One of most well-known and respected bloggers on philanthropy, Sean Stannard-Stockton, launched a new venture on August 31:  Tactical Philanthropy Advisors.  Sean intends to operate as a B Corporation, but his site shows that he considered the nonprofit form.  Here's his explanation of why TPA ultimately chose a for-profit structure:

We chose a for-profit legal structure because we believe doing so gives us a competitive advantage in hiring the very best client advisors. In addition, a significant element of value to our clients is our ability to leverage our deep philanthropic networks to source the knowledge our clients need. We feel that we are better able to navigate networks of large foundations because we are operating as their peers rather than as potential grantees.

Tactical Philanthropy Advisors is committed to advancing the field of philanthropy. We believe our service benefits the public because we help our clients maximize the effectiveness of their giving. Even though we have not requested tax-exempt status, our fees are in line with leading nonprofit community foundations that offer similar services. We are a “double bottom line” company that tracks financial and social impact performance and strives to maximize both. We are committed to the idea of knowledge sharing in the philanthropic sector and seek to aggressively share any reports, information or practices we create with the public.

TPA gives me an excuse to take a brief (read, noncomprehensive) look at the decision-making process that might have been involved.

Initial Considerations:

• How will the enterprise be controlled and governed? 
• What will its capital structure look like (including its access to capital, its use of capital, and its redeployment of profits)?  Will the enterprise seek donations, investors, or both?
• Will its operations be transparent?
• What are the desired tax attributes?
• What are the stakeholders' risk tolerances? 

501(c)(3) Nonprofit:

Pros:

• Tax-exempt
• Ability to receive deductible contributions 
• Ability to receive foundation funding
• Perceived trustworthiness 

Cons:

• Consulting practice operational limitations
  • Commerciality doctrine:  
    • Organization may be operated only insubstantially in furtherance of a non-exempt purpose;
    • An activity may be in furtherance of a non-exempt purpose if engaged in a manner that is considered commercial. 
  • Commerciality factors include
    • Competition with for-profits;  
    • Business model focused on generation and accumulation of profits;  
    • Commercial-like business and marketing practices; 
    • Service to the general public as opposed to a discrete charitable class; 
    • Lack of donative support. 
• Limitations on insider transactions (even if ultimately beneficial to the organization) 
• Limitations on lobbying and electioneering
• Inability to raise equity capital
• Reduced recruitment capacity due to compensation limitations 

For-profit: