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Low-Profit Limited Liability Company (L3C)

The low-profit limited liability company, or L3C, is a legal structure for business organizations in the United States that has been explicitly designed to facilitate the capitalization of for-profit social enterprises. Social enterprises have the mission of setting up standard nonprofit organizations to promote societal well-being in some way. Many social enterprises incorporate in the not-for-profit form, but increasingly, founders of such ventures find advantages in operating as for-profit businesses. Like any business, for-profit social enterprises must generate earned income and attract investor capital. Because of their limited profit potential, however, they are not very attractive to investors seeking market rate returns. The L3C structure was created to overcome this barrier to obtaining capital for socially beneficial businesses.

Features of L3Cs

The first state in the United ...

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