Low-Profit Limited Liability Company (L3C)

Sometimes all government needs to do is get out of the way and let businesses and nonprofits partner up. Increasingly, nonprofits are seizing the power of market-based strategies to pursue sustainable social innovation and promote positive social change. Their best opportunity to do this is hidden in plain view in the Internal Revenue Code.

Foundations earn their tax benefits when they serve the public by distributing at least five percent of their assets to social programs every year - or by making socially beneficial "program-related investments" of five percent or more of their assets every year. Program-related investments are those that further a foundation's tax-exempt activities and wouldn't have been made if profit were the sole reason to invest. And therein lies the opportunity.

The "low-profit limited liability company" (L3C) is a new, hybrid business form which can leverage foundations' program-related investments to access trillions of dollars of market-driven capital for ventures with modest financial prospects, but the possibility of major social impact.

An L3C can have different classes of investors - - individuals, nonprofits, for-profits, and even government agencies. But foundations, primarily seeking social payoffs, take the lion's share of economic risk yet content themselves with below-market financial returns. No wonder for-profit investors, seeing the risk-reward tradeoff shifted dramatically in their favor, eagerly commit their capital and expertise to investments they would otherwise reject out of hand.

We are recognized as a national leader in the development of L3Cs and provide assistance in:

Evaluating the feasibility of social-purpose ventures
Rendering opinions of counsel in support of Program Related Investments (PRI)
Comprehensive business planning
Satisfying Federal and state registration and regulatory compliance obligations
Selecting the optimal business structure
Developing and negotiating operating agreements
Mitigating the tax risks associated with private benefit/inurement, lobbying, political
campaign activity and unrelated business income
Avoiding the legal and tax traps associated with sponsorships, endorsements and
cause-related marketing
Addressing fiduciary, governance and reporting issues
Linking for-profits and nonprofits
Negotiating and documenting financing transactions
Effectively pursuing the legal and financial opportunities of venture philanthropy.

Marc Lane is an innovator in helping social enterprises and social entrepreneurs leverage capital to maximize financial results while driving positive social change. He designed and teaches the Social Enterprise course at Northwestern University School of Law where he is an Adjunct Professor of Law. He is the pioneer behind the Advocacy Investing approach to mission-related investing (http://www.advocacyinvesting.com/). A past Director of Social Enterprise Alliance, the national association of enterprising nonprofits and social-purpose businesses, he spearheaded the launch of its Chicago chapter, which he serves as President and a Director. And he is the force behind Illinois' L3C legislation, authorizing the new hybrid business form which can leverage foundations' program-related investments to access trillions of dollars of market-driven capital for ventures with modest financial prospects, but the possibility of major social impact. By appointment of Gov. Pat Quinn, he is Chairman of the State of Illinois’ Task Force on Social Innovation, Entrepreneurship, and Enterprise. Also by appointment of Gov. Pat Quinn, he is a Commissioner of the Serve Illinois Commission.


What is the Illinois Low-Profit Limited Liability Company?
Click here to download the PDF.

Information in the attachment has not been updated since its respective creation date, and its accuracy and comprehensiveness cannot be guaranteed. Nothing contained herein shall be construed as legal, financial or investment advice. Consultation with a professional is strongly recommended before implementing any of the ideas discussed herein. Any tax information contained herein is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on you or any other person.


Articles
Information in the attachment has not been updated since its respective creation date, and its accuracy and comprehensiveness cannot be guaranteed. Nothing contained herein shall be construed as legal, financial or investment advice. Consultation with a professional is strongly recommended before implementing any of the ideas discussed herein. Any tax information contained herein is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on you or any other person.

Emerging Legal Forms Allow Social Entrepreneurs to Blend Mission and Profits
Copyright © 2014 TriplePundit. All rights reserved.
March 11, 2014
Click here to read article.

SEA-Chicago and the Illinois Task Force on Social Innovation, Entrepreneurship, and Enterprise: A Strategic Partnership
Copyright 2013, Social Enterprise Alliance.
September 16, 2013
Click here to read article.

L3C Primer by Marc Lane
As featured in CulturalStrategies.org
May 23, 2012
Also featured in interSectorL3C.com
Click here to download the PDF.

L3C Proponents Eager for Proposed New Program Related Investments Regulations
Copyright © 2012 Nonprofit Information Networking Association.
May 14, 2012
Click here to read article.

IRS Rules Could Help the Fledgling L3C Corporate Form
Copyright © 2012 Forbs.com LLC.  All Rights Reserved.
May 4, 2012
Click here to read article.

Where Did Social Enterprise Come From, Anyway?
Copyright © GOOD Worldwide, LLC
March 8, 2012
Click here to download the PDF.

Social Enterprises: A New Business Form Driving Social Change
Copyright © American Bar Association
December 5, 2011
Click here to download the PDF.

The L3C: A Boon to Illinois' Social-Purpose Business
Copyright © Chicagoland Chamber of Commerce
August 4, 2011 
Click here to download the PDF.

Marc J. Lane — Social Involvement and L3C Legislation
Copyright © SIMAMA.org
August 2011 
Click here to download the PDF.


Webinar: Legal Issues Unique to Social Enterprise
Information in the following Webinar has not been updated since their respective production date, and its accuracy and comprehensiveness cannot be guaranteed. Nothing contained herein shall be construed as legal, financial or investment advice. Consultation with a professional is strongly recommended before implementing any of the ideas discussed herein. Any tax information contained herein is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on you or any other person. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice).

To watch, click here.

The social enterprise is adopting emerging business forms, employing new strategies and tactics to drive positive social change, and spearheading alliances with complementary stakeholders. This webinar will help social entrepreneurs overcome some of the knottiest legal, tax and governance challenges they face. Marc Lane will offer his practical advice about these issues and others:

Copyright © Marc J. Lane. All Rights Reserved


Online Chat: Nonprofit, For-Profit, L3C, B Corp... How to Choose?
Provided by GrantSpace.org

With the availability of low-profit limited liability corporations (L3Cs) and B corporations in more and more states, choosing an organization type to achieve a charitable mission is no longer limited to nonprofits or for-profits. Learn from our expert panelists about what to consider when choosing a legal structure and the pros and cons of each form.

To view, click here.

Copyright © 2011 Foundation Center. All Rights Reserved. 


Audio presentations about L3Cs
Information in the following audio recordings has not been updated since their respective production date, and its accuracy and comprehensiveness cannot be guaranteed. Nothing contained herein shall be construed as legal, financial or investment advice. Consultation with a professional is strongly recommended before implementing any of the ideas discussed herein. Any tax information contained herein is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on you or any other person. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice).


Purposeful Planning Forum features Marc J. Lane as guest speaker in "The L3C: Social Enterprise’s Powerful, New Capital Formation Tool.” September 30, 2010.
Copyright © Marc J. Lane. All Rights Reserved
Listen Now »

Marc J. Lane presents "Are You a .com or a .org?" on June 30, 2011, hosted by Net Impact Dallas/Fort Worth and the North Texas chapter of the Social Enterprise Alliance.
Copyright © Marc J. Lane. All Rights Reserved
Listen Now »

Good Business International presents "Nuts & Bolts of Social Enterprise: Marc J. Lane"
Copyright © Good Business International 2011. All Rights Reserved
Listen Now »

Marc J. Lane presents "The L3C and Catalytic Philanthropy" at the AiP 2010 Conference on Philanthropy.
Copyright © Marc J. Lane. All Rights Reserved


Video presentations about L3Cs 
Information in the following videos has not been updated since their respective production date, and its accuracy and comprehensiveness cannot be guaranteed. Nothing contained herein shall be construed as legal, financial or investment advice. Consultation with a professional is strongly recommended before implementing any of the ideas discussed herein. Any tax information contained herein is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on you or any other person. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice).

 

Marc Lane on Illinois Business this Week
Interview with Fritz Golman. August 2014.

Marc Lane on Illinois Business this Week from Perfect Cut Productions on Vimeo.

 

How Social Enterprise Policy Becomes Law: The Illinois Experience
Marc Lane's webinar video,presented to Social Enterprise Alliance’s Chapter Leaders. March 6, 2014

 

L3C and the Arts
Presented by: Columbia University School of the Arts, Columbia Law School Kernochan Center for Law Media and the Arts, TDF/Theatre Development Fund, and The Off-Broadway League. November 16, 2012

Watch live streaming video from newplay at livestream.com


Marc J. Lane presents "Legal Structures and Funding Strategies for Social Enterprises"
Social Enterprise Alliance Southeastern Regional Summit. October 30, 2012

 

The Next Generation of Social Enterprise
A discussion with MacArthur Foundation's Debra Schwartz and Groupon Grassroots' Patty Morrissey, moderated by Marc J. Lane.
Presented by SEA Chicago and SOCAP World Forum. September 13, 2012

 

Marc J. Lane presents Emergence of New Business Approaches: Social Entrepreneurship Models
Microsoft’s Public Health Conference, Innovations in Public-Private Collaboration: The Edge for Business and the Health of the Public.  June 21, 2012

Click here to view full presentation with Dr. James M. Galloway and Marc J. Lane.

If you are unable to view this video, please click here.

 

Marc J. Lane’s Conversation with Nobel Laureate Dr. Muhammad Yunus
The Foundation of Transformational Leadership presents the 2012 Transformational Leadership Award Dinner & Symposium. April 28, 2012
Click here to view full panel discussion on Social Business.

 

 

[Introducing L3C - Parts 1-8] L3Cs: Social Enterprise's Powerful, New Capital Formation Tool

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