L3Cs: Bringing Change or in Need of Change?

Abstract

The low-profit, limited liability company (“L3C”) is a hybrid social and business entity not entirely for-profit or entirely not-for-profit. Referred to as a “for-profit with the nonprofit soul,” an L3C is a “specifically branded LLC” governed by a state’s Limited Liability Company (“LLC”) laws. The L3C model is enabled by a definitional addition to LLC statutes, imposing additional state-law obligations. The L3C model is an attempt to enable socially responsible businesses to access funding previously unavailable to charities. As the L3C model is more regularly adopted, it is important to understand the benefits and drawbacks associated with operating as one.

Keywords: L3C, Low, Profit, Limited, Liability, Company, Low-Profit, Limited Liability, LLC, Low Profit Limited Liability Copmany, Hybrid, Hybrid Entitity, Legal, Entitiy, social, government, tax, taxation, charity, law, legal