Welcome to Playground Post, a bi-weekly newsletter that keeps education innovators ahead of what’s next.

Here’s what we have on deck for today…

1. House bill would give Treasury new powers over nonprofit tax status

2. School choice gaining momentum but laws lag behind

3. Cyber threats rise to critical levels in education and nonprofit sectors

House bill would give treasury new powers over nonprofit tax status

The house recently passed a bill (219-184) that would grant the Treasury Department authority to revoke tax-exempt status from organizations it determines have supported terrorism.

The legislation would create a new "terrorist supporting organizations" category and would give nonprofits 90 days to appeal such designations.

Major nonprofit associations including the Council on Foundations have raised operational concerns about the bill's implementation, particularly around due process and evidence disclosure requirements.

Regardless whether the bill clears the Senate or not, it highlights the increased complexity of nonprofit compliance — especially for organizations operating internationally or who manage sensitive data.

Operators: Make sure to review your risk management and compliance frameworks regularly — document your funding sources and maintain clear audit trails around international partnerships and transactions.

School choice gaining momentum but laws lag behind

84% of Americans want students to attend the public schools that best meet their needs, regardless of zip code.

But most laws are creating roadblocks instead of creating pathways.

Today, only 16 states have statewide cross-district open enrollment laws for their public schools and 14 states have statewide within-district open enrollment laws.

However, there’s hope. The Reason Foundation showed that during the 2024 legislative session, 21 states introduces at least 40 bills meant to advance open enrollment laws. What does that mean for innovators in the space?

There's a growing opportunity for platforms that help schools showcase their unique offerings, manage enrollment processes, and track capacity data (which states increasingly require).

Think of it as "CommonApp meets K-12" – schools need better digital tools to handle this new enrollment ecosystem, and first movers in this space could capture significant market share.

Cyber threats rise to critical levels in education and nonprofit sectors

Moody’s rated the education and nonprofit sectors as a high cyber risk in 2024 (up from a moderate rating).

Cyber incidents have the potential to shut down school networks and significantly strain resource-strapped districts. In a world where education largely lives online, it’s important that schools secure their digital assets so they continue to operate effectively.

There’s federal funding to support cybersecurity initiatives for schools, but there isn’t enough money to go around. The FCC recently announced its cyber security pilot program that would deploy $200M over three years, but they had 2,734 applicants requesting $3.7B of help.

That’s 18x more than what is available...

With a $3.5B gap between cybersecurity needs and federal funding, there's a massive opportunity for entrepreneurs to develop affordable, scalable security solutions for schools.

The sector is actively seeking help. And innovators who can deliver effective cyber protection at education-friendly prices will find a ready market.

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We’ll be back with another edition on Tuesday. See you then!

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