The IRS Office of Chief Counsel recently issued a Legal Advice Memorandum that determined benefits provided by NIL collectives exceed what an exempt organization is allowed to provide, and therefore most NIL collectives do not serve an exempt purpose under IRC Section 501(c)(3).

I believe this guidance could negatively impact NIL collectives across the country. If I'm a large donor, I have to weigh whether I want to give to an NIL collective (now likely not tax deductible) or give to the university (generally tax deductible). Interested in hearing other peoples' thoughts and whether there have been any rumblings about this.

For those interested in some light reading, here is a link to the full Legal Advice Memorandum: https://www.irs.gov/pub/lanoa/am-2023-004.pdf