Valuing the Unlicensed Commons: A Methodology for Charitable Transfers of Non-Standard Knowledge Assets

Roshan Ghadamian
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Roshan Ghadamian: Institute for Regenerative Systems Architecture

IRSA Working Papers from Institute for Regenerative Systems Architecture

Abstract: Charitable transfer of intellectual property is a structurally underdeveloped mechanism in philanthropic finance, and part of the reason is methodological. Qualified-appraisal standards address conventional IP — patents with licensing histories, software with market comparables — and give no systematic guidance for assets whose value lies in their cost of production, their option potential or their social utility rather than in a transaction history. Pharmaceutical companies, universities, technology firms, media organisations and government research bodies hold knowledge assets of substantial appraised value that generate near-zero commercial return, carry maintenance cost, and are inaccessible to the research commons. This paper calls them stranded knowledge assets. 🔴 The methodological gap is not the whole obstacle. 170(e)(1)(B)(iii) reduces the deduction for a contribution of any patent, copyright, trade secret, know-how or software by the whole of its built-in gain, so a donor who developed the asset deducts adjusted basis — nominal for research expensed as incurred — whatever the appraisal finds. Every asset class treated here sits inside that provision. â–¶ A valuation methodology is therefore necessary and not sufficient, and its decisive use is to supply the measure a relief provision would operate on. The paper specifies four methods — Cost-to-Recreate, Comparable Licensing Value, Option Value and Social Value Discount — across five asset classes. â­ Three of the four are the valuation profession's own approaches applied where each one's normal input is missing; the contribution is what substitutes for each absent input, and the discipline keeping the substitution honest. âš ï¸ Two recommendations are administrative; the third asks Congress for relief from the (e)(1)(B)(iii) reduction and for a measure of realised public benefit other than donee income. â­ 170(e)(4) already grants that relief for constructed scientific equipment given to a research organisation, on conditions this framework satisfies one for one. The word excluding the assets treated here is "tangible", and the operative ask is that documented production cost stand where adjusted basis stands. 🔴 A framework for assets with no market price is a deduction-inflation instrument unless built not to be. The conservation-easement precedent is worse than usually stated: those appraisals purported to be qualified appraisals and inflated value anyway, so compliance with the standard is not itself a safeguard — which is why the safeguards here attach to each method rather than to the appraiser's credentials.

Keywords: stranded knowledge assets; charitable IP transfer; qualified appraisal; cost-to-recreate; option value; social value discount; knowledge commons; deduction abuse (search for similar items in EconPapers)
JEL-codes: D64 H25 K34 L31 O34 (search for similar items in EconPapers)
Date: 2026-04
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DOI: 10.2139/ssrn.6565358

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