I am working on registering a not-for-profit which will involve itself into research activities in technology. The outcomes will be mostly public goods, in terms of papers, open source code, etc. At the same time, it may generate IP, income from licensing IP and ownership (equity) in companies that come out of the work of the center. This will be used for sustaining the center.
As far as I know, there is restrictions by the IT Act that organizations (for Section 8/Trusts which have IT exemption) can’t own equity and also, their total income (from commercial activities) should not be more than 20% of all receipts.
- Does this mean that a not-for-profit cannot generate income to pay off for their expenses? If that is the case, then how do not-for-profits become sustainable?
- Can NFP own patents or equity?
Thanks for the help.