College athletics sees surge in nonprofits paying players

The new world of college athletes getting paid for endorsements has created a rapidly expanding pop-up industry: Brand new nonprofits that set up athletes to promote charities for a fee.

The nonprofits are pitched as feel-good partnerships, but they also raise questions. Is their mission to support charities and their communities or do they exist primarily to funnel money to athletes — in some cases tens of thousands of dollars — and give a school’s donors a tasty tax break?

“That’s the ultimate question,” said Brian Mittendorf, an Ohio State accounting professor with a focus on nonprofits. His school is one of dozens across the country with affiliated nonprofit “collectives” setting up athletes with deals to work with charities.

“We are certainly in gray areas about it. Is this existing to benefit the public through a charity, or is it existing to benefit the athletes?” Mittendorf said. “My default on this is skepticism.”

There’s enough skepticism that a bipartisan effort in Congress has been started to try to limit the tax deductions that would be available to those bankrolling nonprofit NIL collectives. A bill filed 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 specific contributions that are then paid to athletes for name, image and likeness deals.

Thune and Cardin said they don’t want to prevent athletes from signing so-called NIL deals.

“We also have an obligation to protect taxpayer funds, which means that charitable deductions should be reserved for charitable activities,” Cardin said. “Purposefully blurring the line between private expenses and charitable contributions dilutes both these efforts.”

The new entities often exist right next to for-profit collectives that pool money to align athletes with business deals and offer contributor perks such as VIP-level access to athletes.

The number of nonprofits supporting athletes appears to growing, with at least two dozen in place and more launching on an almost weekly basis. They were born out of t he massive change that hit college sports in 2021 when athletes were allowed to earn money in ways that had been prohibited for decades.

Among the first was Horns With Heart, a nonprofit set up for offensive linemen at the University of Texas. It launched in December 2021 just before the national signing day for football recruits as coach Steve…