Why the L3C?

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Traditionally the United States had three economic sectors: private (for profit), public (government) and non-profit. It was the job of private businesses to return the maximum profit to their owners; the non-profit and governmental sectors addressed social ills (hunger, poverty, care of the environment).

Many entrepreneurs, however, wish to accomplish a social or environmental mission that doesn’t square with the existing sectors. They want to make some profit, but also want to make a difference. They may not qualify for non profit status with the IRS or may not want to be bothered with the extensive auditing, reporting and filing involved with being a non-profit.

To try to shoehorn social missions into corporate structures, we have seen corporate social responsibility programs, triple bottom line business models, non-profit agencies with for-profit divisions, for-profit and non-profit partnerships . None of these is truly helpful in providing a meaningful and useful structure for social entrepreneurship.

Thus, the benefit corporation (B-corp or B-corporation) and low-profit limited liability company (L3C) structures emerged to govern social enterprise.

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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