By Kristen Popham
America’s rapidly expanding and politically influential nonprofit sector is under increased scrutiny, and nonprofit law has yet to provide answers to critics’ burning questions. If the nonprofit sector is born of a democratic commitment to pluralism and community linkages, what do we make of its contributions to plutocracy? If the federal government’s subsidization of the nonprofit sector reflects political choices about who and what serves the community benefit, should the sector include groups that actively undermine principles of civil rights? Should institutions be able to exploit the nonprofit legal form to exact discrimination? As the nation undergoes a rethinking of the government’s role in enforcing public and private norms, answers to these questions will prove critical.
This Comment aims to move the law one step forward in answering these questions by proposing modifications to the private benefit standard through the case study of nonprofit Name, Image, and Likeness (NIL) collectives. The Supreme Court’s landmark ruling in NCAA v. Alston both facilitated student compensation in collegiate athletics and prompted the growth of over 200 organizations pooling fan and alumni funds for school-specific athletes. These NIL collectives represent a black market for college athletic labor facilitated by weaknesses in nonprofit law. Offering a safe-haven free from the demands of federal antidiscrimination law, the nonprofit sector allows NIL collectives to amass great wealth for a small, disproportionately male subset of private individuals. In addressing this sector, the IRS has missed an opportunity to articulate a more reaching community benefit analysis of nonprofit organizations that reintegrates public policy doctrine principles into nonprofit law. This Comment posits that the IRS should seize the opportunity created by this emerging form of inequality to clarify important elements of the community benefit doctrine and reinvigorate the application of antidiscrimination principles in nonprofit legal enforcement.