While in these reports we do not often stray from reporting court opinions released for public consideration, an Associated Press article by Jim Vertuno and Pat Eaton-Robb that appeared in a USA Today affiliate on October 1, 2022 seemed to require some notice. The reporters stated: “The new world of college athletes getting paid for endorsements has created a rapidly expanding pop-up industry: Brand new nonprofits that set up athletes to promote charities for a fee.” The article indicated the federal government was scrutinizing some of these “brand new nonprofits.” Of course, old charities would have an easier time of it. That would include churches.
Imagine next week’s worship services described in glowing sports terms by a locally famous high school or college athlete. In my state, in which sports figures are all but demigods when they are winning, and discarded when they are not, many churches, parachurch organizations, church schools and denominations may one day soon be signing athletes to such endorsement deals. The debate about whether such advertising and endorsements are a good thing will be left for others. The debate about whether such deals would be good for high school and college sports will be avoided altogether in this report.
These deals will attract existing participants or members of the long existing non-profit to fulfill two desires: pay their favorite athlete and support the mission of the non-profit. That they will also get a tax deduction might simply be a bonus. If the member or participant exerts too much influence as to the choice of the athlete or the deal between the non-profit and the athlete, taxing authorities may have grounds for arguing the money paid was not a donation at all. On the other hand, the member or participant may have some indirect “say” in these matters while on a governance board upon which they are otherwise already serving. The athlete may even be a product of the youth group. Donations made early in the tax year and paid out later in the tax year might not seem directly related either to donor intent or the endorsement deal. Donors who are not acknowledged as “sponsors” of the deal may fare better than donors who are acknowledged, even if everyone in town or in the non-profit entity knows the donor.