Leveraging All Assets: Making a Case for Intellectual Property

At the Council on Foundations Annual Conference in San Francisco, there was enormous interest in how foundations can lead together by aligning all of their assets with their missions. However there is one investment nearly every foundation makes, but which many fail to properly evaluate.

Intellectual property is an asset, a tool, and a driver of innovation. Industry has long understood the power of intellectual property, as trademarks, copyrights, patents, and trade secrets, to be an engine for change and spurring further innovation. Intellectual property (IP) in the nonprofit sector can play the same role on a broad scale and, as in industry, it’s a tool that does not require new capital investments, can be integrated with other IP and systems to solve new or different problems, and is fairly easy to transfer and share.

During the winter of 2013 and spring of 2014, I surveyed the more than 100 social entrepreneurs listed on the S&I 100 Index to get an understanding of their IP assets, how they manage them, and for what purposes they leverage it. Though the sample was small, the survey tried to be fairly comprehensive in assessing the recognition of IP, methods of management, and ways in which the IP is leveraged to support the organizations mission. Some of the key findings were:

• 90% of respondents were aware that they have IP, indicating that they have trademark, copyright, and trade secrets, but only 53% of respondents have internal policies for managing their IP.
• 65% of written internal policies focused on policies geared towards protection of IP, such as non-disclosure and proper use and display of brand and trademark, rather than active strategic management.
• 100% of respondents indicate that IP developed by employees is the property of the organization but 64% do not have a written policy specifically regarding that.
• 85% of organizations did not have any individual(s) or committee in place to make strategic decisions regarding IP, though 90% indicate they use IP in some strategic way, such as leveraging funding, licensing to others, revenue generation, or expanding market opportunities.

The results are interesting. Social entrepreneurs, and by extension, nonprofits in general, create and recognize that they have IP. But, what stands out is what is missing—an organized IP asset management strategy. Intellectual property can be just as powerful for the nonprofit sector to solve social problems as it is in industry to spur product and service innovation.

Think for a moment about the grant making that your foundation does. How much has gone into developing curricula? How many grants to develop theories of change and strategies for affecting that change? How many studies to determine effectiveness have been funded? What, if any, are the expectations to share those effective strategies, and the underlying IP, with other organizations and communities?

My assessment of the power of intellectual property in this context is not alone. In April 2013, the World Intellectual Property Organization magazine interviewed Richard Wilder, Associate Legal Counsel for the Foundation's Global Health Program, to discuss the role of IP negotiation and management in getting health products to markets. Wilder is clear that the attention given to IP is directly related to the Gates Foundation commitment to supporting global health. Wilder’s comments can be seen as a form of mission-related asset management. A foundation that invests in the creation of IP should also have an interest in how that IP is managed, even if it takes no rights to ownership of that IP. Rather, the importance is in knowing that the benefits of the philanthropic capital invested in successful innovations achieve the best possible social returns.

Further, in the fall of 2014, SSIR published an article on how foundations are using program related investment (PRI) to further scientific advancement and discovery. These PRIs are filling a gap in basic research funding created by a shortened attention span in venture capital funders. Current investing strategy favors software and Internet investments over science-intensive R&D.  One result is that PRIs are generating IP in laboratories and research centers that have clear social benefits. The article notes that some models have been developed for bridging the transfer of that PRI IP to market, but overall PRI investment is a very small piece of foundation funding and support. There’s a large amount of IP creation from foundation funding outside of the PRI tool.  

If the sector, both foundations and their grantees, took a serious look at how to utilize existing, successful intellectual property there could be enormous efficiencies created, perhaps putting communities and stakeholders closer to solving critical community problems. Intellectual property cannot replace the skills, leadership, and advocacy necessary to solving social problems. Rather, it is a tool that could significantly change how organizations think about addressing those problems. 

The needs of the nonprofit sector are many. The management of IP is a conversation worth having if we are looking for economies of scale and new ways of thinking about how we collaborate and solve problems together.

Michelle Walker is Principal at Walker Philanthropic Consulting.