logo
Donate
    • Magazine
    • Membership
    • Donate
  • Racial Justice
  • Economic Justice
    • Collections
    • Glossary
  • Climate Justice
  • Health Justice
  • Leadership
  • CONTENT TYPES
  • Magazine
  • Webinars
  • Membership
  • Submissions

To Be or Not To Be an L3C

Rick Cohen
November 9, 2010

November 5, 2010; Source: Asheville News/Mountain Xpress | NPQ has devoted plenty of print and online space to the emerging concept of L3C companies, the low-profit limited liability companies that have been promoted by the Council on Foundations and others as a new corporate form of social enterprise worthy of foundation support.

A half dozen states have authorized the creation of L3Cs, the latest being North Carolina. As many have acknowledged, the aim of L3Cs is to get a sort of blanket approval of eligibility for Program Related Investments (PRIs), which are loans and loan guarantees that foundations can make and that count toward foundations’ required qualified distributions or payout. (Note: Foundations can invest from their corpus in for-profit companies through Market Related Investments or MRIs, but they don’t count toward payout).

In the absence of the authority to access PRIs, what do L3Cs actually do? An artisan bread company in the western part of North Carolina called Carolina Ground has formed as an L3C under that state’s new authorizing legislation. The structure of Carolina Ground is as a “bakers’ owned co-op mill,” but it has sought and received L3C status. The founder said that the mill will “enable the farmer to get the best possible price for his/her grain at an affordable cost to the baker . . . to exist outside of the commodities market.” She calls Carolina Ground a “sort of hybrid between an LLC and a 501 C-3, in other words, it is a mission-driven for-profit business.”

Sign up for our free newsletters

Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

Although unclear in the article, it appears that the company has received some sort of unspecified support from the North Carolina Bread Flour Project of the Carolina Farm Stewardship Association (an initiative launched with a two-year grant from the North Carolina Tobacco Trust Fund Commission and Santa Fe Tobacco). All well and good, we love artisan bread, but the purpose of the L3C per se is unclear.

Perhaps the L3C’s triple-bottom-line nomenclature enhances Carolina Ground’s ability to attract socially responsible investment, but unless somehow the IRS suddenly gives L3Cs in Vermont, Illinois, Michigan, and now North Carolina the PRI authority they want, it doesn’t seem like Carolina Ground will be quickly accessing the PRIs available from North Carolina’s well-respected and innovative philanthropic sector.—Rick Cohen

About the author
Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He also worked in government. Cohen pursued investigative and analytical articles, advocated for increased philanthropic giving and access for disenfranchised constituencies, and promoted increased philanthropic and nonprofit accountability.

More about: Nonprofit News

Our Voices Are Our Power.

Journalism, nonprofits, and multiracial democracy are under attack. At NPQ, we fight back by sharing stories and essential insights from nonprofit leaders and workers—and we pay every contributor.

Can you help us protect nonprofit voices?

Your support keeps truth alive when it matters most.
Every single dollar makes a difference.

Donate now
logo logo logo logo logo
See comments

You might also like
Beyond Shared Vision: Building a Collaborative Road Map
Michael Anderson
How to Fend Off Attacks on Nonprofits—Three Key Strategies
Aaron Dorfman
Why Legal Fear Shouldn’t Drive DEI Decisions: What Leaders Need to Know
Jennifer Johnson
How the State of the People Power Tour Is Building Power and Amplifying Black Voices
Rebekah Barber
Private Equity and Wheelchair Services: How to Address a National Crisis
James A. Lomastro
Amid Disappearing Federal Funds, Could New York Be a Model for City-Level Health?
Rebecca L. Root

Upcoming Webinars

Group Created with Sketch.
May 27th, 2:00 pm ET

Ask the Nonprofit Lawyer

Register
Group Created with Sketch.
June 26th, 2:00 pm ET

From Performance Management to Mutual Commitment

Fostering a Culture of Joyful Accountability

Register

    
You might also like
US Capitol Building
Tax Provision Would Give Trump Administration Unilateral...
Rebekah Barber and Isaiah Thompson
A piggy bank wearing a graduation hat and standing on a pile of cash, symbolizing how endowments for academic institutions can be accessed in difficult times.
Endowments Aren’t Blank Checks—but Universities Can Rely...
Ellen P. Aprill
Saving AmeriCorps: What’s at Stake and Why We Must Act Now
Hillary Kane

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

See our newsletters

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

  • About
  • Advertise
  • Careers
  • Contact
  • Copyright
  • Donate
  • Editorial Policy
  • Funders

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.