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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