Renewed hope for the low-profit limited liability company

Abstract

PurposeThe purpose of this paper is to challenge the notion that low-profit limited liability companies (L3Cs) are an ineffective or flawed choice of entity for social entrepreneurs. Most of the literature surrounding L3Cs has been critical of the form; however, a detailed analysis shows that the form is not only still viable but also, in fact, experiencing growth.Design/methodology/approachThis paper utilizes key literature and an analysis of current L3C activity in the USA to provide a unique viewpoint on the utility and viability of L3Cs in the USA.FindingsAnalysis demonstrates that despite criticisms throughout the legal community, the L3C is experiencing recent growth and continues to be a viable choice of entity for social entrepreneurs.Practical implicationsThis piece fills a significant gap in the literature surrounding L3Cs. Much has been written about L3Cs in the legal academy, but analysis is scarce when reviewing management and entrepreneurship literature.Originality/valueThis piece furthers the literature by providing the business academy with an in-depth analysis of the legal components of L3Cs and draws research-based conclusions about the state of the form and its viability for social entrepreneurs. It is unique in that it challenges the prevailing legal opinion that the L3C form is useless and unnecessary.