L3C
Encyclopedia
A low-profit limited liability company (L3C) is a legal form of business entity in the United States
that was created to bridge the gap between non-profit and for-profit investing by providing a structure that facilitates investments in socially beneficial, for-profit ventures while simplifying compliance with Internal Revenue Service
rules for "Program Related Investments".
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
that was created to bridge the gap between non-profit and for-profit investing by providing a structure that facilitates investments in socially beneficial, for-profit ventures while simplifying compliance with Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
rules for "Program Related Investments".
Concept
L3C is a classification of an organization. The organization uses its for-profit efficiencies along with fewer regulations from the IRS to achieve socially beneficial goals. An L3C is a taxed organization that operates with a stated goal of achieving a social goal while making a profit is a secondary goal.Legislation
To authorize L3C, legislation must be passed to amend the General Limited Liability Company Act (LLC). Thus far, legislation has been passed in Illinois, Louisiana, Maine, Michigan, North Carolina, Utah, Vermont, and Wyoming. Legislation has also passed in the federal jurisdictions of The Crow Indian Nation of Montana and The Oglala Sioux Tribe. Currently, the Americans for Community Development are seeking sponsorship to pass legislation at federal level. Additionally, legislation has been written in California, Florida, Georgia, Iowa, Minnesota, Nebraska, Ohio, Texas, Washington, and Wisconsin but has not yet been introduced.See also
- Community interest companyCommunity interest companyA community interest company is a new type of company introduced by the United Kingdom government in 2005 under the Companies Act 2004, designed for social enterprises that want to use their profits and assets for the public good...
(similar legal structure under United KingdomUnited KingdomThe United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
law) - Social entrepreneurshipSocial entrepreneurshipSocial entrepreneurship is the work of social entrepreneurs. A social entrepreneur recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change . While a business entrepreneur typically measures performance in profit and return, a...