Effective Date: |
March 2, 2017 |
Supersedes: |
Joint Venture Policy - November 19, 2015 |
Policy Review Date: |
One year |
Issuing Authority: |
Research Foundation President |
Responsible Party: |
Vice President of Industry and External Affairs |
Contact Information: |
Heather Hage 518.434.7061 |
In furtherance of its mission to support The State University of New York ("SUNY"), the Research Foundation for the State University of New York ("RF") will occasionally participate in Joint Ventures with external partners. These relationships can put the RF’s tax-exempt status at risk if not structured properly.
The purpose of this policy is to establish parameters to protect campus administration and the RF’s tax-exempt status when the RF participates in Joint Ventures. This policy describes common Joint Venture transactions, the critical factors to consider when evaluating entry into Joint Venture transactions, who has authority to approve Joint Ventures of the various types, and how Joint Ventures must be structured when the RF is a party.
For the RF to participate in a Joint Venture, the Joint Venture must be structured in such a way as to mitigate any risk posed to the RF’s tax-exempt status. The following describes typical Joint Venture transactions and the protocols for their execution:
Except as provided in Section II below, the RF should only engage in Joint Ventures, such as strategic alliances with industry partners, where the activity to be pursued through the Joint Venture is substantially related to, and in furtherance of, the RF’s Exempt Purpose., Additional guidance to assist campuses with assessing the consistency of a specific activity or objective with the RF’s tax-exempt mission can be found in the Joint Venture Guidelines. Unless the particular activity to be pursued is clearly in furtherance of, and substantially related to, the RF’s tax-exempt purpose, a campus must contact the Director of New Ventures who will coordinate to ensure that the subject activity is reviewed by the appropriate parties for compliance with the RF’s tax-exempt purpose.
Joint Ventures that further the RF's tax-exempt purposes may be structures in a variety of different ways, including:
In certain circumstances, SUNY may request that the RF act as a founding member with another entity (typically, a campus affiliated organization) of a separate, independent corporation which is tax-exempt under Internal Revenue Code ("Code") Section 501(c) (an "Affiliated Corporation") where the activities to be pursued further charitable objectives, but only tangentially further the RF’s Exempt Purposes. Creation of any such Affiliated Corporation requires the approval of the RF Board of Directors as prescribed by the RF’s Affiliated Corporations Policy.
Campuses considering other transactions or engagements with start-up companies or any other equity opportunities should contact the Director of New Ventures in the Office of Innovation and Partnerships as early as possible in the planning stage, and must contact the Director of New Ventures before signing any Joint Venture agreements. Joint Ventures not falling into one or more of the transaction types described in this policy require the submission of a Campus Research Initiative Plan to the Office of Innovation and Partnerships and the review of the Office of General Counsel, Finance Office and Compliance Office as needed.
Situations in which the RF receives Equity in Lieu of Payment ("EILP") pursuant to a License Agreement or Incubator Program arrangement are not subject to this Policy and instead are governed by the RF’s Equity Administration Policy.
The following table outlines the responsibilities for compliance with this Policy:
Responsible Party |
Responsibility |
Operations Manager |
Submission of proposed Joint Ventures, including Contractual Joint Ventures, to RF Central Office as required under this policy Submission of equity-generating transactions to the Director of New Ventures, Office of Innovation and Partnerships |
RF General Counsel |
Providing legal advice regarding, and conducting legal review of, proposed Joint Ventures |
RF President |
Approval of the creation of new Joint Ventures – both for profit and not-for-profit |
RF Board of Directors |
Approval of the creation of new Joint Ventures – both for profit and not-for-profit |
Office of Innovation and Partnerships |
Policy oversight Joint Venture establishment and oversight following approval Transaction modeling and support for Joint Venture development |
Joint Venture – For purposes of this policy, a Joint Venture means any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity without regard to: (1) whether the RF controls the venture or arrangement; (2) the legal structure of the venture or arrangement; or (3) whether the venture or arrangement is taxed as a partnership or as an association or corporation for federal income tax purposes. This definition is intended to mirror that definition used for purposes of IRS Form 990, Part VI, Section B, Line 16. Should the definition of a joint venture change for these purposes, this definition is modified accordingly.
Equity in Lieu of Payment ("ELIP") - equity in a third-party company in an amount of no greater than a twenty percent (20%) ownership interest in the subject entity which was acquired by the RF through its support of innovation objectives pursuant to a License Agreement or through the Incubator Programs and the subject EILP was obtained pursuant to the RF’s standard forms linked in the RF’s Equity Administration Policy. For the avoidance of doubt, if the RF will own greater than a twenty percent (20%) ownership interest in the subject entity, or otherwise be involved in the management of the day-to-day operations of the subject entity, such equity interest will not be deemed EILP Equity for purposes of this policy and the campus shall seek approval for such arrangement pursuant to the RF’s Joint Venture Policy.
Exempt Purpose - The charitable purpose of the RF, which is set forth in the RF’s Charter as follows:
License Agreements – An agreement pursuant to which the RF grants a third-party the right or permission to use the RF’s intellectual property, typically in return for a set royalty such as upfront payments, minimum payments, royalties based on a percentage of net sales and/or termination payments.
Incubator Programs – Programs housed within campus affiliated or controlled facilities which enable the support of new and growing companies by providing a suite of programs and services, including without limitation the SUNY established incubators throughout the system which provide growth-oriented companies essential business incubation services and access to industry-specific development resources through its connection to SUNY and SUNY’s academic and programmatic resources.
Affiliated Corporations Policy
Equity Administration Guidelines
Procedures for Equity Administration
Responsibility for Losses Policy
Delegation of Authority Policy and Procedure
Research Initiative Plan Template
Date |
Summary of Change |
July 6, 2020 |
Updated Policy Owner. |
March 2, 2017 |
Remove equity language to new policy and update policy ownership language. |
November 19, 2015 |
Specific language related to process and transaction examples has been moved into the Guidelines for RF Participation in Joint Ventures and Procedure for Equity Administration. |
September 10, 2015 |
Updated links and added new links. |
December 30, 2014 |
New policy. |
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