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9.10.4: Authority of Non-Profits To Engage in Commercial Activities
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Abstract
The authority of a university or other tax-exempt institution to enter into commercial relationships has to be examined on a case-by-case basis. Many a university, particularly one publicly sponsored, has formed a "research institute" governed by a board of trustees appointed by the chairman of the university's governing board. Among the several reasons for organizing such a vehicle, not the least is to avoid issues concerning legal authority and independence-that is, to vest power over activities such as joint industry/university ventures in an entity which is not a creature of statute nor ancient grantor documents and is not subject to the oversight and governance of the public members of the board of regents. If no such entity exists, the issue of ultra vires should be taken seriously by any potential partner. A challenge to the legal authority of a tax-exempt institution to pursue commercial ventures is likely to be...
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