New Corporate Structure Could Give Social Entrepreneurs New Funding Stream

Monday, August 10, 2009

By Ann Meyer

After nearly four decades of running a staffing agency on a shoestring budget, John Plunkett hopes the next business he starts will be a moneymaker thanks to a new law that recognizes for-profit businesses with a strong social bent.

The law, After nearly four decades of running a staffing agency on a shoestring budget, John Plunkett hopes the next business he starts will be a moneymaker thanks to a new law that recognizes for-profit businesses with a strong social bent.

The law, signed by Gov. Pat Quinn last week, allows the incorporation of low-profit, limited-liability companies, or L3Cs, a new hybrid structure for for-profit ventures that have a primary goal of achieving a socially beneficial purpose.

“One of the problems we’ve had for four decades is operating with enough capital to do what needs to be done to grow and thrive as a business,” said Plunkett, founder and chief executive of Harborquest Inc., a Chicago non-profit staffing firm that aims to move disadvantaged workers into better jobs.

While the charity, which has an annual budget of about $5 million and employs 20 staffers, competes with for-profit staffing firms, it has struggled to come up with working capital to fund its growth because most of the grants it receives are designated for programming expenses only, Plunkett said.

By launching an L3C with a similar social purpose, Plunkett would be able to offer investors a financial return.
signed by Gov. Pat Quinn last week, allows the incorporation of low-profit, limited-liability companies, or L3Cs, a new hybrid structure for for-profit ventures that have a primary goal of achieving a socially beneficial purpose.

“One of the problems we’ve had for four decades is operating with enough capital to do what needs to be done to grow and thrive as a business,” said Plunkett, founder and chief executive of Harborquest Inc., a Chicago non-profit staffing firm that aims to move disadvantaged workers into better jobs.

While the charity, which has an annual budget of about $5 million and employs 20 staffers, competes with for-profit staffing firms, it has struggled to come up with working capital to fund its growth because most of the grants it receives are designated for programming expenses only, Plunkett said.

By launching an L3C with a similar social purpose, Plunkett would be able to offer investors a financial return.

Source: Chicago Tribune (link opens in a new window)