Yes, the NFL is a nonprofit. And there’s nothing wrong with that.

Old-fashioned football playersThe folks that own title to the Game Which Shall Not Be Named are all over the news about their nonprofit status. Despite the link-bait headlines and self-righteous outrage, there really isn’t a problem with the National Football League being a nonprofit.

  1. The NFL is a trade association, not a “charity.” It is a 501 (c) 6 nonprofit organization. It is not a 501 (c) 3 organization, which would in fact be a bit outrageous. The difference is “(c) 3” nonprofits are institutions of public charity, and the other 29 classes of nonprofits (See Nonprofitiness™  for more on this) are not the same. Trade associations like the NFL cannot grant tax-deductions for donors, for example. Yes, the association doesn’t pay any income tax – but it also cannot distribute any profits. Any profits it makes have to be put back into the use of the trade association, so mostly the NFL just makes the money it needs to protect the trade association from small blogs that might use their trademarked words (which this one will assiduously avoid).
  2. The big money does get taxed. It just doesn’t get “corporate” taxed. Yes, there is a huge amount of money in the NFL, but it goes down the food chain to the players, the teams, and even the very highly paid executives for the NFL itself – all of which pay taxes.  Any reasonable person can make an argument that the pay of NFL executives is too high, but this is hardly unique to the nonprofit status of the organization, and that pay would all be tax-deductible it if were a for-profit league anyway. So in either case, it wouldn’t have been subjected to corporate tax.
  3. This is all beside the point. Anyone choosing to get outraged about the inappropriate amount of money put into sports ball will find an ally here. The real point isn’t the tax status of the business, but what else can and should we be doing to bring more resources to the important social work which needs to be done. Corporate structures will come and go (such as the benefit corporation) but community good will still be a need. If you want to get some additional resources for that work, don’t focus on someone else’s tax structure. Go to all those big companies advertising and tell them how you can bring them value in supporting your charity more than repeating the same commercial on a football game a thousand times.

The tax structure of the NFL isn’t worth your time. Promoting a different choice about where to spend time, money and energy is where the “real” nonprofits are going to find value.

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