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Mizzou NIL
Posted on 12/4/23 at 2:34 pm
Posted on 12/4/23 at 2:34 pm
I'm a booster through my company. Every quarter we make for example, $1,000,000 gross profit. Well gotta pay taxes. Now the goal is to get taxable income down to $750,000. It lowers taxes from 55% to 52% which is $30k savings.
I take all government deductions and credits, leases etc, let's say we are now at $760k. That's when we write a 10k donation to MU or the NIL because they are non-profit organizations. So that $10k donation saves me 30k in taxes.
So I give $10k to the NIL collective. I then choose which opportunities I want my money going towards. I.e. athlete at Childrens Hospital, Cancer Walk or some opportunity.
Athletes sign up for these opportunities and are compensated as I directed. Some boosters just throw into a pool and let the collective work out the details.
So the bigger the NIL the more opportunities available. Athletes have to participate in the opportunities to get paid. They cannot be paid to just show up and play sports. Pay for play is not allowed.
The NIL can promise an athlete whatever they want, but there is no guarantee the opportunities will actually exist for them. This happened at Florida with a 4 star QB recruit that the NIL said he would make 2 million, and their whole NIL wasn't that big at the time.
Mizzou has a great collective it just doesn't have a big multi-million dollar donor. But we have alot of really good opportunities, and we follow through. Unlike big program NILs who promise millions to get headlines and don't actually deliver, so you see their blue chip players in the portal constantly trying to chase big money opportunities. For example the 5 star DT at A&M who just hit the portal.
Sorry this is so long but hope it explains this nasty NIL thing.
I take all government deductions and credits, leases etc, let's say we are now at $760k. That's when we write a 10k donation to MU or the NIL because they are non-profit organizations. So that $10k donation saves me 30k in taxes.
So I give $10k to the NIL collective. I then choose which opportunities I want my money going towards. I.e. athlete at Childrens Hospital, Cancer Walk or some opportunity.
Athletes sign up for these opportunities and are compensated as I directed. Some boosters just throw into a pool and let the collective work out the details.
So the bigger the NIL the more opportunities available. Athletes have to participate in the opportunities to get paid. They cannot be paid to just show up and play sports. Pay for play is not allowed.
The NIL can promise an athlete whatever they want, but there is no guarantee the opportunities will actually exist for them. This happened at Florida with a 4 star QB recruit that the NIL said he would make 2 million, and their whole NIL wasn't that big at the time.
Mizzou has a great collective it just doesn't have a big multi-million dollar donor. But we have alot of really good opportunities, and we follow through. Unlike big program NILs who promise millions to get headlines and don't actually deliver, so you see their blue chip players in the portal constantly trying to chase big money opportunities. For example the 5 star DT at A&M who just hit the portal.
Sorry this is so long but hope it explains this nasty NIL thing.
This post was edited on 12/4/23 at 9:15 pm
4
Posted on 12/4/23 at 4:14 pm to surgicalvenom
quote:
It lowers taxes from 55% to 52% which is $30k savings.
Is that really savings, though?
Posted on 12/4/23 at 8:39 pm to surgicalvenom
Good thread.
Appreciate you taking the time to share. Found it interesting.
Appreciate you taking the time to share. Found it interesting.
Posted on 12/4/23 at 11:35 pm to surgicalvenom
Appreciate the support for the Mizzou program. But, you realize the tax brackets are "marginal". Let's say the 52% to 55% bracket change occurs at $750k and your taxable profit is $1M. Then you only pay the 3% increase on the amount above the 52% level or $250k in this case, not the full $1M. Since the increased tax rate is 3% on $250k the "extra" tax is $7.5k not $30k.
So, in your example of $760k with a $10k NIL deduction, you reduce your taxes by $5.5k (since it's all in the 55% bracket), not $30k since the amount below $750k remains in the same bracket(s). You paid $10k to get that deduction, so it cost you $4.5k to give Mizzou a $10k NIL. Awesome donation and much more economical to make it but it is still costing you money to make the donation.
So, in your example of $760k with a $10k NIL deduction, you reduce your taxes by $5.5k (since it's all in the 55% bracket), not $30k since the amount below $750k remains in the same bracket(s). You paid $10k to get that deduction, so it cost you $4.5k to give Mizzou a $10k NIL. Awesome donation and much more economical to make it but it is still costing you money to make the donation.
Posted on 12/6/23 at 11:15 am to surgicalvenom
A couple of things to add:
As others have pointed out the tax savings example you provide is unrealistic. You won't reap a greater tax benefit than your contribution. Also, not sure how you’d be in a 55% or 52% bracket even combining federal and state tax rates. However, you stated earlier that you were more focused on the workings of the collective than the tax aspects so let's move on from there.
Some may have heard that the IRS has increased its scrutiny of these collectives. That is true and it advised in an Office of Chief Counsel memorandum last May that in many cases the NILs will not be furthering an exempt purpose under 501(c)(3). Their reasoning is beyond the scope of this post (and yes they do address the involvement of charitable organizations the way the Every True Tiger collective is organized).
Now, should donors worry about this? Not currently because the Every True Tiger collective has (per their website) received a determination letter granting them 501(c)(3) status. As such contributions should be deductible by donors unless and until the IRS notifies the public that contributions to the organization are no longer deductible.
Should that ever come to pass however, donors could simply make future contributions to the University Tiger Scholarship Fund’s Tiger Branding Fund which is organized with the same objective in mind.
So in summary, as you point out, all fans have the opportunity to support MU’s NIL effort and receive a tax deduction in the process thus subsidizing their contribution. So please do!
As others have pointed out the tax savings example you provide is unrealistic. You won't reap a greater tax benefit than your contribution. Also, not sure how you’d be in a 55% or 52% bracket even combining federal and state tax rates. However, you stated earlier that you were more focused on the workings of the collective than the tax aspects so let's move on from there.
Some may have heard that the IRS has increased its scrutiny of these collectives. That is true and it advised in an Office of Chief Counsel memorandum last May that in many cases the NILs will not be furthering an exempt purpose under 501(c)(3). Their reasoning is beyond the scope of this post (and yes they do address the involvement of charitable organizations the way the Every True Tiger collective is organized).
Now, should donors worry about this? Not currently because the Every True Tiger collective has (per their website) received a determination letter granting them 501(c)(3) status. As such contributions should be deductible by donors unless and until the IRS notifies the public that contributions to the organization are no longer deductible.
Should that ever come to pass however, donors could simply make future contributions to the University Tiger Scholarship Fund’s Tiger Branding Fund which is organized with the same objective in mind.
So in summary, as you point out, all fans have the opportunity to support MU’s NIL effort and receive a tax deduction in the process thus subsidizing their contribution. So please do!
This post was edited on 12/6/23 at 11:51 am
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