Starting the first of this month, the state of North Carolina will no longer recognize L3C corporations as a legal structure. With little evidence of improving or growing social entrepreneurship since its enactment in 2010, there has been dwindling support for these new and improved corporations. A majority of this doubt stems still from IRS's refusal to recognize them as legitimate entities. With this large piece still missing, foundations have not hurried to fund L3C's.
An important part to realize from the state's decision, is that the enactment of such entities were hastily decided, with little thought into the tangible results the entities could produce. Warren Kean , a partner with K&L Gates
in Charlotte and now chair of the North Carolina Bar Association’s
Joint Task Force responsible for drafting the new LLC act, says ,”There
was no objection on the policy side. The objection was that this is not
necessary.” That is, you can use the plain LLC for a lot of purposes
and contractual arrangements. So in the interest of streamlining the
act, they decided the L3C was “deadwood”, to quote Kean.
Just click here to find out more details about North Carolina's recent decision to abolish L3C's.
