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Full-Text Articles in Law
The Fatal Design Defects Of L3cs, Daniel S. Kleinberger
The Fatal Design Defects Of L3cs, Daniel S. Kleinberger
Faculty Scholarship
This article argues that the L3C is an unnecessary and unwise contrivance, and it's very existence is inherently misleading. The notion that an L3C should have privileged status under the Internal Revenue Code (known as the Code) for access to tax-exempt foundation resources is inescapably at odds with the key policies that underpin the relevant Code sections, and L3Cs are not on track-let alone on a fast track-to receive special status under the Code. An ordinary limited liability company (LLC) can perform precisely the same functions proclaimed of L3Cs. In addition, because of technical flaws, the L3C legislation adopted to …
A Myth Deconstructed: “The Emperor’S New Clothes” On The Low-Profit Limited Liability Company, Daniel S. Kleinberger
A Myth Deconstructed: “The Emperor’S New Clothes” On The Low-Profit Limited Liability Company, Daniel S. Kleinberger
Faculty Scholarship
This article carefully debunks each major tenet of the L3C “movement” and reveals the legal and practical realities under “the Emperor’s New Clothes.” Using foundation funds to offer market-rate returns to “tranched” investors is, at best, a complicated device; not appropriate for “branding” and simplistic appeals to social conscience. When a foundation contemplates making a program-related investment, the matter requires careful, individualized, professional assessment, not reliance on a branded template. In this context, the L#C is but a snare and a delusion.