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StacyAdelmanSecondPaper 6 - 04 Jan 2012 - Main.StacyAdelman
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| | | The Creation
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< | (1) L3C Status. Low profit limited liability company (L3C) model is an intermediate structure between the poles of for-profit and non-profit systems. L3Cs are taxable for-profit businesses, but, by law, they must place their charitable mission/community service goals ahead of profits. L3Cs derive their sustainability from program related investments (PRIs), loans made by private foundations for specific goals that are low-yielding, but tax deductible and in line with the IRS's charitable giving requirements. Because the probable investors are local, this reorients newspapers' mission to community service. In June 2010, Vermont's Point Reyes Light became the first newspaper successfully converted to an L3C. There are obvious drawbacks to this model. The creation of L3Cs must be authorized by an amendment to the state's (or the country's) General Limited Liability Company Act; only a handful of states have done so, likely because, historically, newspapers have not been recognized as non-profits. Additionally, attracting donations depends on the supply of investors satisfied with reaping high social dividends rather than any substantial financial ones. | >
> | (1) 501(c)(3) Status. 501(c)(3) organizations are non-profit ventures exempt from federal corporate tax (though "unrelated business income," such as revenue from advertising, is taxable). | | | | |
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< | (2) 501(c)(3) Status | >
> | (2) L3C Status. Low profit limited liability company (L3C) model is an intermediate structure between the poles of for-profit and non-profit systems. L3Cs are taxable for-profit businesses, but, by law, they must place their charitable mission/community service goals ahead of profits. L3Cs derive their sustainability from program related investments (PRIs), loans made by private foundations for specific goals that are low-yielding, but tax deductible and in line with the IRS's charitable giving requirements. Because the probable investors are local, this reorients newspapers' mission to community service. In June 2010, Vermont's Point Reyes Light became the first newspaper successfully converted to an L3C. There are obvious drawbacks to this model. The creation of L3Cs must be authorized by an amendment to the state's (or the country's) General Limited Liability Company Act; only a handful of states have done so, likely because, historically, newspapers have not been recognized as non-profits. Additionally, attracting donations depends on the supply of investors satisfied with reaping high social dividends rather than any substantial financial ones.
*Except on | | | -- StacyAdelman - 4 Jan 2012 |
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