Florida State NIL collective reported $1.2M in 2022 contributions

The nonprofit corporation Rising Spear Garnet Spirit Inc., which is one of the two arms of the collective Rising Spear that provides NIL opportunities for Florida State athletes, reported receiving more than $1.2 million in contributions in the 2022 fiscal year.

Rising Spear’s nonprofit arm reported $1,249,479 in contributions in its renewal application to the Florida Department of Agriculture and Consumer Services, which received the application on April 11, 2023. The fiscal year ended Dec. 31, 2022.

The application defines contributions as “the promise, pledge, or grant of money or property, financial assistance, or any other thing of value in response to a solicitation.”

“That number accurately reflects the funds raised through our nonprofit,” Rising Spear COO Will Cowen said in a phone interview. “However, that does not account for nearly all the transactions through Rising Spear with our Gold Standard, which is on the for-profit side.”

Rising Spear’s application to renew its nonprofit corporation provides just a partial window into Florida State’s ecosystem of NIL collectives.

“Florida State’s NIL picture is actually a really good one,” Cowen said. “Our nonprofit aspect is only a small fraction of what we’re doing in totality.”

Rising Spear also has a commercial arm called Rising Spear Gold Standard LLC. Plus, another collective called The Battle’s End focuses on Florida State football players. It also includes separate nonprofit and for-profit entities. Micconope 1851 is a for-profit collective powered by Blueprint Sports.

“We have executed over 1,400 hours of work through the county schools, the Boys & Girls Club, American Red Cross – all of our partner charities,” Cowen said. “Fourteen hundred hours. That’s why we feel great. You can read it on the statement. We told the IRS what our mission was. They approved it and we executed upon that within our community to the tune of 1,400 hours.”

State, IRS filings provide window into nonprofits

Nonprofit collectives’ filings to their respective state governments and the IRS – for those that have applied and received approval for 501(c)(3) status – provide rare windows into the financial status of collectives around the country.

For example, On3 previously reported the Memphis-focused nonprofit corporation 901 Fund reported to the state of Tennessee it received more than $831,000 in revenue in 2022.

Regarding Rising Spear Garnet Spirit’s reported 2022 contributions, Cowen noted “a worthwhile point, that fundraising number is particularly low because it does not reflect the money The Battle’s End has spent on football for the spring.”

Collectives will often raise money in the fall to provide NIL opportunities to football players in the winter and spring.

Rising Spear Garnet Spirit is one of more than 50 nonprofits that facilitate NIL deals that the IRS has approved under Internal Revenue Code Section 501(c)(3). The 501(c)(3) status provides the corporation’s tax exemption and donors with the ability to make tax-deductible contributions.

In total, there are more than 80 nonprofit collectives nationally, although the IRS hasn’t approved all of their applications.

“The easiest money is always the charitable money because people write a check,” Cowen said. “As soon as you get into the business element and with the marketing and the exchange factors of what considerations and sponsorship, like, anybody will tell you it’s harder to sell sponsorship and marketing than it is to solicit donations. It’s more time-consuming. So, it’s a balance.”

Cowen said a collective that has a nonprofit and for-profit arm works with fans, donors and businesses on a case-by-case basis to figure out which entity is best for them to support athletes through NIL opportunities. The collective then structures contracts based on the available funds in each entity.

“You have to work with the individual donor on their needs,” Cowen said. “You’re collecting money and you have to work with each individual supporter to find out the best needs for them.”

IRS releases memo on nonprofit collectives

However, the future of nonprofit collectives at large is uncertain, following a memo the IRS drafted in late May and released in early June.

“An organization that develops paid NIL opportunities for student-athletes will, in many cases, be operating for a substantial nonexempt purpose – serving the private interests of student-athletes – which is more than incidental to any exempt purpose furthered by the activity,” wrote Deputy Associate Chief Counsel Lynne Camillo.

It remains to be seen how many nonprofit collectives will be impacted, either due to increased scrutiny from the IRS or due to concerns from donors related to the memo. Not all collectives are structured or operate similarly.

The memo also states, “This document may not be used or cited as precedent.”

The IRS determined Rising Spear Garnet Spirit is a public charity, according to a letter dated July 7, 2022. The nonprofit corporation’s tax-exempt status is effective dating back to Dec. 6, 2021.

Cowen said Rising Spear is preparing to send a memo to donors as a follow-up to the IRS memo.

“Everything’s been fine,” he said. “We haven’t had any issues so far.”

On its renewal application to the Division of Consumer Services, Rising Spear Garnet Spirit’s directors said the purpose of the contributions is “to cover the fair market value of college athletes’ name, image, and likeness, which those athletes will then use to further the efforts of charitable causes and organizations.”

“As you can see, we didn’t spend millions of dollars,” Cowen said. “We served a lot of athletes. That number will certainly go up in this fiscal year. But it’s not going up in that magnitude on the nonprofit side.”

Florida State nonprofit reported $200K in 2021

Rising Spear Garnet Spirit stated its original charitable purpose was, “Working with local college athletes to help further the efforts of the Boys & Girls Club of the Big Bend and other local non-profits.”

In early 2022, Rising Spear’s nonprofit arm reported on its solicitation of contributions application that it received $200,000 in contributions in the fiscal year that ended Dec. 31, 2021. Rising Spear’s directors legally established the nonprofit corporation in early December 2021.

Its proposed budget based on its 2021 fundraising included $182,500 in total expenses. Although, the itemized expenses added up to $186,500. That included $135,000 on “program service expenses” and $51,500 on “management and general expenses.”

When itemized, its management and general expenses included $25,000 in legal fees, $15,000 in fees for service from non-employees and $10,000 in information technology. In April 2023, the law firm Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A. provided the Florida Department of Agriculture and Consumer Services with a cover letter and Rising Spear Garnet Spirit’s application for annual renewal.

The application says four Rising Spear directors – Robert Davis, Alan Flaumenhaft, Robert Frey and Robert Miller – were not compensated.

“The true picture of Florida State NIL is The Battle’s End has two entities as well so you really have four entities,” Cowen said. “You have the two with The Battle’s End and the two with us, and it’s a very powerful formula but it is certainly not weighted into the nonprofit side and that’s by design.”