Beginning with the End in Mind: Legal Entity Selection for Social Ventures

It can be daunting to decide whether to organize a new venture as a nonprofit, tax-exempt organization or as a for-profit, business entity. Sometime an organization could be organized and operated both in a manner that qualifies for tax-exemption under Internal Revenue Code Section 501 or as a taxable business entity.  Toss in a number of recently developed “hybrid” legal entities like the L3C and the social benefit corporation, and it is easy to quickly become misguided and/or confused in the options.  Founders should thus heed Stephen Covey’s wisdom and begin with the end in mind.