Saturday, September 26, 2015

IP & Legal Structure Thoughts

This week, C and I were able to have a video conference with both of the potential collaborators mentioned last week. Having everyone in one meeting instead of a series of meetings allowed for some good bouncing of ideas around. Mostly this was a groundwork meeting, getting introduced to each other and making sure that our visions were in alignment.

There is lots of email flying, and I know that C is the center of a lot more of it than I am. I am excited by the energy and ideas, but the next few weeks will busy as we turn those broad visions into focus. I am feeling the pressure to have a full draft in only 3 weeks, but later after a working meeting with C, I think we have a good game plan to get it done.

More work needs to be done understanding and describing target markets. One of the things that is particularly challenging in this regard is the fact that we are interested in providing resources to people who often will not be direct customers. The differentiation between users and customers is important in a business sense, but it is also important to focus on the community being served as a whole. Solvency and the ability to reinvest and/or provide materials at no cost are all necessary considerations to staying viable.

We have an initial products and services sheet started, but there are some intellectual property questions about Creative Common licensing. We need to confirm, but it sounds like the AI workshops were an attribution style, with explicit discussion in their train-the-trainers workshops that participants were welcome to use it for commercial use.

It is under discussion, but there are reasons to continue our new materials with this model as well. The most important thing is that this material is out there, and that discussions on these important topics are being raised. With an Attribution CC license, we retain the value to build brand awareness, but we could easily spread this work, both directly and indirectly. Do you have concerns we should think more about? Please share your thoughts or experiences!

There also has been some conversation about legal company structure, and we are looking to pin that down on Tuesday. My own thoughts on the matter focus on a few options:

Sole Proprietorship:
This seem like a problematic match, given that from the beginning this will be a team endeavor. Also the liability concerns and lack of transferability does not align with the current vision. We have had some really candid and heartfelt conversation about making this organization be representative of the values of diverse perspective we want to see more of in the world. Having control by just a single individual runs a risk of not staying transparent and open to feedback. Also liability would rest on the sole-proprietor.

As long as it was built in from the beginning, we could make provision for allowing additional partners in the future. This is important, because we would like to increase the diversity of the partners. One of the drawbacks to this company structure, however is the liability concern. Also it does not have as many major tax benefits, beyond some minor exceptions that could allow for possible avoidance of double taxation.

Combining many of the tax advantages of a sole proprietorship or partnership with the some of the liability protection of a corporation, a LLC is in many ways a hybrid. In many states this is primarily a for-profit structure, but there are some exceptions. It would need to be researched further. This would allow for financing through the sale of stock.

Given the public good mission of the organization, non-profit is an option. The AI was a non-profit, and this was really important for their cash flow. More important than avoiding many type of tax liability, being non-profit would mean that donors could make their donations tax-deductible and eligible for donation matching by their employers.

Again the public good mission is central for this organization. Although it is relatively new structure, Benefit Corporations are an interesting solution.  In order to be eligible for B-Corp status, a company has to commit to rigorous standards of social and environmental performance, accountability, and transparency. With required reports holding an organization accountable to its commitment, this would ensure that even as the organization grows and changes, it remains committed to all stakeholders. As a for-profit structure, this would not have the tax benefits of the non-profit. It also provides personal liability protection and financing options through the sale of stock.

This was raised, but it is not one that we had covered in class, and I am not as familiar with the details on it. We need to do some more research to understand how this would fit with our needs.

1 comment:

  1. Godd solid work. A couple of comments: shame on me for not including coops: look here: perhaps great choice for you. In your discussion of legal forms, yes, it sounds as though reflecting your mission is important. sole prop is out, I think. What kind of donations do you think you would get with nonrprofit? For many people, managing a nonprofit is not as motivating as owning a company. And I would guess -- you will start with the "owners" you have and then see where you go from there. In terms of including financial owners, or investors, you can always make a decision later, after proof of concept if you want to move in that direction.