People get together to form organizations all the time, for a variety of reasons. Many times, it’s for the sake of business: two or more people have an idea and a plan to go out into the world and offer a product or service in exchange for money, with the end goal being the accumulation of profits. Others want to join forces and eradicate social injustice with a less profit-oriented and more charitable mindset.
These people are then faced with a dilemma: do they run their organization as a business, or as a nonprofit?
Depending on the state these enterprising individuals live in, there isn’t any need to fall back on such a false dichotomy. There is a third choice: Low-profit Limited Liability Companies, or L3Cs.
L3Cs are defined as for-profit social enterprise ventures. The stated goal here is that instead of maximizing income, they seek to perform some socially beneficial purpose. Although this designation does not exist in every state, and North Carolina has recently ceased authorization of such companies, in many states it is still a viable option; combining the legal and tax benefits of a Limited Liability Company with the social benefits of a non-profit organization.
Before you make a decision on where do go with your organization, ask your lawyer if your state allows for such characterization and if your company can or does fit the requirements.