Social Entrepreneurs Use Low-profit Limited Liability Company (L3C) To Implementing University Research
Nancy I. Clement, Robert M. Lang, Udaiyan Jatar · Journal of Small Business & Entrepreneurship · 2010
This paper describes the exploration of a new business entity, the Low-profit Limited Liability Company (L3C), for use with university intellectual property. Many states and Indian tribes have joined Vermont in embracing this new business entity. The L3C is considered a hybrid business entity that bridges the gap between nonprofit and for-profit organizations. The new business classification complies with the tax code and offers foundations an easier way to invest using program-related investments. Operating the L3C provides protections and flexible ownership with the option of receiving foundation investments at a low rate of return in the first risk tranche (layer). Universities are investigating the opportunity to use the L3C for early stage university intellectual property often considered too risky for commercial investors but have high social value. Thus, the L3C may be very well suited for early stage research.