One of my favorite places to visit is Vermont. When people think of Vermont, they think of mountains, maple syrup, skiing, and hiking. Now something else—Vermont was the first state to enact the L3C (low-profit limited liability company). This is an innovative entity structure that has quickly gained in popularity and has been formally adopted by 5 states with legislation pending in a number of other states.
This entity combines the social mission of the nonprofit entity with the business concept of return on investment. The L3C can receive investment capital from foundations and the foundations can later receive a return on their investment. The Nonprofit Law Blog does a great job clearly explaining the details.
An entity can form the L3C in a state where legislation has been enacted and file as a foreign corporation in the state where they are located (similar to the idea of incorporating in Delaware).
The L3C offers just the right structure to meet the needs of certain industries as discussed by the Nonprofit Law Blog
As with anything new, there are some issues up in the air with the IRS as the NonProfit Times notes so the pros and cons of this type of entity need to be carefully reviewed before deciding if it is the right form of entity for your organization.
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