The 1870 Society Statement on the IRS Interpretation of Non-Profit NIL Collectives

The 1870 Society Statement on the IRS Interpretation of Non-Profit NIL Collectives

June 10, 2023

Change in the NIL landscape is inevitable. The recent news regarding how the IRS views non-profit Collectives is the latest addition to a series of new regulations that we expect will disrupt how Collectives are operated.

At The 1870 Society, we anticipated these changes and structured our organization as an LLC from the start. Any business structure that is not a non-profit is, by definition, established as a for-profit business. This doesn't imply, though, that we intend to generate profits from running the business. Instead, it is a structural decision we made to ensure we are properly set up to fulfill the objectives of our organization. In the long term, a non-profit model imposes significant limitations if you aim to build a viable and sustainable business.

Non-profit organizations rely heavily on fundraisers and generous donations from contributors. Their ability to provide tax deductions is a primary incentive to attract donors. The donated funds are then entrusted to the 501(c)(3) entity, which is expected to allocate them in a manner that aligns with the spirit and goals of a non-profit.

However, there are numerous collectives across the country that are utilizing these funds to contract with players who are then asked to engage in promotions, marketing, and collaborations with for-profit corporate entities like car dealerships, restaurants, and others. This is the type of behavior we believe the IRS is targeting in its latest remarks on the NIL space. While we acknowledge that some non-profit Collectives are leveraging their 501(c)(3) designation appropriately and deploying funds exclusively in collaboration with other 501(c)(3) and non-profit organizations, this distinction should not be lost as the IRS considers its regulatory options in the NIL space.

The 1870 Society is constructing a sustainable business model that can grow and scale in alignment with the needs of Ohio State's athletic department across all sports. We do not choose or differentiate because, for us, every student-athlete at Ohio State possesses immense potential, and our aim is to empower them to fulfill that potential. NIL was not created so that Coaches can give speeches at $1,000-a-plate galas but rather to unlock the potential of student-athletes and deepen their relationship with fans and businesses around the world.

We anticipate that others will observe our progress and follow suit in due time, and this is not only flattering but also beneficial if it elevates the entire university, sports teams, and student-athletes.

As collectives, our responsibility is to prioritize athletes' well-being and ensure the success of the school, community, and the students we deeply care for. Being a part of Buckeye Nation is one of the greatest honors in our lives. We are not here to enrich anyone other than the community we are incredibly fortunate to be a part of. As Woody Hayes once said, "You can never really pay back; you can only pay forward."

Go Bucks!


Todd Markiewicz, The 1870 Society