Universities are nonprofit organizations, and thus all divisions and departments within a university system fall into this category as well. Apparently, Congress exempted colleges from paying taxes on their sports revenues decades ago, and despite the huge changes and massive amounts of cash flowing in to college athletic departments (thanks to the wild success of college sports, particularly football and basketball), this fact has not changed since. Under the federal tax code, clubs are recognized as charities, and athletic departments that are set up as clubs can benefit from these privileges and enjoy the donations of wealthy supporters to build stadiums and to woo athletes into joining their ranks as athlete/scholars. In most cases, becoming a club (and essentially, a charity) is merely a matter of submitting forms, electing officers and “recruiting” club members. Refer to the op-ed article from the New York Times (below).
You may be able to find more specific information in the NCAA’s rules and bylaws, but you’d have to pay to download or order these documents.
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