Abstract

http://ssrn.com/abstract=1656541
 
 

Footnotes (205)



 


 



Vermont's Social Hybrid Pioneers: Early Observation and Questions to Ponder


Elizabeth Schmidt


Vermont Law School


Vermont Law Review, Vol. 35, No. 1, pp. 163-209, Fall 2010
Vermont Law School Research Paper No. 10-53

Abstract:     
On April 30, 2008, Vermont recognized a new business entity form, the Low Profit Liability Company, also known as the L3C. An L3C is a for-profit organization, designed to retain the flexibility of a limited liability company (LLC), but with a primary motivation to achieve a charitable goal. It is also designed to facilitate social investing from private foundations through program related investments (PRIs). In the two plus years since Vermont adopted the L3C, six other states and two tribal nations have recognized this new social hybrid. During that time, 101 social entrepreneurs also registered their L3Cs with Vermont’s Secretary of State.

This article examines the experiences of those early adopters of the L3C business form. Through surveys, phone conversations, and examinations of web sites, I explored the reasons these entrepreneurs chose the L3C over alternatives such as a traditional LLC or a Section 501(c)(3) tax-exempt organization. I found a group of entrepreneurs who embraced the unofficial slogan of the L3C, “the for profit with a nonprofit soul.” The flexibility and simplicity of the L3C form also appealed to them. The possibility of attracting PRIs intrigued some, but certainly not all, of these entrepreneurs, and it was not the prime motivator for any of them. Given a choice between creating a traditional LLC or a Section 501(c)(3) tax exempt organization, every person interviewed would choose the LLC.

These findings suggest that the motivations of the early L3C entrepreneurs in adopting this business form do not match the expectations of those who created the L3C. For a variety of reasons discussed in the article, this result is not surprising, and it may change over time. Nevertheless, these findings can inform legislators and others who are following the development of the L3C, and they raise broader questions for policy makers in the nonprofit and for-profit business arenas.

Number of Pages in PDF File: 50

Keywords: Social Enterprise, L3C, Hybrid Organizations, Charity, Nonprofit, Philanthropy

Accepted Paper Series


Download This Paper

Date posted: August 12, 2010 ; Last revised: July 27, 2014

Suggested Citation

Schmidt, Elizabeth, Vermont's Social Hybrid Pioneers: Early Observation and Questions to Ponder. Vermont Law Review, Vol. 35, No. 1, pp. 163-209, Fall 2010; Vermont Law School Research Paper No. 10-53. Available at SSRN: http://ssrn.com/abstract=1656541

Contact Information

Elizabeth Schmidt (Contact Author)
Vermont Law School ( email )
68 North Windsor Street
P.O. Box 60
South Royalton, VT 05068
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,585
Downloads: 375
Download Rank: 43,949
Footnotes:  205
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.453 seconds