Joint Venture Policy

EFFECTIVE DATE: June 30, 2009 |LAST UPDATED: March 15, 2011 | Policy Section: tax-compliance

Responsible Executive

Carolyn Ainslie, vice president for finance and treasurer

Responsible Office

Office of the Controller

Contact

Dan Richlin, tax manager, (609) 258-1550

I. Policy StatementBACK TO TOP

This policy defines a “joint venture” for the purposes of Princeton University’s business enterprise, investment, and exempt-purpose activity.

II. Who is Affected by this PolicyBACK TO TOP

All units of the University.

III. Definitions

Joint venture

Any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity without regard to: (1) whether the Trustees of Princeton University controls the venture, (2) the legal structure of the venture or arrangement, or (3) whether the venture or arrangement is taxed as a partnership or as an association or corporation for federal tax purposes.

IV. PolicyBACK TO TOP

POLICY RELATING TO ENTERING INTO JOINT VENTURES

A joint venture for these purposes is defined as any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity without regard to: (1) whether the Trustees of Princeton University controls the venture, (2) the legal structure of the venture or arrangement, or (3) whether the venture or arrangement is taxed as a partnership or as an association or corporation for federal tax purposes.

Joint ventures in which 95% or more of the income generated during the year is described in Internal Revenue Code Sections 512(b)(1) through 512(b)(5) of the Internal Revenue Code of 1986 and whose primary purpose is the production of income or appreciation of property will not be subject to the policies articulated below.

This definition is intended to mirror that definition used for purposes of IRS Form 990, Part VI, Section B, Line 16. Should the definition of a joint venture change for these purposes, this definition is modified accordingly.

PRINCO - Managed Investments

Princeton University Investment Company (“PRINCO”) is generally responsible for managing the University’s endowment. This section of the Policy applies to any investments made by PRINCO on behalf of the University that may be considered joint ventures, as defined above.

PRINCO makes investments with the primary (if not the exclusive) purpose of production of income and/or appreciation of property. Though PRINCO often serves on Limited Partner advisory or valuation committees, PRINCO does not make investments on behalf of the University with the intent of assuming an active role in managing any investment, with the exception of limited circumstances that principally involve hedging and/or derivative strategies. However, the nature of an investment may be such that because of the structure of the investment and/or the nature of the income generated by the investment, the investment could be considered a joint venture as defined above.

All investments are made in accordance with the University’s Investment Policy Statement, and in compliance with both the University’s conflict of interest principles and applicable state law standards governing investments. Investments are made on arm’s length or terms more favorable to the University. PRINCO will not make investments with managers whom PRINCO knows may use invested funds in a manner that may jeopardize the University’s tax-exempt status. For example, PRINCO will not invest with managers who could use invested funds to intervene in political campaigns or engage in substantial lobbying.

Should such assets be acquired in spite of the afore-mentioned policy, they should be disposed of upon their discovery.

Investments Not Managed by PRINCO

Endowment investments are also acquired by gift and other means not associated with PRINCO. Some of those investments may be considered joint ventures as defined above.

Acceptance of such gift should be conditional upon review by the Treasurer’s Office to ensure that such gift does not jeopardize the University’s tax-exempt status. For example, gifts of interests in activities which intervene in political campaigns or engage in substantial lobbying should not be accepted.

If such gifts are received in spite of the afore-mentioned acceptance policy, they should be disposed of upon their discovery.

Investments Acquired through Licensing of Intellectual Property

The Office of Technology Licensing and Intellectual Property will occasionally agree to the receipt of equity interests in entities in exchange for the licensing of intellectual property owned by the University. Some of the interests received may be considered joint ventures as defined above.

Acceptance of such interests should be conditional upon review by the Treasurer’s Office of the transaction to ensure that such interests will not jeopardize the University’s tax-exempt status. For example, interests in entities which intervene in political campaigns or engage in substantial lobbying will not be accepted.

Should such interests be acquired in spite of the afore-mentioned policy, they should be disposed of upon their discovery.

Other Agreements

All other agreements which meet the definition of a joint venture (as outlined above) should be reviewed by the Treasurer’s Office in order to safeguard the University’s tax-exempt status.

V. Procedures BACK TO TOP

VI. Forms BACK TO TOP

VII. Contact Roles and Responsibilities BACK TO TOP

VIII. Update Log BACK TO TOP

2/25/2011

No changes. Copied to web-based policy library.

6/30/2009

Approved


 

CONTACT US

finance@princeton.edu
Tel (609) 258-3080
Fax (609) 258-0442

Princeton University
Office of Finance & Treasury
701 Carnegie Center
Princeton, NJ 08540

Google Map
Princeton Shuttle

FINANCIAL SERVICE CENTER

7 New South
Tel (609) 258-3080
Fax (609) 258-5040
Open Monday through Friday,
8:45 am — 5:00 pm

SERVICES INCLUDE

Customer service, cashiering,
check pick-up, financial system access

FINANCE NEWSLETTER

The General Ledger is your link to updates on people, policies, and other information related to financial transactions at the University.

Download Current Issue
Download Past Issues
Subscribe

WE WANT YOUR FEEDBACK!

How can we better serve you? Submit comments, questions, and ideas to our customer service department.

finance@princeton.edu