Posted by:
Steve Dubb
"Low-profit LLC" idea gains momentum
As Heather Peeler highlights in a recent e-newsletter article from the social enterprise consulting group Community Wealth Ventures, as the social enterprise field grows, “there is a great deal of debate on legal and structural issues.”
As Peeler explains, one potential solution, backed by the Council on Foundations, the Mary Elizabeth and Gordon B. Mannweiler Foundation, and others called Americans for Community Development (ACD) is to establish a new category of organizations called Low-Profit Limited Liability Company (L3C) which “would be a for-profit entity organized to engage in socially beneficial activities.
As Peeler explains “The L3C’s unique structure would allow foundations to invest by using an alternative to grants—Program-Related Investments (PRIs). It can have different classes of investors—such as individuals, government agencies, nonprofits, and for-profits—with foundations taking the most risk. The L3C’s investment structure would be designed to bring new pools of funds such as pension and endowment investments to bear on problems normally treatable only by nonprofit dollars.”
Further details are available on Americans for Community Development’s website, including links to publications and draft legislation in the states of North Carolina, Vermont, and Montana. For discussion of the L3C idea at the Social Enterprise Alliance’s annual conference last spring, see also our previous entry on this topic.