L3C: For-Profit Entity with Non-Profit Soul
To the extent that new legal structures can be exciting -- which is a long shot for many, I admit -- there is one on the horizon. The L3C (Low-Profit Limited Liability Company) officially came into being in Vermont last month. It has national applicability (thanks to the fact that it is essentially a modified version of the LLC which exists in all 50 states) and provides enormous potential to facilitate socially beneficial and "double bottom line" investing by commercial investors and philanthropic entities alike. Among other advantages, it flips the traditional investment model on its head by enabling (1) foundations and donor advised funds the ability to meet Program Related Investment (PRI) requirements by taking an equity position in the L3C (high-risk + low-return), with the possibility of receiving financial returns in the future, and (2) market investors increased opportunities to enter the social investment arena due to such equity cushion (low-risk + high-return).The L3C is a fascinating model and appears to be broadly workable. The more I learn about it, the more I like it... Perhaps a longer post about it in the future. For now the best L3C summary can be found here.