NCAA Football: Kent State at Texas A&M

Texas A&M has shut down the controversial 12 Man+ Fund after reviewing directives from the IRS. The fund, which attempted to bring name, image and likeness (NIL) collective efforts in-house, put the 501(c)(3) status of the 12th Man Foundation at risk. 

The decision to shut down the NIL fund came after the IRS released a memo on June 9, which told NIL collectives their function doesn't fit within the confines of tax-exempt status. The 12th Man+ Fund attempted to reward donors with athletic department points and tax benefits in exchange for donations to provide NIL compensation to athletes. 

"Following consultation with external advisors, the 12th Man Foundation is altering its approach to NIL, which includes discontinuing the 12th Man+ Fund. This decision was made to ensure the 12th Man Foundation meets its high standards for compliance and to protect the organization's mission," the 12th Man Foundation said in a release. 

Texas A&M plans to reach out to 12th Man+ Fund donors and allow them to redirect their donations to approved fundraising organizations. While the 12th Man Foundation is eliminating its collective-based NIL arm, the organization says it remains committed to supporting NIL for players through marketing efforts rather than direct payment.

"As part of its altered approach, the organization plans to support NIL opportunities for Aggie student-athletes by expanding its marketing outreach using unrestricted annual fund contributions," the statement said. 

Major swing

The 12th Man+ Fund made major ripples in February as the first in-house NIL fundraising effort. Almost immediately, the NCAA tried to fight back, issuing a memo essentially telling Texas A&M that the fund explicitly violated NCAA rules and regulations. 

While Texas A&M dared the NCAA to act, the IRS is another story. The Aggies couldn't ignore a potential threat to the nonprofit status of their primary fundraising arm. Tax benefits remain among the most significant drivers of athletic department donations, especially for big-money donors. 

After Texas A&M began its efforts, multiple other schools began exploring the possibility of creating similar programs. The 12th Man+ Fund shutting down is a warning sign to other institutions that the tax implications may not be worth the trouble. 

Questions remain

After the NCAA issued its clarification in March, Texas A&M opted to ignore it. In May, Texas Gov. Greg Abbott signed legislation, including input from Texas A&M, that essentially banned the NCAA from investigating or punishing schools for collectives. 

More than two years after the NCAA first allowed athletes to be compensated for their NIL, the NCAA has not even attempted to investigate and punish collectives. For all intents and purposes, the NIL age has been the Wild West, with money flowing unencumbered across the landscape. The NCAA is lobbying in Washington to try and wrest back some of the power, but the gears of Capitol Hill turn slowly. 

The IRS's latest action shows there are forces far bigger than college athletics that can help reign in the chaos.