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 2013 | Issue 2
A selection from our current issue.
- Parallel or Paralyzed? Sklena, Rule 804(b)(1), and the Costly Implications for Interagency Law Enforcement Efforts
by Miheer Mhatre
- Necessary Evils: How to Stop Worrying and Love Qui Tam
by Ni Qian
- Symposium: Past, Present, and Future of Insider Trading Law
- Introduction: Mapping the Future of Insider Trading Law: Of Boundaries, Gaps, and Strategies
by John C. Coffee, Jr.
- Memories of Bill Cary
by Joel Seligman
- Panel: A View from the Front Lines
- Panel: A Second View from the Front Lines
- Panel: The SEC's Perspective
- Insider Trading: Where is the Line?
by Stephen J. Crimmins
- Duty-Free Insider Trading?
by Edward Greene* & Olivia Schmid**
- "Fine Distinctions" in the Contemporary Law of Insider Trading
by Donald C. Langevoort
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