August 12, 2009 | Read Time: 1 minute
A growing number of nonprofit leaders are calling for Congress and states to establish a new designation for businesses that make profit as they pursue a social mission. But Jeff Trexler, a professor of social entrepreneurship at Pace University, in New York, wonders what the new status really offers.
The Chicago Tribune reports that Illinois last week approved a law that will allow low-profit, limited-liability companies, or L3C’s.
The article says that creating such a hybrid structure would help attract loans from foundations and investments from for-profit entities. On the Just Means blog, Mr. Trexler writes that this reasoning is faulty because charities could largely receive such support already, albeit with some additional financial steps.
“Rather than simply dreaming about how the L3C could solve your organization’s money problems, you should also look into what is already possible,” he writes.
Read The Chronicle’s articles about Vermont’s L3C law and how charity and business leaders are pushing for a federal rule.
(A subscription or free temporary pass is required to view the Chronicle stories.)
What do you think? Do you support new laws creating L3C businesses?
