:Title:    L3C company? - Potential great news for social enterprise
:Author:   John Berger
:Date:     Wed, 14 May 2008 03:29:40 PDT
:Modified: Wed, 14 May 2008 03:42:43 PDT
:URL:      http://www.ned.com/group/community-general/news/213/

Very interesting articles linked below about a new legal structure in Vermont called the L3C which essentially formalizes the hybrid model social enterprise as a legal entity under state law.  

There are some very important claims being made including:

 Passing L3C legislation streamlines a time-consuming and often expensive process to get specific Internal Revenue Service approval for a company to accept foundation funds, through a program known as "program related investment,"

I have not read a copy of the legislation yet, but based on press reports I think entities like mine (The Emancipation Network) would want to seriously consider registering as an L3C in Vermont.  

However, the part I dont get is how state law in this case trumps federal law.  The PRI rules and rules about what donations can or cant be tax deductible are determined by federal law - so does anyone have an idea on how this state law makes the federal law work better for hybrids?  Is this only for PRIs from foundations or could it stretch to individuals?  Even if it cant stretch to individuals, could not a hybrid not be an L3C and co managed private foundation that passed individual donations through to the L3C?

Lots of possibilities here but a lot more clarity is needed.

http://www.burlingtonfreepress.com/apps/pbcs.dll/article?AID=/20080420/BUSINESS/804200301/10


http://philanthropy.com/news/government/index.php?id=4459

http://www.communitywealth.com/Newsletter/August%202007/L3C.html

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/passed/h-775.htm


John Berger
The Emancipation Network
http://www.madebysurvivors.com/