L3C Chicago, L3C owns and operates SmallBizChicago.com. Journalist Ann Meyer is president, chief executive officer and sole owner of the company, which was officially recognized by the state of Illinois on Aug. 5, 2010. In addition to operating SmallBizChicago.com, the company provides content and editorial and consulting services to organizations that have socially beneficial purposes.
What’s an L3C?
The acronym stands for low-profit limited liability company. A form of LLC, the L3C structure can be used by for-profit ventures that have a primary goal of achieving a socially beneficial purpose. In other words, the company’s social mission must come before the profit motive. At the same time, there is no limit on profits.
Illinois’ L3C law, which took effect Jan. 1, 2010, aims to make it easier for social enterprises to attract capital, particularly from foundations interested in making program-related investments in for-profits with charitable or educational purposes. While many L3Cs have purposes similar to non-profits, they can distribute their profits to shareholders, a major distinction.
- An L3C must have a socially beneficial purpose.
- It’s designed to let foundations make program-related investments more easily.
- Investors can earn a return and hold equity in the company.
- L3Cs are not tax-exempt.
- Contributions to L3Cs are not tax-deductible.
- L3Cs are “pass-through entities,” like partnerships and sole proprietorships; owners pay taxes on profits that pass through to them.
- Illinois’ L3C law took effect Jan. 1, 2010.
- States that have passed L3C laws:
- Vermont law signed April 30, 2008
- Michigan law signed Jan. 15, 2009
- Wyoming law signed Feb. 26, 2009
- Utah law signed March 23, 2009
- North Dakota law signed April 16, 2009
- Illinois law signed August 4, 2009
- Louisiana law signed June 21, 2010
- North Carolina law signed August 3, 2010