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DIY: Choosing Your Tax Status - Vander Ark on Innovation - Education Week

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The decision may be heavily influenced by where you think you can raise initial capital. But give some thought how much you'll need to raise down the road. It may be easier to raise a large amount of capital from return-seeking investors--assuming you have a great plan and some early traction. In general, if you want to work at scale I recommend a for-profit structure.

It is becoming increasingly common to use a hybrid structure to take advantage of grant, equity and debt investment. This can be accomplished with affiliated organizations (that, like, may be transparent to partners) or a nonprofit with a for-profit subsidiary. The subsidiary structure worked out pretty well for NCEE which sold its for-profit subsidiary, America's Choice, to Pearson creating a $3.6 million-per-year endowment for NCEE.

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