Day 2 · Lesson 7Pre-Work 35 minSession 60 minChallenge 45 min

Organisational Structures: Choosing the Shape of the Thing

A business model tells you how value gets created and paid for. It does not tell you what legal shape to build. Most researchers default to 'start a company' without ever seeing the other seven options on the table.

This lesson is built to be worked through, not just read.

It has 5 prompts that ask you to apply the ideas to your own work. Sign up to answer them, keep your answers in a portfolio that is yours, and turn them into your own plan by the end of the course.

Work through this lesson About the course

What you will learn

Compare eight organisational shapes open to a research venture, from a limited company through consulting practices, non-profits, and open-source projects to fiscal sponsorship and hybrids
Separate the business model question (how value is created and captured) from the structure question (what legal and organisational shape holds it)
Understand fiscal sponsorship and other low-overhead structures as legitimate and productive starting points
Weigh structures specifically against New Zealand's legal entity options and case studies
Choose a working structure for your own venture, and delineate the things what would cause you to change it

Pre-Work

About 35 minutes: eight organisational structures compared side by side, why staying small and NZ-based can be as economically sound as scaling, New Zealand's actual legal entity options, and a worked New Zealand case study.

Session

A 60-minute working session: sorting real ventures onto the structure spectrum, a fiscal sponsorship deep-dive, and a structure-fit exercise against your own situation.

Challenge

About 45 minutes choosing a working structure, stress-testing it against a two-year scenario, and naming the trigger that would make you reconsider it.

Pre-Work

35 min

Structure Is Not the Business Model

You can run the same consulting business model as a sole trader, inside a limited company, through a university's commercialisation arm, or as a fiscally sponsored project of a non-profit. The revenue and the client relationship might look identical. But the legal exposure, the tax treatment, the overhead, and the story you can tell funders and partners would be quite different in each case.

Eight Structures on the Spectrum

Licensing and IP held by the researcher or institution, monetised without building an operating entity at all.
Commercial entity (limited company): full control, full liability exposure, a common default most people reach for first.
Virtual or distributed organisation: a loose network of contractors and collaborators operating under a light legal shell, low fixed overhead, often disburses all excess revenue to contractors each tax year.
Consulting or "lifestyle" business: sole trader or small company optimised for income and autonomy rather than growth or exit.
Charity structure with commercial activity: locked to an articulated "charitable purpose", can still charge for services and products, different (sometimes more) funding access (e.g., grants, donations) than a commercial entity.
Open-source organisational model: value and community built in the open, monetisation through services, support, or dual-licensing layered on top.
Fiscal sponsorship: operating a project under an existing non-profit's legal and financial umbrella, no new entity required, fastest and cheapest way to start receiving grants or donations.
Hybrid models: a non-profit paired with a commercial spin-out, a foundation that owns IP licensed to a for-profit operating company, and similar combinations.

Read two of the seven in depth. Structures 1 through 7 below each fold their full write-up (how it works in practice, trade-offs, when it fits) behind a "Read more" toggle; expand it for the two that are the strongest candidates for your own venture. Structure 8, Hybrid Models, has no standalone write-up: it is a combination of the other seven.

1. Licensing and IP Held by the Researcher or Institution

What it is: Monetising intellectual property without building an operating entity at all. The researcher or their institution retains ownership of patents, copyrights, or trade secrets and grants licenses to others who commercialise the work.

Read more: how it works, trade-offs, and when it fits

How it works in practice: A university technology transfer office files a patent on your research, then negotiates licensing deals with companies. You receive a negotiated royalty share while continuing your academic work. Alternatively, you hold IP personally and license it directly.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Low to moderate. Patent filing costs $15,000-45,000 NZD per jurisdiction; university TTO handles most administrative burden if institutionally owned. Timeline: 2-4 years for patent grant, but licensing can begin earlier.
Liability	Minimal. You're not operating anything: licensees assume product liability. Your exposure is limited to IP warranty claims (rare).
Tax treatment	Royalty income taxed as ordinary income. If structured as an IP sale, may be treated as capital (NZ has no general capital gains tax, but IP sales can be taxed as revenue in some circumstances). University employees often have specific arrangements through institutional schemes.
Funder and partner perception	Academics see this as legitimate and "clean." Industry partners prefer it: they get freedom to operate without a competing entity. Some impact-focused funders may worry about loss of control over how the IP is used.
Exit optionality	Limited. You can sell the IP outright (one-time payment) or continue collecting royalties. No equity upside if the licensee builds something massive.

When this structure fits:

Your innovation is a discrete, patentable invention rather than an ongoing service or platform
You want to stay in academia or another primary role
You lack the appetite or capacity to build and run an organisation
The IP has clear commercial applications that established players can execute better than you

When it doesn't fit:

The value is in execution, community, or ongoing development rather than a static invention
You want control over how the work is applied in the world
The IP requires significant further development to be useful

2. Commercial Entity (Limited Company)

What it is: A standard for-profit company with shareholders, directors, and limited liability. The default structure most people reach for first when "starting a business."

Read more: how it works, trade-offs, and when it fits

How it works in practice: You incorporate a private limited company (Ltd in NZ), issue shares to founders / partners, and operate as a distinct legal person. The company owns assets, employs people, enters contracts, and can raise investment by selling equity. Considering shareholdings and partnership structures, governance / decision making and long-term succession plans in advance in multi-party shareholdings is strongly advised. You can also create a Ltd. company that pays only yourself, or nobody at the outset.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Low. $150-500 NZD and same-day incorporation through the Companies Office. Legal costs for proper shareholder agreements, vesting schedules, and IP assignment add $5,000-25,000 NZD if done properly.
Liability	Limited to company assets in most cases. Directors have personal liability for reckless trading, fraud, or breaches of the Companies Act. Investors and landlords often require personal guarantees for early-stage debt or leases.
Tax treatment	Company tax rate of 28% on profits. Extraction via salary (taxed at personal rates up to 39%) or dividends (with imputation credits). R&D Tax Incentive available for eligible activities. GST registration required above $60,000 turnover.
Funder and partner perception	Universally understood. VCs and angel investors require this structure. Corporate partners comfortable contracting with limited companies. Some grant funders (MPI, MBIE) work with for-profits; others exclude them or limit eligible costs.
Exit optionality	Maximum flexibility. Can sell shares, sell assets, merge, or wind down. Equity can be used for employee incentives (though NZ employee share scheme rules are complex), acquisitions, and raising capital.

When this structure fits:

You're building something intended to grow and eventually be sold or generate significant profits
You want to raise equity investment
You need to hire employees and build a traditional team
Your work has clear commercial customers willing to pay market rates

When it doesn't fit:

Your primary motivation is social impact and you want that legally locked in
You need significant grant funding from sources that exclude for-profits
You're uncomfortable with investor expectations around growth and exit
The work is better suited to community ownership or open collaboration

3. Virtual or Distributed Organisation

What it is: A loose network of contractors and collaborators operating under a light legal shell, with low fixed overhead. Often disburses all excess revenue to contractors each tax year rather than accumulating assets.

Read more: how it works, trade-offs, and when it fits

How it works in practice: A small legal entity (often a single-director company or Look-Through Company) acts as a contracting vehicle. Work is performed by a rotating cast of freelancers and collaborators who invoice the entity. There's no office, few or no employees, and minimal retained earnings. The entity exists primarily to hold contracts, receive payments, and provide a professional interface.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Very low. Basic company formation ($150 NZD) plus simple contractor agreements. Ongoing admin is minimal if you're disciplined about keeping it simple. A Look-Through Company (LTC) adds some setup complexity but allows profits to pass through to shareholders.
Liability	Distributed but potentially murky. The legal shell provides some protection, but contractor relationships must be genuine (not disguised employment) or you face IRD penalties and liability exposure.
Tax treatment	Standard company tax (28%) or pass-through if using an LTC (profits taxed at shareholders' personal rates). Risk of IRD reclassifying contractors as employees if relationships don't meet the independence tests: back taxes, ACC levies, and penalties apply.
Funder and partner perception	Some clients love the flexibility and access to specialist talent. Others worry about continuity, accountability, and whether anyone is "really" in charge. Institutional funders often uncomfortable: who's responsible for deliverables?
Exit optionality	Very limited. There's nothing to sell: the value walks out the door every evening. This is a feature if you want freedom, a bug if you want to build lasting equity.

When this structure fits:

The work is project-based with natural start and end points
You value autonomy and flexibility over stability and scale
Collaborators genuinely want to remain independent rather than become employees
Overhead and fixed costs are enemies of your model
You're comfortable with income variability

When it doesn't fit:

Clients or funders require organisational continuity and accountability
You want to build equity value over time
The work requires deep institutional knowledge that's hard to maintain with rotating collaborators
You need employees for legal, insurance, or regulatory reasons

4. Consulting or "Lifestyle" Business

What it is: A sole trader or small company optimised for income and autonomy rather than growth or exit. The pejorative "lifestyle business" label obscures that this is a legitimate, often highly profitable structure for expertise-based work.

Read more: how it works, trade-offs, and when it fits

How it works in practice: You sell your time and expertise directly to clients, either as a sole trader or through a personal company. You control your hours, rates, and client selection. Growth is optional and usually means raising rates rather than hiring staff.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Minimal. Sole trader requires only an IRD number. A company adds $150-500 NZD setup and ~$1,500-3,000 NZD/year in accounting costs but provides more flexibility and professionalism.
Liability	Sole traders have unlimited personal liability. A company provides limited liability, but professional indemnity insurance ($1,500-5,000 NZD/year depending on field) is often expected or required regardless of structure.
Tax treatment	Sole traders pay personal income tax on all profits (up to 39%) plus ACC levies. Companies pay 28% tax with flexibility on timing of extraction. At income above ~$70,000-80,000 NZD profit, a company structure typically becomes more tax-efficient.
Funder and partner perception	Clients generally don't care about structure if you deliver. Some corporate procurement processes prefer contracting with companies. Grant funders rarely fund consulting businesses: you're expected to earn commercial revenue.
Exit optionality	Very limited. The business is you. You can sell a client book or brand, but valuations are typically 0.5-1.5x annual revenue at best. Most consultants simply wind down when they're ready to stop.

When this structure fits:

Your primary goal is income and autonomy, not building something beyond yourself
You have expertise that commands premium rates
You don't want to manage employees or build systems
You value flexibility in how and when you work
"Enough" is a meaningful concept to you

When it doesn't fit:

You want to build something that outlasts your personal involvement
Your ambitions require more capital or capacity than one person can provide
You find the direct link between hours worked and income earned to be limiting
You want to create jobs for others or build a team culture

5. Charity Structure with Commercial Activity

What it is: A registered charity locked to an articulated "charitable purpose" that can still charge for services and products. Different (sometimes greater) funding access than a commercial entity, but with constraints on how surplus is used.

Read more: how it works, trade-offs, and when it fits

How it works in practice: You establish an incorporated society or charitable trust, register with Charities Services, and operate in pursuit of your stated charitable purpose. You can charge fees, sell products, and run commercial activities, but all surplus must be applied to the charitable purpose, not distributed to founders or members.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Moderate. Incorporated society costs ~$150 NZD to register; charitable trust requires a trust deed ($2,000-5,000 NZD legal costs). Charities Services registration is free but takes 2-4 months and requires careful drafting of purposes and rules.
Liability	Incorporated societies and charitable trusts provide limited liability for members/trustees in most circumstances. Trustees have fiduciary duties and can be personally liable for breaches. Directors & Officers insurance ($1,000-3,000 NZD/year) is advisable.
Tax treatment	Registered charities are exempt from income tax on profits applied to charitable purposes. Donors can claim 33.33% tax credits on donations. GST registration still required above $60,000 turnover. Trading activities must relate to the charitable purpose or be taxed.
Funder and partner perception	Opens doors to philanthropic grants, government funding, and donations that are closed to for-profits. Some commercial partners prefer working with charities for reputational reasons. Others worry about capacity, commercial discipline, or slow decision-making.
Exit optionality	None in the traditional sense. You cannot sell a charity or extract accumulated value. If the charity winds up, assets must go to another charity with similar purposes. Founders can be paid salaries but cannot build equity.

When this structure fits:

Your purpose is genuinely charitable (relief of poverty, advancement of education, or other purposes beneficial to the community)
You need access to philanthropic funding, grants, or donations
You want the mission legally locked in, protected from future drift
You're comfortable with governance by a board rather than founder control
Building personal wealth from this work is not a priority

When it doesn't fit:

Your purpose doesn't fit the legal definition of "charitable" (Charities Services interprets this narrowly)
You want to raise equity investment or provide equity incentives
You need the flexibility to pivot quickly without board approval
You want the option to sell the organisation or extract value later
Commercial revenue will dominate and the charity structure creates unnecessary constraints

6. Open-Source Organisational Model

What it is: Value and community built in the open, with monetisation through services, support, or dual-licensing layered on top. The core intellectual property is freely available; the business model captures value from adjacent activities.

Read more: how it works, trade-offs, and when it fits

How it works in practice: You release software, research, content, or designs under an open license (MIT, GPL, Creative Commons, etc.). A community forms around the work. Revenue comes from consulting, support contracts, hosted services, training, certification, or selling proprietary extensions under a different license.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Low direct costs: open-source licenses are free. But building a community takes significant time investment before any monetisation is possible. Legal costs for dual-licensing structures or contributor agreements add $5,000-15,000 NZD if done properly.
Liability	Open-source licenses typically disclaim all warranties, limiting your liability for how others use the work. But if you provide paid services or support, normal commercial liability applies to those activities.
Tax treatment	Depends on the legal entity you choose for the commercial layer (company, sole trader, etc.). The open-source project itself isn't a legal entity. Donations to support development may not be tax-deductible for donors unless routed through a charity.
Funder and partner perception	Tech-savvy funders and partners often love open-source. It signals transparency, openness, community validation, and reduced lock-in risk. Traditional funders may be confused about how you'll make money or protect your "competitive advantage."
Exit optionality	Complex. You can't sell the open-source project itself (it's already public), but you can sell the company that provides services around it. Acquirers are buying the team, brand, customer relationships, and any proprietary extensions, not the core IP.

When this structure fits:

The work benefits from community contribution and scrutiny
Network effects mean wider adoption increases value for everyone
You can capture value through services, support, or proprietary extensions
Transparency and openness align with your values and build trust
You're playing a long game and can sustain the community-building phase

When it doesn't fit:

Your competitive advantage depends on keeping the IP proprietary
You need revenue immediately and can't wait for community growth
The work doesn't benefit from external contribution
Your target customers don't value or understand open-source
You want a clean, simple business model

7. Fiscal Sponsorship

What it is: Operating a project under an existing non-profit's legal and financial umbrella, with no new entity required. The fastest and cheapest way to start receiving grants or donations.

Read more: how it works, trade-offs, and when it fits

How it works in practice: An established charity agrees to "sponsor" your project. Donations come to the sponsor (tax-deductible for donors), who passes funds to your project minus an administrative fee (typically 5-15%). The sponsor provides legal status, financial administration, and sometimes HR, insurance, and compliance support.

Honest trade-offs:

Dimension	Assessment
Setup cost and time	Very low. No entity formation required. Finding a willing sponsor and negotiating terms takes 2-8 weeks. Some sponsors charge setup fees ($500-2,000 NZD); others just take the ongoing percentage.
Liability	The sponsor assumes most legal liability, which is why they conduct due diligence and maintain oversight. You're personally liable for any actions outside the sponsorship agreement. The sponsor can terminate the relationship if you create problems.
Tax treatment	Donations are tax-deductible for donors (through the sponsor's charity status). Project funds are not your personal income until paid to you as salary or contractor fees, at which point normal tax applies.
Funder and partner perception	Many funders accept fiscally sponsored projects: it's a well-understood model in the philanthropic sector. Some prefer you to have your own entity as a sign of maturity and commitment. Commercial partners may find the structure confusing.
Exit optionality	You can spin out into your own entity at any time (subject to the sponsorship agreement). Assets accumulated under sponsorship may or may not transfer: negotiate this upfront. Alternatively, you can wind down the project with minimal administrative burden.

When this structure fits:

You want to test a concept before committing to entity formation
You need to receive grants or tax-deductible donations quickly
Administrative burden and compliance costs are barriers you want to avoid
The project may be temporary or experimental
You're not ready to recruit a board or take on governance responsibilities

When it doesn't fit:

You need full control over finances and decision-making
The sponsor's mission or values don't align well with your project
You're generating significant commercial revenue (sponsors may not allow this or may take too large a cut)
You want to build an independent brand and institutional identity
The 5-15% fee becomes significant as your budget grows

NZ-specific note: Fiscal sponsorship

Staying Small and NZ-Based Is Not a Consolation Prize

The programme philosophy behind this course is focused on creating a job for yourself, or a handful of others, inside New Zealand. This is truly an economically sound outcome and not a fallback from "real" venture-scale ambition. A well-run consulting practice or a fiscally sponsored research-service project can be more resilient, more autonomous, and better aligned with a researcher's actual goals than a venture-backed company chasing exponential growth.

New Zealand's Actual Legal Entity Options

The table below summarises the main legal structures available in New Zealand for research commercialisation and social enterprise. Each has distinct characteristics suited to different purposes, funding sources, and governance preferences.

New Zealand Legal Entity Options

Limited Company (Ltd)

Governing Legislation: Companies Act 1993

Registration Body: Companies Office

Typical Setup Cost: $150-200 NZD (online registration) + $5,000-25,000 NZD for legal agreements (shareholder agreement, constitution, IP assignment)

Setup Timeframe: 1-3 days for basic registration

Minimum Governance Requirements:

Minimum 1 director (must be NZ resident or resident in an "enforcement country")
Minimum 1 shareholder

Ongoing Compliance:

Annual return ($57 NZD)
Financial statements
Tax returns
Maintain registered office and share register

Best Suited For: Commercial ventures, equity investment, building saleable assets, clear ownership structure

Look-Through Company (LTC)

Governing Legislation: Income Tax Act 2007 (tax treatment) + Companies Act 1993 (structure)

Registration Body: Companies Office + IRD election

Typical Setup Cost: Same as Ltd + accountant setup for LTC election ($500-1,500 NZD)

Setup Timeframe: 1-2 weeks including IRD election

Minimum Governance Requirements:

Same as Ltd
Maximum 5 "look-through counted owners" who must all be NZ resident

Ongoing Compliance:

Same as Ltd
Attributed income/loss reported on owners' personal tax returns

Best Suited For: Small ventures where founders want pass-through taxation, early-stage losses to offset personal income

Sole Trader

Governing Legislation: No specific legislation (default structure)

Registration Body: IRD only (for tax number)

Typical Setup Cost: $0 (just need IRD number)

Setup Timeframe: Immediate

Minimum Governance Requirements:

None: you are the business

Ongoing Compliance:

Personal tax returns
GST if turnover exceeds $60,000
ACC levies

Best Suited For: Consulting, freelancing, testing an idea before formalising

Partnership

Governing Legislation: Partnership Act 1908 (general) or Limited Partnerships Act 2008 (limited)

Registration Body: IRD only (for tax number); limited partnerships register with Companies Office

Typical Setup Cost: $0-500 NZD (general) or $270 NZD + legal costs (limited partnership)

Setup Timeframe: Immediate (general) or 1-2 weeks (limited)

Minimum Governance Requirements:

Minimum 2 partners
Limited partnerships need 1+ general partner with unlimited liability

Ongoing Compliance:

Partnership tax return (IR7)
Partners report share on personal returns
ACC levies

Best Suited For: Professional services firms, short-term collaborations, investor structures (limited partnerships)

Charitable Trust

Governing Legislation: Trusts Act 2019 + Charities Act 2005

Registration Body: Charities Services (for charitable status)

Typical Setup Cost: $2,000-8,000 NZD (trust deed drafting) + $0 (Charities Services registration)

Setup Timeframe: 2-6 weeks for trust deed + 4-12 weeks for charity registration

Minimum Governance Requirements:

Minimum 2 trustees (no maximum)
Trustees cannot be paid for trustee duties without specific provision in the deed

Ongoing Compliance:

Annual return to Charities Services (free)
Financial statements (tier-dependent reporting)
Maintain trust deed and records

Best Suited For: Philanthropic purposes, receiving donations, grant funding, asset protection for charitable purposes

Incorporated Society

Governing Legislation: Incorporated Societies Act 2022 (new)

Registration Body: Incorporated Societies Register (Companies Office)

Typical Setup Cost: $150 NZD (registration) + $2,000-5,000 NZD (constitution drafting)

Setup Timeframe: 1-2 weeks for registration + 4-12 weeks if also registering as charity

Minimum Governance Requirements:

Minimum 10 members to incorporate
Must have committee/board (minimum 3 officers)

Ongoing Compliance:

Annual return ($33 NZD)
Annual financial statements
AGM required
Re-registration under 2022 Act required by April 2026 for existing societies

Best Suited For: Membership-based organisations, clubs, community groups, sector bodies, some social enterprises

Incorporated Society + Charitable Registration

Governing Legislation: Incorporated Societies Act 2022 + Charities Act 2005

Registration Body: Companies Office + Charities Services

Typical Setup Cost: $150 NZD + $2,000-5,000 NZD (constitution) + $0 (charity registration)

Setup Timeframe: 1-2 weeks + 4-12 weeks (charity registration)

Minimum Governance Requirements:

10 members
3+ officers
Purposes must be exclusively charitable

Ongoing Compliance:

Annual returns to both registers
Tier-dependent financial reporting to Charities Services

Best Suited For: Membership-based charities, community organisations seeking donation tax benefits

Cooperative Company

Governing Legislation: Co-operative Companies Act 1996

Registration Body: Companies Office

Typical Setup Cost: $200 NZD (registration) + $5,000-15,000 NZD (legal: rules and constitution more complex)

Setup Timeframe: 2-4 weeks

Minimum Governance Requirements:

Minimum 5 shareholders who must be "transacting shareholders" (do business with the co-op)
Board of directors

Ongoing Compliance:

Annual return
Financial statements
Must maintain cooperative principles (one member one vote, limited return on capital)

Best Suited For: Producer cooperatives, worker-owned businesses, community enterprises, shared infrastructure

Limited Partnership

Governing Legislation: Limited Partnerships Act 2008

Registration Body: Companies Office

Typical Setup Cost: $270 NZD (registration) + $5,000-20,000 NZD (partnership agreement)

Setup Timeframe: 1-2 weeks

Minimum Governance Requirements:

Minimum 1 general partner (unlimited liability)
Minimum 1 limited partner
General partner is often a company

Ongoing Compliance:

Annual return ($57 NZD)
Tax return
Limited partners must not participate in management

Best Suited For: Investment vehicles, venture capital structures, separating investors from operators

Fiscal Sponsorship

Governing Legislation: No specific legislation: contractual arrangement

Registration Body: N/A (operates under sponsor's registrations)

Typical Setup Cost: $0-2,000 NZD (negotiation and agreement) + 5-15% ongoing fee on funds received

Setup Timeframe: 2-8 weeks to find sponsor and finalise agreement

Minimum Governance Requirements:

Governed by sponsorship agreement
Sponsor maintains oversight

Ongoing Compliance:

Reporting to sponsor (frequency varies)
Sponsor handles charity compliance

Best Suited For: Testing ideas, short-term projects, receiving grants/donations without forming an entity

Key Decision Factors

If you need to raise equity investment: Limited Company is effectively your only option. Investors expect shares, shareholder agreements, and standard company structures.

If you want tax-deductible donations: You need charitable status, which means either a Charitable Trust or an Incorporated Society registered with Charities Services. Your purposes must be exclusively charitable as defined in case law and Charities Services guidance.

If you want profits to pass through to founders' personal tax returns: Look-Through Company (limited to 5 owners) or Partnership structures allow this. Useful when you expect early losses or want simplicity.

If you want democratic/member governance: Incorporated Society (one member one vote by default) or Cooperative Company (cooperative principles mandated).

If you want to start receiving grants immediately without forming an entity: Fiscal sponsorship through an existing charity, university, or CRI.

Notes on Fiscal Sponsorship in New Zealand

Fiscal sponsorship is less formalised in New Zealand than in the US, but functionally similar arrangements exist:

University commercialisation offices (e.g., Auckland UniServices, Otago Innovation, Victoria Link) can hold IP, receive grants, and contract on behalf of research projects. They typically take 15-30% of commercialisation revenue and have specific policies about spin-out formation.

Crown Research Institutes have similar arrangements for projects aligned with their mission.

Existing charities sometimes sponsor aligned projects. The sponsor receives donations (tax-deductible for donors), provides financial administration, and passes funds to the project minus an administrative fee. The project operates under the sponsor's charitable status and must align with the sponsor's purposes.

Community foundations (e.g., Auckland Foundation, Wellington Community Trust) occasionally provide fiscal sponsorship for community-benefit projects.

Key negotiation points for fiscal sponsorship:

Fee structure (percentage vs. flat fee vs. hybrid)
Who owns IP created during the sponsorship
What happens to accumulated assets if you spin out
Reporting requirements and approval processes for expenditure
Termination provisions and notice periods

Compliance Calendar Summary

Entity Type	Key Annual Obligations	Approximate Annual Compliance Cost
Limited Company	Annual return (Companies Office), financial statements, tax return, director duties	$1,500-5,000 NZD (accounting + filing fees)
Charitable Trust	Annual return (Charities Services), financial statements (tier-dependent), tax exemption maintenance	$1,000-4,000 NZD (accounting: may be less if volunteer treasurer)
Incorporated Society	Annual return (Companies Office), AGM, financial statements, Charities Services return if registered charity	$1,000-3,500 NZD
Cooperative Company	Annual return, financial statements, AGM, maintain cooperative principles	$2,000-6,000 NZD (more complex reporting)

Important Caveats

This table is for orientation, not legal advice. Entity choice has significant legal, tax, and practical implications. Before committing:

Confirm current fees and requirements directly with the Companies Office (companies.govt.nz) and Charities Services (charities.govt.nz): fees and rules change
Consult a lawyer for entity formation documents, especially shareholder agreements, trust deeds, and constitutions
Consult an accountant for tax structuring, particularly around LTC elections, GST registration timing, and R&D tax incentives
Talk to your intended funders about their requirements and preferences before finalising structure

The "right" structure depends on your specific circumstances, and the cost of getting good professional advice upfront is almost always less than the cost of restructuring later.

New Zealand Case Studies

Cawthron Institute:

Charitable Trust with Commercial Activity

The Cawthron Institute in Nelson is owned by a charitable trust and earns much of its income from commercial laboratory testing, science consultancy, and contract research. It traces its origins to a bequest from Thomas Cawthron, who died in 1915: the institute was established in 1919, opened in 1921, and its Trust Board was formalised by a private Act of Parliament, the Thomas Cawthron Trust Act 1924. Now New Zealand's largest independent science organisation, with about 300 staff, Cawthron combines that commercial work with contestable research grants, government platform funding, and philanthropy. Its charitable status means it can receive tax-deductible donations and bequests through the Cawthron Foundation, while also selling analytical and advisory services to industry and government clients in aquaculture, food safety, and freshwater and marine environments.

The trust structure creates both advantages and constraints. Cawthron has no shareholders, so proceeds from commercial activity are reinvested by the Trust Board in research programmes, capability, infrastructure, and community projects rather than distributed. The same structure means it cannot fund growth by issuing shares, and Cawthron has said it finds it increasingly hard to pay for specialised laboratories and vessels from its own resources. Commercial income does not guarantee a surplus either: in 2022-23 it recorded an operating deficit of about $2.3 million on income of about $43 million. For researchers considering a similar model, Cawthron illustrates that "charity" and "commercial revenue" are not mutually exclusive. But New Zealand charity rules require that business profits advance the charitable purpose and cannot be paid to owners, so founders cannot build personal equity in the organisation.

Sources:

For researchers: Name one part of your own work that could run as commercial revenue inside a charitable structure, the way Cawthron's lab testing funds its research. What would you give up to get it (personal equity, the ability to raise growth capital by issuing shares)?

Rocket Lab

New Zealand Startup to US-Listed Company

Rocket Lab began as a privately funded New Zealand startup, not a university or research-institute spin-out. Founder Peter Beck, who did not attend university, trained as a toolmaker at Fisher & Paykel and worked at the Crown Research Institute Industrial Research Limited from 2001 to 2006 before founding the company in 2006. Early backing came from seed investor Mark Rocket and from Stephen Tindall, whom Beck had met at Industrial Research. In 2009 its Ātea-1 sounding rocket made Rocket Lab the first private company in the Southern Hemisphere to reach space. Venture capital came later: in July 2013 Rocket Lab USA, Inc. was incorporated in Delaware, alongside investment from Khosla Ventures and a headquarters in California, while the engineering team stayed in New Zealand. The shift followed growing US government work as well as investor expectations: Bessemer's 2014 investment memo notes it would be investing in the "Delaware-based US parent company". New Zealand public money also played a part, with Callaghan Innovation providing matching R&D funding of up to $15 million over three years from 2014. By late 2018 Rocket Lab had raised more than US$288 million from venture, sovereign-wealth and institutional investors. It began trading on the Nasdaq in August 2021 through a merger with a special purpose acquisition company, which brought in about US$777 million.

The Rocket Lab trajectory illustrates a key principle: structure follows strategy and funding requirements. Building an orbital launch business took hundreds of millions of dollars of equity investment, and those investors bought shares in a conventional US corporation with clear ownership, governance, and exit pathways. It is hard to see how a charitable trust or cooperative, which cannot issue equity in this way, could have raised capital on that scale. For researchers whose ambitions require significant external capital and who are building technology with global commercial markets, conventional company structures (whether NZ Ltd or, at scale, a US parent) remain the practical choice despite their constraints. Rocket Lab also shows that a US parent can coexist with substantial New Zealand operations and New Zealand government R&D support.

Sources:

For researchers: If your venture needed tens of millions of dollars to reach the scale it needs, name the specific feature of a conventional company (clear ownership, a share structure, a defined exit) that a trust or cooperative cannot offer, and that you would have to adopt first.

Reflection Prompts

What structure did you default to assuming, before reading this, and why?
Name the structure you dismissed fastest, and the one thing that would make you look at it again.

Session

60 min

Activity: Sort the Ventures (20 min)

Activity: Fiscal Sponsorship Deep-Dive (15 min)

Activity: Structure-Fit Exercise (25 min)

Challenge

45 min

Produces a working structure choice and the conditions under which you would revisit it.

Part 1: Structure Choice

Name the structure you would start with, and the one runner-up you seriously considered. Write two sentences on why the choice beat the runner-up for your specific situation.

Part 2: Two-Year Stress Test

Describe one plausible way your venture could grow or change over two years (a new funder, a co-founder, a large contract, a mission shift). Name the specific feature of your chosen structure that would do the work if it held, or the specific point where it would break if it didn't.

Part 3: The Trigger

Name the single, specific event that would make you reconsider your structure (a revenue threshold, a hire, a liability exposure, a funder's requirement). Naming it now means you will notice it when it happens instead of drifting past it.

Key Concepts Reference

Structure vs. business model: the business model is how value is created and captured; the structure is the legal and organisational shape that holds it. They are chosen separately.

Fiscal sponsorship: operating a project under an existing non-profit's legal and financial umbrella, typically for a fee, without incorporating a new entity.

Hybrid structure: two paired entities (commonly a non-profit and a commercial operating company) that divide mission-locked and commercial activity.

This lesson is built to be worked through, not just read.

It has 5 prompts that ask you to apply the ideas to your own work. Sign up to answer them, keep your answers in a portfolio that is yours, and turn them into your own plan by the end of the course.

Work through this lesson About the course