UCLA meets Washington in week 5 of the college football season on Friday, September 30, 2022 (09/30/22) at the Rose Bowl in Pasadena, Calif.
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What: NCAA Football, Week 5
who: UCLA vs. Washington
When: Friday 30 September 2022
Where: Rose Bowl in Pasadena, California
time: 10:30 p.m. ET
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The new world of college athletes getting paid for endorsements has created a fast-growing pop-up industry: brand new nonprofits that athletes start for a fee to promote charities.
The nonprofit organizations are touted as feel-good partnerships, but they also raise questions. Is their mission to support charities and their communities, or do they exist primarily to give money to athletes — tens of thousands of dollars in some cases — and give a school’s donors a tasty tax break?
“That’s the ultimate question,” said Brian Mittendorf, an Ohio State accounting professor specializing in nonprofits. His school is one of dozens across the country with affiliated nonprofit “collectives” that form athletes with contracts to work with charities.
“We are certainly in gray areas in this regard. Is this to benefit the public through a charity, or is it to benefit the athletes? said Mittendorf. “My default attitude is skepticism.”
There is enough skepticism that a bipartisan effort has been launched in Congress to try to limit the tax deductions that would be available to these NIL fundraising non-profit collectives. A bill introduced this week by Sens. John Thune, a South Dakota Republican, and Ben Cardin, a Maryland Democrat, would eliminate the tax deduction for individuals and for certain contributions then made to athletes for name, image – and similar transactions are paid.
Thune and Cardin said they did not want to prevent athletes from signing so-called NIL deals.
“We also have a duty to protect taxpayer funds, which means charitable deductions should be reserved for charitable activities,” Cardin said. “The intentional blurring of the line between private spending and charitable giving dilutes both of these efforts.”
The new entities often coexist alongside for-profit collectives that pool money to match athletes with business deals and offer contributor perks like VIP-level access to athletes.
The number of nonprofits supporting athletes appears to be growing, with at least two dozen in existence and more starting almost weekly. They were born out of the massive change that hit college sports in 2021, when athletes were allowed to make money, something that had been forbidden for decades.
Among the first was Horns With Heart, a nonprofit organization for offensive linemen at the University of Texas. It was launched in December 2021, just before national football recruit signing day, as coach Steve Sarkisian attempted to land a highly rated recruiting class.
Horns With Heart caused an immediate uproar with a promise of $50,000 a year to each offensive lineman grantee. Critics said it pushed the limits of the NCAA ban on “play for pay” deals, but that was just the beginning. By April, Texas rival Oklahoma had the nonprofit 1Oklahoma, which pledged up to $50,000 a year for Sooners football players in supporting charities.
Horns With Heart founder Rob Blair said there is no gray area in his organization’s mission: help gamers make money and help charities harness local star power to raise their profile.
“Our consistent intent,” Blair said, “was to do both jobs.”
Horns With Heart has now signed every Longhorns offensive lineman for their first $50,000, Blair said. The work that is expected of them for charities may include social media promotions, personal appearances at events and public service announcements.
The group has announced partnerships with a children’s hospital, a support group for active military and veterans, soccer camps and a foundation run by former Longhorns and NFL linebacker Derrick Johnson to rebuild and update school libraries.
“In life, everyone looks for win-win scenarios,” Blair said. “We want to show the world that NIL can be used to make a real positive impact for everyone.”
Blake Lawrence, chief executive of Opendorse, a company that works with dozens of schools to help initiate, track and monitor NIL deals, noted that boosters are used to making tax dedications on their donations to athletic department foundations receive. Many, he said, have made it clear they will not reallocate that money to NIL collectives without a similar return on investment.
“That’s not the only reason, but the main reason is that the largest contributors require collectives to make their contributions tax-deductible,” he said. “And that’s only possible if the collective has 501(c)(3) status.”
Mit Winter, a sports attorney in Kansas City, Missouri, who investigates issues in the collegiate athlete market, agreed. He said the nonprofits might be able to lure the savvy, larger donors who want something even more valuable: the tax deduction that Sens. Thune and Cardin are trying to eliminate.
“They’re used to donating to nonprofit universities,” Winter said. “And they’re used to getting something in return.”
Thilo Kunkel, director of the Sports Industry Research Center in Temple, asked how the nonprofits can give dollar value to an athlete’s efforts on behalf of a charity, ranging from something as simple as a tweet to visiting sick children to delivering Meals might suffice to the elderly.
He also noted that in some cases, a star athlete who simply walks into an event has an impact that cannot be measured, certainly not in dollars or cents. A win? That’s possible, said Kunkel.
“So now we’re like, ‘Yeah, we’ll give you $5,000. But you have to show up at this kids’ training camp and then give a motivational speech disguised as a charity drive,” Kunkel said. “So they’re going to run a camp for inner-city kids, but it’s basically just a way for them to pay the kids running the camp. I think the kids, the inner city kids, still benefit. You still benefit. The inner city kids will continue to have access to the athlete. And they still get the motivation.”
In Kansas, a group of Jayhawks basketball players were paid to attend a fundraiser for a group fighting homelessness. The players ended up contributing $17,000 of their own money.
“I think people were surprised,” player Jalen Wilson, who donated $5,000 that night, told Lawrence Journal-World. “I just felt the need to do it, and if I have it or can help, I will do it every time.”
Whether these nonprofits are simply payment options for athletes could be spelled out in the documents they will have to file with the federal government over the coming months and years. These are public records and charity watchdog groups also pay attention.
Ultimately, the market will determine the future of nonprofits when donors decide their money could be better spent elsewhere, Lawrence said. For now, donors feel like they’re helping their favorite teams and charities get their jobs done at the same time.
“It kind of feels more right to see a student athlete interacting with kids than to see a student athlete promoting a Mercedes or a BMW or an expensive sports car, doesn’t it?” Laurentius said.
(The Associated Press contributed to this report)
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Ryan Novozinsky can be reached at [email protected].