Nebraska Cornhuskers: New NIL ruling could be disastrous

The Nebraska Cornhuskers are positioning themselves to be big players in the NIL market in the coming years, but a new ruling might stop that plan cold.

One of the big issues with NIL, in general, is that there just isn’t much known about what the system is going to look like in coming years. Certainly, there are some bills that are winding their way through congress that could make everything clearer in a few months or years, but it’s still mostly the Wild West.

That doesn’t mean that any rule at all about NIL is a good one. Certainly a recent ruling by the IRS could be quite bad for Nebraska football and the Nebraska Cornhuskers athletic department. That ruling states that donations to NIL collectives are not tax-exempt.

According to Sports Illustrated, the Internal Revenue Service has decided that donating money to these collectives, even if they’re billed as “non-profit,” does not actually honor the intent of what 501(c)(3) companies are supposed to be about.

It’s hard to exactly how far-reaching this new rule will be, but it doesn’t seem like a surface-level annoyance. More than 200 NIL collectives exist among the 131 FBS schools. The Nebraska Cornhuskers have one of the more well-known ones in the 1890 Initiative. It is officially listed as a 501(c)(3) organization.

Nebraska Cornhuskers NIL collective taking a hit?

The 1890 Initiative and other collectives like it are largely funded by big money donors who want programs like the Nebraska Cornhuskers to compete with the Big Boys in recruiting. But those donors are giving so much money in part at least because they believe they will be able to use those donations as a tax writeoff.

The IRS is now saying they won’t. Make no mistake, this particular rule is going to impact the Nebraska Cornhuskers far more than it is Alabama, or Ohio State or Georgia. The way the Huskers are going to compete against those schools in recruiting is by being able to outbid them.

If this rule doesn’t close that door entirely, it’s certainly a rock in the road. I don’t think “disastrous” is too harsh a word. It will certainly be interesting to see how this affects the money Nebraska Cornhuskers collectives take in over the course of the rest of the year.