Can the L3C Spur Private Foundation Program-Related Investment?
Edward Xia, Can the L3C Spur Private Foundation Program-Related Investment?, 2013 Colum. Bus.L. Rev. 242.
The L3C, a modified form of the LLC, is a new hybrid entity that has been formed in several states. Its major aim is to facilitate capital-raising for social causes in both non-profit and for-profit sectors. In order to accomplish this, the L3C must attract significant program-related investments (“PRIs”), which are investments private foundations can make that further the foundation’s social mission, and thus do not subject the foundation to a variety of penalty taxes.
This Note argues, however, that the L3C will not cause private foundations to make significantly more PRIs. The IRS standard for PRIs requires private foundations to make a case-by-case determination of the nature of the investment, which L3C legislation does not respond to. Additionally, expenditure-responsibility requirements impose on private foundations a level of due diligence that is at odds with L3C advocates’ claims of a more streamlined decision-making process for making PRIs into L3Cs. Federal legislation is necessary to make the L3C more effective in spurring PRI, but such legislation is unlikely to be passed.
Volume 2015 | Issue 2
A selection from our current issue.
- The Data Security Governance Conundrum: Practical Solutions and Best Practices for the Boardroom and the C-Suite
by Thad A. Davis, Michael Li-Ming Wong & Nicola M. Paterson
- Law in Regression? Impacts of Quantitative Research on Law and Regulation
by David C. Donald
- Preparing Financial Regulation for the Second Machine Age: The Need for Oversight of Digital Intermediaries in the Futures Markets
by Gregory Scopino
- Congress Killed the Radio Star: Revisiting the Terrestrial Radio Sound Recording Exemption in 2015
by Melanie Jolson
- A Safe Harbor from Spoliation Sanctions: Can an Amended Federal Rule of Civil Procedure 37(e) Protect Producing Parties?
by Alexander Nourse Gross
- Death and Live Feeds: Privacy Protection in Fiduciary Access to Digital Assets
by Jeehyeon (Jenny) Lee