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This paper addresses several positive changes resulting from the U.S. crisis, including some changes that made some independent R&D organizations even stronger and more competitive. The experiences and reactions of one organization, the Research Triangle Institute (RTI), are offered as a case study. It also incorporates observations made during the committee's visit to Moscow and St. Petersburg in November 1997. Although the paper extends beyond technology commercialization, it treats many of the issues that research organizations must address in this effort.

RTI is one of perhaps ten large-scale, basic and applied research, nonprofit organizations in the United Sates. A much larger group of smaller organizations generally follow the same policies and practices for business development and organizational management. Many of these policies and practices are dictated, at least in part, by the sponsors of research programs. Others have been developed over time in the interest of good business.

RTI was founded nearly 40 years ago by the three major universities in the local area—North Carolina State University, Duke University, and the University of North Carolina at Chapel Hill. It was created by those academic institutions and visionaries in the State of North Carolina to provide research opportunities for graduates and thereby retain the graduates as an intellectual resource for the region. Shortly after its creation, RTI became financially and administratively independent of the universities. In accordance with its charter, however, about one-half the members of its Board of Governors are associated with the universities.

RTI has approximately 1,500 investigators and staff members involved in basic and applied research and engineering. Most of the staff is located in Research Triangle Park, North Carolina; some researchers are located at RTI offices or facilities in Washington, D.C.; Hampton, Virginia; Cocoa Beach, Florida; and a number of small project offices in locations around the world.

RTI is organized as a not-for-profit corporation under a section of the U.S. Tax Code (501.C.3) that encompasses entities operating exclusively for religious, charitable, scientific, or educational purposes. As such, it is exempt from federal income taxes, with the exception of taxes on unrelated business income. Such income is earned when a university or a nonprofit research institution realizes gross income from any regularly conducted business that is not substantially related to the purposes cited above. It may be determined that questionable activities are not subject to unrelated business income tax; even if they are taxable activities, the revenue may be offset by associated expenses. State income taxes, intangible taxes, real property taxes, and sales taxes are governed by the state; and in North Carolina, these not-for-profit organizations are exempt from all such taxes. No part of the net earnings of a not-for-profit institution can be used to influence legislation or to participate in a political campaign on behalf of any candidate for public office.



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