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Introducing Paul and the L3C vs. Nonprofit Debate

December 7, 2010

Hi, I have been posting on here for a while now, but since my other teammates are writing bio posts I guess I should too. My name is Paul Kaplan, I am a student here at the University of Chicago double majoring in Math and Physics (minor in Comp. Sci?). I am one of the founding members of ChangeMachine, the brainchild of our amazing housing arrangement this year (Colin, Sean, Anish (who you will meet when his finals are over) and we all have an apartment together). I love everything about the creative process which almost explains why a Math and Physics major is making a socially responsible organization, but not quite… I’m sure there is plenty of time for self pontification later, but lets move on to Corporate Structure.

Ugh.

Corporate Structure?

But we are college students!

Yeah, that is actually why I am writing this post. We have been throwing ideas around trying to find a legimate structure for ChangeMachine, but we are being hampered by conflicting reports, finals week (back to the college student thing) and our lack of knowledge.

L3C or a nonprofit?

If you have been reading the twitter account, I have been getting a lot of feedback and some good links and info about the ‘Low-profit Limited Liability Company’ which means it enjoys some of the rights of an LLC and some of the rights of a nonprofit. This all needs some clarification:

  • What parts of an L3C are tax exempt?
  • How different is the fundraising?
  • Do you need to guarantee profit (which is notoriously difficult for websites)?
  • Is it really worth it for the possible funding boost, or are there too many strings attached?
  • Conversely, is it much more difficult to become a nonprofit?
  • Is the ‘social’ boost from being a nonprofit worth it?
  • Will there be less respect for a for-profit business, even a low-profit one?

Any help in these areas is very much appreciated, especially because there seems to be a lot of conflicting reports on these things. If you have any experience/advice, please comment on this post!

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One Comment leave one →
  1. December 15, 2010 12:44 am

    Hey again Paul.
    I know your pain! We went through a similar (and long) debate/research period a couple of years ago. Jacob and I wrote up a couple of blog post about the topic – and how we ended up as a B-Corp.

    http://blog.beextra.org/entity-types-research-thoughts.html

    http://blog.beextra.org/2009/03/nobel-laureate-muhammad-yunus-the-extraordinaries-and-social-business.html

    hope it’s helpful.
    -ben

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