Charity Question for the Tax Lawyers out

[SoCalDukeFan]

I have given to charities and volunteered at charities but have little knowledge of the ins and outs of the law and am not a lawyer.

My understanding, and it is public is that the 12th Man Foundation at Texas A and M is a 501 c3 and unrestricted donations are tax deductible.e The 12 Man Foundation is going to pay a part of Jimbo Fisher's buyout. How is that legal? Is Jimbo so poor he needs charitable contributions?

I also understand and it is pretty public that 501 c3 s have been established to basically funnel money to athletes. For example pay hundreds of dollars per hour to deliver meals on wheels, paying athletes to write blog posts trying to get contributions at 20 times the going rate for professional blog writers. Duke athletes, I am told, are paid to visit kids at Duke Children's Hospital.

These may all be perfectly legal.

Questions - Is this a problem of enforcement or a bad law? Is perfectly legal for the US tax payer to help pay Jimbo's buyout is the 12 Man just knowing they can get away with it.

How about the NIL deals?

Thanks

[Kdogg]

IANAL but a few months ago the IRS put out a memorandum that questions the tax-exempt status of these collectives that don’t primarily do charity work. Those donors are going to get a big fat tax bill if the IRS rules against the collectives in the future. I think it’s more a tax issue than a law one. They were setup as charities so donors could get the tax deduction. There are some that were not setup this way and others that changed their structure after the memo.

[SoCalDukeFan]

IANAL but a few months ago the IRS put out a memorandum that questions the tax-exempt status of these collectives that don’t primarily do charity work. Those donors are going to get a big fat tax bill if the IRS rules against the collectives in the future. I think it’s more a tax issue than a law one. They were setup as charities so donors could get the tax deduction. There are some that were not setup this way and others that changed their structure after the memo.

Thanks

How about the 12th Man Foundation at A&M? How can a charity provide funds to pay off a failed football coach?

SoCal

[sagegrouse]

Thanks

How about the 12th Man Foundation at A&M? How can a charity provide funds to pay off a failed football coach?

SoCal

Charity gives funds to TA&M athletics, which uses it for all legitimate athletic department expenses, which happen to include payments to a former coach. Pretty smelly, but maybe that's what is happening.

[Kdogg]

Thanks

How about the 12th Man Foundation at A&M? How can a charity provide funds to pay off a failed football coach?

SoCal

I looked it up because I remembered something about A&M but not what it was. The 12th Man Foundation recently dissolved their NIL collective (The 12th Man+) because of the IRS memo. So they can’t give kids money and get a tax break. They can continue using funds in the areas sage mentioned and get a tax break. So no to athletes but yes to coaches. I’m assuming all booster clubs (including the Iron Dukes) get this “perk.” A&M was trying to create an in-house collective. The non directly affiliated collectives can still do their thing but they were never a “charity.”

[burnspbesq]

Without delving too deeply into the legislative history of the 1976 and 1982 amendments to Code Section 501, it seems pretty clear that outfits like the 12th Man Foundation (and the Iron Dukes) have been the beneficiaries of a *very* lenient IRS rulings policy.

The 1976 amendment, which added organizations that “… foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment)” was pretty clearly intended to clarify that the U.S. Olympic Committee and sports’ national governing bodies like USA Basketball were exempt.

The 1982 amendment added Section 501(j), which effectively eliminated the restriction on facilities or equipment, which had engendered some pretty ridiculous IRS rulings (one such ruling said you couldn’t give athletes tapes to study to improve their performance, because the tape players were “equipment”).

Internal IRS training materials from the 1980s (which are not “authority” in any meaningful sense) make a distinction between sports that are recognized by the International Olympic Committee and in which there is meaningful international competition, and those that aren’t. Football would seem to be on the wrong side of that line, but the notion that the Iron Dukes could support Duke fencing but not Duke football would not go over well with the average Iron Duke.


An organization that filed a proper Form 1023 and got a determination letter can rely on it until it’s revoked. And I kinda doubt that this is high on the TE/GE Division’s to-do list. But there is risk here.

[SoCalDukeFan]

Without delving too deeply into the legislative history of the 1976 and 1982 amendments to Code Section 501, it seems pretty clear that outfits like the 12th Man Foundation (and the Iron Dukes) have been the beneficiaries of a *very* lenient IRS rulings policy.

The 1976 amendment, which added organizations that “… foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment)” was pretty clearly intended to clarify that the U.S. Olympic Committee and sports’ national governing bodies like USA Basketball were exempt.

The 1982 amendment added Section 501(j), which effectively eliminated the restriction on facilities or equipment, which had engendered some pretty ridiculous IRS rulings (one such ruling said you couldn’t give athletes tapes to study to improve their performance, because the tape players were “equipment”).

Internal IRS training materials from the 1980s (which are not “authority” in any meaningful sense) make a distinction between sports that are recognized by the International Olympic Committee and in which there is meaningful international competition, and those that aren’t. Football would seem to be on the wrong side of that line, but the notion that the Iron Dukes could support Duke fencing but not Duke football would not go over well with the average Iron Duke.


An organization that filed a proper Form 1023 and got a determination letter can rely on it until it’s revoked. And I kinda doubt that this is high on the TE/GE Division’s to-do list. But there is risk here.

To me it smells very bad if donations which can be deducted as for "charity" are used to pay millions to a failed football coach. Wish it were higher on the list.

SoCal