The following points will help you choose a legal structure for your mission driven enterprise:
How will you make money?
- Are you going to have an earned income strategy?
- Is that income related to a tax exempt purpose?
Who will fund this enterprise?
- Will it be funded by grant-makers? Donors? Investors? If they’re investors, are they angel investors, foundations or an early stage venture capital fund?
- If they are donors, where will they come from? The local community? Charitable organizations, and if so, how will you organize that campaign?
- Come up with a plan B for the possibility that your first source of funding falls through: who will you approach then?
- If you are leaning towards grants and charitable donations, then you will most likely want to choose a tax exempt structure for your enterprise.
- If you plan on making a profit for angel or venture investors, then you should strive toward a for-profit entity.
What are its purposes?
- Will you serve a charitable function or a profit-driven function? Your enterprise’s ultimate objective will determine what structure you choose.
Dirk Sampselle, CEO of B Revolution, Inc., offers tips on choosing the right corporate entity for your for-profit and socially conscious enterprise.