NIL Collectives in IRS Crosshairs: Schools Brace for Major Changes

The IRS is targeting NIL collectives, and the message is clear: the days of nonprofit collectives running unchecked are numbered. With the agency naming NIL collectives a compliance enforcement priority for the 2025 fiscal year, the foundation of tax-exempt collectives looks ready to collapse under the weight of federal scrutiny.

Nonprofit collectives have been a driving force behind NIL fundraising, leveraging their tax-exempt status to attract contributions from wealthy boosters. The justification? Athletes would promote charitable causes as part of the arrangement. However, the IRS has seen through this veneer, pointing to the reality that these organizations primarily exist to pay athletes and bolster recruiting, not fulfill legitimate charitable purposes.