tax-exempt nonprofits because their main purpose is paying athletes, which benefits private individuals rather than the public.
- A 2025 settlement in House v. NCAA lets big universities share revenue from TV and ticket sales to pay athletes about $20.5 million per school annually.
- Experts agree that nonprofits have seen only minor financial gains compared to athletes and colleges.
- The hope that charities would gain significant benefits from NIL payments was short-lived.
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