Legal & Tax-Exempt Guidance for Athlete Foundations
Professional athletes often want to give back to their communities and support causes they care about. One effective way is by creating a foundation, a 501(c)(3) nonprofit entity.
But athlete foundations aren’t just charitable projects — they involve complex legal, tax, and governance requirements. Without proper setup, a foundation can face IRS penalties, lose tax-exempt status, or encounter public scrutiny.
Cullinane Law Group helps professional athletes and their teams build foundations that are legally compliant, mission-driven, and sustainable.
Why Athletes Start Foundations
Many professional athletes give back in different ways — volunteering, hosting fundraising events, or establishing foundations. As Steve Nash, retired eight-time NBA All-Star, says:
“I am a huge believer in giving back and helping out in the community and the world…I believe that the measure of a person’s life is the affect they have on others.”
A foundation allows athletes to amplify their impact, engage donors, and create a structured, long-term approach to philanthropy. All share the joy that comes from being a part of something bigger than themselves.
Types of Athlete Foundations
What is a Foundation?
Generally, a foundation is an organization that supports charitable activities for the common good. Foundations work to help other organizations, institutions, or individuals for scientific, educational, cultural, religious, or other charitable purposes.
Many philanthropic and charitable organizations are considered to be “foundations.” The name foundation itself can represent several types of organizations.
The IRS distinguishes between two entities:
- Private foundations, which are often funded by an individual, family, or corporation.
- Public charities, which may be nonprofit groups or community foundations that raise money from the general public.
Foundations can be established by individuals, families, corporations, or groups. Here, we focus on athletes because we have many clients — both current leaders in their sport and others retired from competition — who start foundations as a way to do more good in the world. Athletes often create them to formalize their giving. The main types include:
Private Foundations
Some athletes opt to organize “private foundations” that they endow and fund themselves. These entities may offer donors more control over their charitable giving.
Private foundations often invest their principal funding, then distribute the income from those investments for charitable purposes. Foundations often make financial grants to others. However, some private foundations also may operate programs. We help professional athletes and their advisors to set the foundation’s strategic plans.
Often funded primarily by the athlete or family
Often makes grants to other charities or operate programs
May offer specific tax advantages
We help athletes set up private foundations that maximize tax benefits and ensure proper investment and grant management.
Public Charities (Charitable Foundations)
Some athletes prefer to set up “charitable foundations” that have a public charity status because this entity may allow other individuals, corporations, and foundations to contribute to their foundation. These athletes may like to host special fundraising events (sports tournaments, galas, special events) to raise contributions for a cause that the athlete has pre-selected.
We work with the professional athlete to determine if this structure may offer tax deductibility options.
Often accept donations from the public, corporations, or other foundations
May host fundraising events like sports tournaments or galas
Offer donor tax-deductibility options
Professional athletes set up both types of foundations. We assist athletes and their professional advisors and agents in determining the best corporate and tax structure for their foundation to find success.
Challenges With Athlete Foundations
Professional athlete foundations are highly scrutinized. Issues can arise from:
Improper initial setup
Mismanagement or lack of oversight
Public and media scrutiny of spending
An ESPN “Outside the Lines” investigation of 115 charities founded by high-profile, top-earning professional athletes revealed that the investigated professional athlete’s foundations don’t measure up to what charity experts would say is an efficient, effective use of money.
In that investigation, reporters found that problems with misuse of funds, including how much money a foundation actually spent on charitable work as opposed to administrative expenses. The report also found problems with management, including whether there are enough board members overseeing the organization.
Our clients avoid these pitfalls. We provide guidance on structure, governance, and long-term management, ensuring foundations operate efficiently and ethically.
Our Clients – Professional Athlete Foundations
We are honored to help professional athletes in their mission to give back and bring good to the world. Here a a few highlights.
The Fortress Foundation
Major League Baseball All-Star pitcher Justin Masterson, along with his wife Meryl, family, and friends, founded the Fortress Foundation.
Justin has always expressed a passion for giving back, because the game of baseball has given him so much.
Masterson has embarked on charitable trips to the Dominican Republic in past off seasons and has financially supported numerous causes.
“Meryl and I have received many blessings in this life,” Masterson said, “and strongly believe that to whom much is given, much is expected.”
Nancy Lieberman Charities
Nancy “Lady Magic” Lieberman is a true pioneer in women’s sports. Her extensive resume includes: WNBA player, coach, general manager, sports broadcaster for ABC, NBC, ESPN, and FOX Sports Southwest (FSSW), motivational speaker, author and the first female coach of a men’s team under the NBA umbrella.
“Foundations and giving are about trust, character, honor and service to others. The Nancy Lieberman Foundation found all those qualities in the Cullinane Law Group. We are the fortunate ones to have them on our team.” – Nancy Lieberman, Basketball Hall of Famer.
With the Nancy Lieberman Charities, Nancy and her team serve as a catalyst for the development of young girls and boys throughout the country by using basketball as a motivational tool. Nancy Lieberman is dedicated to expanding and ensuring sports opportunities for youth through her basketball camps and clinics.
Ready for Help with your Professional Athlete’s Foundation?
We offer a turn-key solution for quickly launching your new foundation. We complete all of the work to set up your foundation as a nonprofit corporation with tax-exempt status – from state corporate matters and IRS tax issues.
We help foundations to establish policy development, grants management, and grants administration, so that your programs have the strongest impact.
We ensure that your foundation is fully compliant, so your foundation is in the spotlight for the right reasons: making a difference in the world.
