The L3C: A Boon to Illinois' Social-Purpose Businesses

The Low-profit Limited Liability Company, or "L3C," is a new, for-profit business form available to social entrepreneurs who seek the legal and tax flexibility of a traditional LLC, the social benefits of a non-profit organization, and the branding and market positioning advantages of a social enterprise. Moreover, the L3C presents a unique opportunity to attract private capital to ventures with modest financial prospects, but the possibility of significant social impact.

The opportunity turns on a little known feature of the Tax Reform Act of 1969, which mandated that private foundations distribute at least 5% of their assets every year for charitable purposes. This legal requirement explains the feverish competition for grants among charities.

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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.

© The Law Offices of Marc J. Lane, a Professional Corporation | Attorney Advertising

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