Texas A&M's 12th Man+ Fund discontinuing NIL operations

When the 12th Man+ Fund launched in February 2023, it was heralded as the next evolution of NIL collectives. A booster-funded entity run through Texas A&M‘s fundraising arm, the 12th Man Foundation, the fund became the closest public link between a traditional athletic department fundraising effort and NIL-related donor dollars.

Expectations were set that boosters could earn priority points for their donation. The new Texas state NIL law, which went into effect July 1, provided protection for the 12th Man+ Fund to operate with protections against the NCAA, which released guidance in the last six months quietly targeting the operation.

The decision has now been made, however, to discontinue the foundation’s NIL operations after discussing the IRS memo released in early June with advisors. A 501(c)(3) entity since the 1980s, the 12th Man Fund has led funding initiatives for scholarships, programs and facilities in College Station. 

“Following consultation with external advisors, the 12th Man Foundation is altering its approach to NIL which includes discontinuing the 12th Man+ Fund,” the foundation wrote in a letter sent Wednesday afternoon to donors. “This decision was made to ensure the 12th Man Foundation meets its high standards for compliance and to protect the organization’s mission.”

In the memo drafted by the IRS Chief Counsel, the revenue service outlined donations made to nonprofit NIL collectives are not tax-exempt. Accepting tax-deductible donations can make a significant difference when dealing with top-level donors, who would prefer to write off any NIL donations come tax season. Some of the most aggressive collectives have applied and been deemed as 501(c)(3) organizations by the IRS. That does not mean, however, that the IRS has to sign off on their activity.

NCAA president Charlie Baker backed the guidance shortly after its release. U.S. Senators Ben Cardin (D-Maryland) and John Thune (R-South Dakota) sent a letter to the IRS and Department of the Treasury last month urging the bodies to strengthen their stance on NIL collectives.

The 12th Man Foundation does not plan to stop supporting NIL opportunities, with plans to create deals for athletes by expanding marketing outreach. As part of the quid-pro-quo in the NIL deal with the 12th Man+ Fund, student-athletes were expected to promote the 12th Man Foundation, which is considered a separate entity from the athletic department.

“This decision does not prevent the 12th Man Foundation from supporting NIL opportunities for Aggie student-athletes,” the letter wrote. “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.”

Donors who have contributed to the 12th Man+ Fund will be directly contacted by the foundation regarding options to redirect their contributions.

What does this mean for the Texas A&M NIL market?

Texas A&M been in the NIL spotlight since the new era began in July 2021. The Aggies pieced together the best-ever recruiting class in 2022, with many pointing to NIL being the driving force. Alabama head coach Nick Saban called out Texas A&M and Jimbo Fisher for buying every player in that class. 

The Aggies’ collective – “The Fund” – was thought by many to have some of the deepest pockets. Investors in The Fund told The Athletic last April they didn’t understand why boosters in other collectives feel the need to advertise their groups.

A source told On3 on Wednesday The Fund is still active. While the 12th Man+ Fund was thought to be cutting edge, the NIL fund never publicly announced a NIL deal. Texas A&M head coach Jimbo Fisher pointed toward athletic director Ross Bjork for more clarification at SEC Media Days.

On July 1, the same day the new Texas NIL bill went into effect, the Aggies released a video explaining how they were approaching the new state law. Along with the creation of a new in-house department focused on NIL, they plan to be more active in assisting athletes in finding opportunities.

What does this mean for the NIL landscape?

The aggressive new NIL collective models have piqued the interest of the entire college athletics space, but it’s clear Texas A&M caused the movement. Similar state laws in Oklahoma, Arkansas (the Razorbacks already have a similar model), Missouri and New York signal that one can expect a copycat effect throughout the landscape.

Texas Tech announced a new relationship between, The Matador Club, and the school’s fundraising arm, the Red Raider Club, in June. The agreement was to promote and assist in the fundraising efforts for the collective.

The Texas One Fund was expected to benefit, too. The Texas athletic department had announced current members of the Longhorn Foundation would earn loyalty points for any donations to the NIL collective starting July 1.

The decision to shut down operations of the 12th Man+ Fund could result in many across the NIL landscape making a similar move.

“I do think that’s becoming more commonplace for people to think that way,” North Carolina athletic director Bubba Cunningham previously told On3 of the model. “It certainly would eliminate one of the challenges, which is donor fatigue, because of the number of calls from the different sources of people looking for support.”