Archive for Tax Exemption

Thinking beyond 501(c)3’s.

The current economic turmoil is creating lots of questions about restructuring the way that we all do business.  For some time I’ve been looking at the way that we fund social ventures and wondering if there are different more efficient and more effective options. I’m not alone. There are a many great minds thinking along the same track and some interesting ideas are sprouting up.

Introducing a 501(c)3 and LLC hybrid

One of the most exciting to me is a new legal option – the L3C. The L3C is based on the LLC structure and offers an option for a low profit company that is socially beneficial. In its essence it is a hybrid between a 501 (c)3 and an LLC.

The L3C is the brainchild of Robert Lang, CEO of the Mary Elizabeth & Gordon B. Mannweiler Foundation and was passed into law in Vermont in June 2008. Since it is legal in one state, L3C’s can now be formed in every state in the union for less than a few hundred dollars.

What’s new here?

L3C’s offer a legal structure for low-profit entities that can receive loans and gifts from the private sector as well loans from foundations in the form of Program Related Investments (PRI’s more about these later). It means that a museum and museum shop could be housed under the same legal structure, for example. It could open up avenues for investing in low-profit sustainable agriculture or housing ventures and a myriad other options. I see that this really opens up the options for organizations that are dedicated to the social good.

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