NIL collectives are privately funded organizations that pool money from boosters, donors, and businesses to pay college athletes for the use of their name, image, and likeness. They emerged after the NCAA began allowing athletes to profit from their NIL in July 2021, and they’ve quickly become the primary financial engine of college sports recruiting. In the 2024-2025 season alone, collectives spent an estimated $1.3 billion on athlete compensation.
How NIL Collectives Work
A collective sits outside the university’s athletic department, at least on paper. Donors who want to support a school’s athletic program contribute money to the collective rather than directly to the school. The collective then arranges deals with athletes, paying them for activities like autograph signings, social media posts, charity appearances, or brand endorsements. Athletes receive roughly 90% of the collective’s NIL dollars, with the remaining 10% going to overhead and commissions.
The arrangement gives everyone a layer of separation. The university can say it doesn’t pay its athletes directly. The collective can say it operates independently. In practice, though, millions of dollars flow to athletes in deals arranged just outside athletic department doors, and the line between “independent booster group” and “team payroll office” is thin. A Sportico study surveying 36 Power Five schools found no institution that admitted to any functional connection with its collective, even as the coordination between coaching staff preferences and NIL offers is widely understood.
Three Types of Collectives
The IRS Taxpayer Advocate Service identifies three main structures:
- Marketplace collectives act as matchmakers, connecting athletes with businesses that want to use them for promotions or endorsements. The collective facilitates the deal but doesn’t necessarily fund it with pooled donor money.
- Donor-driven collectives raise money directly from boosters and fans, then create NIL opportunities for athletes. This is the model most associated with big-dollar recruiting, where donors essentially fund athlete compensation through the collective as an intermediary.
- Dual collectives combine both approaches, running a marketplace for outside business deals while also distributing pooled donor funds to athletes.
How Much Money Is Involved
The growth has been staggering. In the first year after NIL rules took effect (2021-2022), collectives spent about $321 million. By year four (2024-2025), that figure had quadrupled to $1.3 billion. The money concentrates heavily in football and basketball at major programs. For the 2025-2026 season, the average Power 4 football program is allocating around $20.5 million through its collective, while high-major men’s basketball averages $4.3 million and women’s basketball averages $4.8 million.
Individual payouts vary enormously. Most college athletes earn little or nothing from NIL. But for the top 5% of earners, the numbers are significant. A top Power 4 wide receiver averages around $2.5 million per year in NIL compensation. A high-major men’s basketball forward or women’s basketball guard averages about $3 million. Even in sports with smaller audiences, elite athletes earn meaningful money: a top Division I volleyball outside hitter averages around $1 million, a top softball player about $300,000, and a top baseball infielder about $600,000.
The Legal Gray Area
Collectives operate in a regulatory gap. They claim independence from universities, but their entire purpose is funneling money to athletes at specific schools. This creates tension on multiple fronts. The IRS has scrutinized whether donor-driven collectives truly qualify for tax-exempt status under 501(c)(3) rules, since paying athletes to play for a particular team looks more like compensation than charitable activity. Donors who expected their contributions to be tax-deductible may find that’s not the case.
There’s also an open question about whether collectives function as employers. If a collective coordinates with coaching staff about which recruits to offer deals to, and those deals are essentially contingent on playing for the school, the relationship starts to look like employment rather than independent endorsement work. Only the National Labor Relations Board or a court can ultimately resolve that question, but it has major implications for how athletes are classified and what protections they receive.
How the House v. NCAA Settlement Changes Things
The proposed settlement in House v. NCAA is reshaping the landscape for collectives. Under its terms, athletic departments will be allowed (but not required) to share revenue directly with athletes, distributing up to 22% of the average annual revenue of power-conference schools. That’s expected to be $20 million to $23 million per school in the first year, the 2025-2026 season, drawn from media rights, ticket sales, and sponsorships.
This matters because it introduces a legitimate, above-board channel for paying athletes that doesn’t require a collective as a middleman. The settlement even allows collectives to be absorbed by athletic departments and become in-house marketing agencies that manage revenue sharing directly.
Collectives won’t disappear, though. Under the proposed settlement terms, they can continue operating outside athletic departments, and athletes can still sign third-party NIL agreements with collectives or outside businesses. Some top-tier athletic departments actually prefer keeping collectives as external agencies that provide additional NIL opportunities beyond the revenue-sharing cap, essentially serving as a recruiting sweetener on top of what the school itself can offer.
The settlement does add oversight. Athletes would be required to report all third-party NIL contracts worth $600 or more to a new clearinghouse database overseen by the NCAA and power conferences. A designated enforcement agency would review those reported deals to determine whether they reflect fair market value, an effort to distinguish genuine endorsement deals from what amounts to pay-for-play. Whether that enforcement mechanism has real teeth remains to be seen, but it represents the first serious attempt to bring transparency to a system that has operated largely in the shadows since 2021.