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In this pandemic year, many not-for-profits are scrambling to find new sources of revenue to replace donor contributions and other lost income. If this sounds like your charity, you might want to consider licensing your name and brand to a for-profit business.<\/p>\n
Ensuring success<\/strong><\/p>\n When licensing arrangements work, both charities and companies can experience significant benefits. One example is AARP, which licenses its name to a variety of companies, including UnitedHealthcare, The Hartford and ExxonMobil. But such arrangements can also cause problems. For example, if a product \u201cendorsed\u201d by a nonprofit is found to be ineffective or harmful, the nonprofit may suffer by association. By the same token, a nonprofit mired in controversy could harm the public perception of a product or service bearing its name.<\/p>\n To ensure a license arrangement doesn\u2019t become a public relations problem, thoroughly research any potential partner\u2019s business, products and the backgrounds of its principals. Also confirm that your mission and values align. If you determine that a potential licensee\u2019s products or services have the potential to undermine your brand, take a pass \u2014 no matter how high the promised royalties.<\/p>\n Look before you leap<\/strong><\/p>\n Work with your attorney to include certain provisions in any license agreement. Specify how the licensee can use your name and brand, mandate quality control standards and detail termination rights. And realize that signing the agreement doesn\u2019t end your responsibility \u2014 you\u2019ll need to actively monitor the licensee\u2019s use of your name and intellectual property throughout the agreement period. If it sounds like all this will require additional staff time, you\u2019re right.<\/p>\n In fact, the resource-intensive nature of licensing leads some nonprofits to outsource the work. Outsourcing allows your organization to focus on its mission, but you\u2019ll probably pay upfront fees, a monthly retainer and a percentage of the royalties that your consultant secures. So it\u2019s important to crunch the numbers and make sure your license arrangement is worth this expense and effort.<\/p>\n Don\u2019t forget the tax implications of licensing. Nonprofits enjoy a royalty exclusion that generally exempts licensing revenues from unrelated business income taxes (UBIT). But certain arrangements can jeopardize this. You can\u2019t receive compensation based on your licensee\u2019s net sales \u2014 only on gross sales. And you must play a passive role, meaning you don\u2019t actively provide services to the licensee.<\/p>\n Make a positive impression<\/strong><\/p>\n Any licensing arrangement your nonprofit enters into should generate revenue and, probably even more important, promote a positive impression of your brand. To ensure you meet both goals, consult an attorney about legal details and us for financial advice.<\/p>\n \u00a9 2020<\/em><\/p>\n <\/body> In this pandemic year, many not-for-profits are scrambling to find new sources of revenue to replace donor contributions and other lost income. If this sounds like your charity, you might want to consider licensing your name and brand to a for-profit business. Ensuring success When licensing arrangements work, both charities and companies can experience significant […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[8,11,12],"class_list":["post-15071","post","type-post","status-publish","format-standard","hentry","category-not-for-profit","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15071","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=15071"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15071\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=15071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=15071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=15071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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