The IRS Threatens to Shut Down Texas A&M’s NIL Foundation

First for NIL

Texas A&M has always been a front runner in the world of college NIL development. The phrase, everything is bigger in Texas, definitely applies to the Aggies’ efforts to grow student athlete NIL promotions. The 12th Man Foundation of Texas A&M is a collective and non-profit that was first launched in February. The 12th Man upped its game making their collective a section (501) charitable organization. The mission for The 12th Man collective is to fund scholarships for athletes, and generate money for the program’s facility’s growth to foster championships.

NEW: The 12th Man+ Fund, which was long thought to be the next evolution of NIL collectives, is being discontinued.

The move comes after discussing the IRS memo released in early June with advisors.

More via @Pete_Nakos96: https://t.co/ySSrFMRdVB pic.twitter.com/uJgve17yQF

— On3 NIL (@On3NIL) August 9, 2023

The move that Texas made that other collectives, since launched, have shied away from is the non-profit aspect. The collective in its mission statement said that the 400 student athletes are what the foundation is helping. ” Your support insures these young men and women leave Texas A&M prepared for the next step in their lives,” as stated on the website. The money that this foundation generates is directly benefiting Aggie student-athletes, whether that is in the classroom or during competition.

Texas A&M discontinues the 12th Man+ Fund in wake of IRS memo on NIL guidelines. pic.twitter.com/ZLK6k0sA95

— Brandon Marcello (@bmarcello) August 9, 2023

Making Changes

As of the start of July the Aggies have continued strong with no fear of the NCAA or the IRS. even launching a new program at the university called Amplify.  The program designed for student athletes is an innovative NIL informational program designed to teach Aggie student-athletes how to maximize their platforms. In turn this would generate a huge buzz for the university using their athletes as marketing tools.

But at the beginning of August the IRS is now knocking, and the 12th Man Foundation is now shut down. The decision to shut down the fund came from the University, as the IRS released a memo earlier in June, telling several NIL collectives like the Texas non-profit that their function doesn’t qualify under the tax-exempt status. It was found that because collectives like the 12th Man Foundation were attempting to reward donors with points for tickets and other exclusive offers, as well as tax benefits in exchange for collective donations for student athletes, it could no longer function as a collective in that way.

The IRS determined that NIL collectives may not qualify as tax-exempt if their main purpose is paying players instead of supporting charitable works. If the collectives aren’t tax-exempt, the donations they collect may not be either. https://t.co/gV6PqYJkSv

— G. Michelle Ferreira (@gmferreira11) August 10, 2023

The foundation released a statement, saying it will be “altering its approach to NIL, which includes discontinuing the 12th Man+ Fund.” It added that “this decision was made to ensure the 12th Man Foundation meets its high standards for compliance and to protect the organization’s mission.”

Moving forward Texas A&M has made efforts to reach out to the Foundation’s donors, in hopes of redirecting their funds to university approved organizations. But as the next school year and athletic season is right around the corner the 12th Man organization says it remains committed to supporting student athletes. The collective moving forward in their rebuild will still support NIL for players through their marketing efforts rather than direct payment to donors.