Q9 & Q10: Foundation Funding and IP Rights Retention
Updated: Feb 7
Image by: Andrea De Santis
The next set of questions in the 2014 survey circled back to the ownership of the nonprofit’s intellectual property. There is no ability to exclude if an organization does not have some ownership in the IP assets. The more I thought about ownership of IP assets in the nonprofit sector and discussed this series of questions with a trusted colleague it became clear that ownership might actually be very unclear to nonprofit leaders.
Nonprofits receive resources, particularly cash, from a variety of sources. Some nonprofits generate resources through fee-for-service or sales of goods and services. However, unless those earned revenues are exclusively the resources used to create intellectual property assets it’s possible that other organizations provided some or all of the funding to develop the nonprofit’s intellectual property. In those cases, the gift agreement between the source(s) of funding and the nonprofit organization about ownership of any developed IP becomes important in order to define ownership and facilitate strategic exclusion or other leverage of the IP assets.
In addition, expectations from the source(s) of funding might include access to the IP that could impair some of the strategic goals of the nonprofit. It’s not uncommon for Federal agencies to retain the rights to use IP developed with their funding to support other funded organizations or in their own delivery of programs and services. By retaining that right, the nonprofit needs to be aware that their intellectual property is in distribution or use without their control and manage their strategic use of that IP accordingly.
In practice, I’ve encountered this with several clients who found that different funders of the same IP assets had different expectations for access and distribution of the IP, some of which were in writing and some of which were not. This has led to many hours of discussion and re-negotiation of grant agreements with all funders. The awareness of intellectual property asset development, ownership, and strategy is also an unexplored area of the nonprofit sector and it has a direct impact on how nonprofit organizations are able to deploy mission-related strategies downstream of foundation funding.
All 19 respondents were asked if any of the organization’s IP was developed with funds from a foundation or government agency.
They shared that:
Nine (9): Yes, their IP was developed with foundation or government resources.
Nine (9): No, none of their IP was developed with foundation or government money.
One (1): Not sure where the resources came from.
These nine were then asked if their organization retained the rights to the IP developed.
Those nine indicated that:
Five (5): Yes, we retained the rights to the IP developed with funder resources
Four (4): It depends on the funder whether we retained the rights to the IP developed with funder resources.
Diving Deeper into Nuance: Ownership and Written Policies Connection
The funding and the assignment of a nonprofit’s IP rights are important to the long-term management of the IP. External funding that does not come with clear guidelines on assignment of rights can lead to disputes over ownership and rights to revenue. (Bloom 2011a; Bloom 2011b). Five (5) of the nine (9) organizations that have IP developed with foundation or government funds indicated earlier in the survey that they do not have written policies for IP management. Only three (3) of the nine (9) with IP developed without foundation or government funding do not have written IP policies.
This suggests that although an organization might recognize IP, it is less likely to have internal controls in place when the IP is developed with foundation or government funding. It further suggests that assets developed with earned or unrestricted resources are seen as more dear, in an economic sense, and receive more attention, scrutiny, or fiduciary oversight from leadership and governance teams.
You can skip to the summary of all of the responses in the Social Entrepreneurs and Intellectual Property Management paper. Or, read through each of the blog posts tagged as Intellectual Property Data V1.0 for a more recent analysis of the data.
Bloom, M. G., 2011. University and non-profit organization licensing in the United States: Past, present and in the future—part I. The Licensing Journal, May Issue, pp. 1-9.
Bloom, M. G., 2011. University and non-profit organization licensing in the United States: Past, present and in the future—part II. The Licensing Journal, June/July Issue, pp. 9-16.