Spinning a for-profit out of a not-for-profit

trap4

If a not-for-profit with charitable status develops it's own IP are there any issues with it spinning out a for-profit company with ownership of that IP?

Alan Shore

You may need to form a subsidiary to trade through. Would the profits be distributed back to the Charity Company?
Revenue made us form a subsidiary to trade through.

Mozart1986

Might not be an easy sell to customers. I thought of this route, I'd like to hear responses also

RATM

I don't see why not provided you stick to the ethical & moral guidelines of the mothership, the charity itself. Social entrepreneurship is a thriving sector.

Revenue might want to look at it though I'm not sure.

Are you able you tell us what the charity and business idea are? Might be able to give a better perspective of potential probs then.

dbran

Hi

The revenue are very wary of people trying to use the cloak of a charity to avoid paying tax on what is a commercial venture.

If the charity is entitled to all the profits then the revenue may allow the venture to remain in the charity. if it is part of a seperate enterprise then they will probably ask that you set up a seperate company to trade through.

Kind Regards


Dbran

trap4

Thanks for the responses. The charity is being set up to provide educational services to minority groups. We will be using opensource software but may develop our own customizations on top of the code. That's there the potential for IP lies.

antoinolachtnai

I think you would be ok to concentrate on developing now and deal with the tax on profits issue when there actually is a profit. But you should get some professional advice obviously.

If the activity doesn't fit firmly within what the revenue considers charitable you will have to pay the tax, even if all the profits go to the charity.

To go beyond the tax issue, it is worth reading more about 'social entrepreneurship'.