Thanks to Stacy Caldwell for connecting me to the fascinating concept of the Low-Profit Limited Liability Company (L3C). Stacy is a Social Entrepreneur/Cultural Anthropologist/Blogger who leads the Dallas Social Venture Partners in addition to being the inspiration behind my Two-Word Strategic Plan.

Robert Lang and the L3CAnd, of course, thanks to Robert Lang of the Mary Elizabeth & Gordon B. Mannweiler Foundation for creating the concept of the L3C in the first place!

Best article I have read about this is here:
"The L#C: A New Tool for Social Enterprise"

Another good one here:
"The L3C: A More Creative Capitalism – Social Enterprise, L3C, Americans for Community Development"

A slightly touger read here, but full of lots of good info:
Americans for Community Development

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Key points:
  1. L3Cs are for-profit entities organized to engage in socially beneficial activities
  2. The structure is already in place to open such a firm in Vermont, and more states are following suit.
  3. This would create a vehicle for engaging the "sacred 95%" — the corpus of a private foundation that is otherwise locked away from charitable purposes — through PRIs (Program Related Investments). 
  4. Example L3Cs: carbon trading, alternative energy, food bank processing, social services, social benefit consulting and media, arts funding, job creation programs, economic development, housing for low income and aging populations, medical facilities, environmental remediation, and medical research.  

It's easy to be impressed by the innovative approach, but do not dismiss this new proposal as simply a novelty that will fade away. I am very optimistic that the proponents of L3Cs have tapped into something that will experience rapid adoption once its initial roll-out phase is complete. By the end of 2010, I think we'll see some work coming out of the L3C movement that will make us ask ourselves, "Why did it take us nearly 100 years to find an alternative to the 501(c)(3) institution?"


As one of the aforementioned articles states:

"The L3C is still in “proof of concept” form, but will be put to the test this year. Because the first L3Cs were formed in 2008, this means 2009 will be the first year that the concept will be tested with the IRS. Hopefully, the IRS will readily accept Foundation investments in L3Cs as valid PRIs. Steve Gunderson, CEO of the Council on Foundations, which supports the L3C approach says “we’re optimistic” that the IRS will also support this approach to PRI investing."

Strap on your helmets, boys and girls. The social sector is speeding up!