College athletes are now eligible for big time payments. Will nonprofits benefit?

When a 2021 Supreme Court decision let loose a tidal wave of cash to pay college athletes for endorsement deals, some nonprofit leaders held out hope that charities would benefit. Many of the organizations created to raise money for that compensation — name, image, and likeness collectives — were created as nonprofits.

At some institutions, charities did see some gains. In 2021, University of Maryland student athletes receiving NIL payments started serving yearlong mentorships with high school students through a program run by a local nonprofit, the Youth Leadership Foundation, one of the several charities that had relationships with Maryland athletes. About 250 students from colleges in low-income neighborhoods typically participate each year, according to Janaiha Bennett, the nonprofit’s executive director.

“Being able to expose students to role models that care about character and care about conducting themselves well as athletes, that’s been a huge plus,” Bennett said.

Initially, the visits with student athletes and tours of the university’s athletic facilities were organized by the Blueprint Sports Foundation, a nonprofit that managed payments to NIL collectives nationwide.

But the real financial benefits went to college athletes. Five years after the court gave the green light to pay athletes in NCAA v. Alston, payments to quarterbacks, gymnasts, pitchers, and other coveted athletes have reached nearly $2 billion annually. It is unclear how much nonprofits have gained, but any benefits charities receive are minuscule compared with the large sums of cash colleges raise to attract and retain star athletes, according to experts.

The idea that charities would benefit turned out to be short-lived rather than baked in to the system, said Jason Kohout, a lawyer who has represented several NIL collectives.

“It was kind of a blip,” he said.

In the Alston case, the Supreme Court officially turned amateur college sports into a big money game for athletes through these NIL payments. For the first time, companies and nonprofits were allowed to pay athletes to appear at events, wear their apparel, and make social media posts.

Shortly after the decision, alumni boosters and businesses rushed to form NIL collectives and registered them as nonprofits. Doing so allowed donations to be tax deductible. But in 2023, the Internal Revenue Service ruled that those collectives did not qualify for a tax-exemption. Their main purpose — compensating students — does not chiefly serve the public, which is typically required to qualify for nonprofit status, the agency found.

“This private benefit is not a byproduct but is rather a fundamental part of a nonprofit NIL collective’s activities,” the agency wrote.

The collectives received another blow following a 2025 settlement in a massive class action case, House v. NCAA, which pitted former student athletes against the college sports organization. The settlement provided for revenue sharing of television contracts and ticket sales among big conference universities, allowing them to direct $20.5 million per college — indexed for inflation — toward student compensation each year.

With colleges able to make payments to students directly, several NIL collectives have since closed, including Student Athlete NIL, whose colleges included Georgia Tech, the University of Oklahoma, and Wake Forest University; an NIL fund associated with Texas A&M’s 12th Man Foundation; and Notre Dame’s FUND Foundation.

“NIL collectives have basically been in shutdown mode because now you can just give the money to the school,” Kohout said.

When the IRS started taking a dim view of NIL collectives seeking tax exemption, the nonprofit Blueprint Sports Foundation, which paid athletes, including University of Maryland players, disbanded.

The university’s in-house NIL program, One Maryland, still works with Blueprint Sports, a related for-profit organization that processes student payments from non-tax-deductible donations. One Maryland did not return calls from the Chronicle.

In its last tax filing, in 2024, the Blueprint Sports Foundation indicated it devoted a total of $844,078 to 90 athletes for charitable activities in partnership with about a half dozen nonprofits near campus. Today, Maryland Terrapin athletes are no longer paid to visit with students through the Youth Leadership Foundation program. But Youth Leadership’s Bennett said student athlete involvement hasn’t subsided and the program is “still going strong.”

However, the connection between college athletes and nonprofits won’t just run on autopilot, some warn. Roy Kessel, founder of the Sports Philanthropy Network, worries that as universities race to raise funds to pay athletes and remain competitive, charity will become an afterthought. Some athletes did create their own foundations after being introduced to giving through collectives. But if students receiving NIL payments aren’t educated about philanthropy, fewer will give to charity in the future and an opportunity will be lost, he said.

In 2022, Kessel launched NIL4Good, a campaign to encourage student athletes to give some of their NIL payments to charity. But raising money for the campaign has been difficult, he said.

One reason it’s been hard, he said, is that paying college athletes was such an immense cultural change that institutional practices, including educating students about money management, haven’t caught up. So far, universities have not made significant investments to help students identify what kind of donations they’d like to make and how to use their place in the spotlight for good, Kessel said.

What student athletes need, he said, is sound advice on the practice of giving and the freedom to choose how to make an impact that comes from the heart. Many of those students, he said, have not yet developed clear boundaries when friends and acquaintances try to seek a cut.

“What we’ve seen evolve over the last few years is that the individual athletes get pulled in a lot of directions,” he said. “Anytime somebody’s got money, that brings more people in.”

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Alex Daniels is a senior reporter at the Chronicle of Philanthropy, where you can read the full article . This article was provided to The Associated Press by the Chronicle of Philanthropy as part of a partnership to cover philanthropy and nonprofits supported by the Lilly Endowment. The Chronicle is solely responsible for the content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy .