Convergence report from La Piana Consulting, blurring boundaries – part 4

Previous posts here  and here mentioned four emerging trends identified by La Piana Consulting in their report called Convergence- How Five Trends Will Reshape the Social Sector.  Will now discuss the last trend they have noticed.

As mentioned previously, I will be quoting from their report a lot.

 “Sector boundaries are blurring” – the boundaries between the for-profit and nonprofit worlds are beginning to blur.  One example is mutual funds competing with community foundations to hold donor advised funds.

A new legal structure is called a low-profit limited liability company, or L3C.  The report says “an L3C is run like a business and is profitable, but its primary aim is to provide a social benefit.  An L3C can attract various types of investors, as well as accept foundation funds in the form of program related investments, mission related investments, loans and guarantees.”

Very interesting.  This would allow a hybrid of what is currently a 501(c)(3), which can accept tax-exempt donations, with a for-profit organization, which can accept equity investments.  Major advantage is that this would allow the organization to raise capital to fund projects that require serious money to set up. 

The report points out this legal form is only available in four states so it is not a very big deal right now.  On the other hand, the point of being a futurist is to perceive new issues before they overwhelm you.  More importantly, new tools out there might provide the perfect tool to finally do that thing you have been dreaming of.  That new legal form might be just what you’ve been looking for.

Two examples of for-profit organizations have a charity impact can be found in Toms Shoes, which donates one pair of shoes to the needy for every one it sells, and Target stores, which donate a portion of profits to a local school of your choice.

An example of people from the faith-based community functioning as a business can be seen in the business as a mission literature.  This is the idea that a person can set up a business to provide a living which simultaneously provides a platform to share God’s love.

Final post – wrap up thoughts.

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