A recent FOIAball investigation into UCLA’s football program offers more than a peek at college sports fundraising in the era of name, image, and likeness compensation—it may expose a test case in tax enforcement. Public records suggest that donors were routed through a 501(c)(3) charity to support NIL deals while claiming tax deductions.
The IRS has already expressed skepticism on the subject. In 2023, it issued guidance clarifying that most NIL collectives don’t qualify as charitable organizations, because they exist primarily to benefit individual athletes rather than serve a public good.
Most collectives likely adjusted accordingly. But at UCLA, emails obtained by FOIAball show NIL donors being directed to send money to Shelter 37, a tax-exempt nonprofit led by the same person who co-founded the school’s NIL collective.
The arrangement appears structured to generate tax deductions for contributions earmarked for recruiting and paying athletes. If true, that starts to look like a tax shelter.
Enforcement is the real issue. The IRS may have drawn the line, but having the resources to police it is another matter. If the agency doesn’t or can’t investigate, schools may read the 2023 guidance as more of a suggestion than a boundary.
The FOIAball documents don’t prove criminal wrongdoing, but they do raise substantial questions about how far schools may be stretching tax law to pursue a competitive advantage. If no one starts demanding answers from UCLA, this blueprint has the potential to spread until someone in authority calls it what it is: public subsidies for roster building.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined the IRS’s fast track settlement program, Canada’s proposed transfer pricing reforms, and more.
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Insights
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News Roundup
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Tax Management International Journal
CJEU Clarifies VAT Rules for Toolings Activities: Brose Prievidza
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Tax Management Memorandum
100% Bonus Depreciation Is Back: Strategies for Implementation
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Five Year-End Moves for Small Businesses to Optimize Tax Posture
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