As many of you may know from the listserve postings and from this blog, I am beginning to do research on types of governance of markets and market organizations. Interestingly, I find that many organizers that I am chatting with simply believe that they cannot get 501c3 status (mostly through informal local advice they get or even during the first foray to I.R.S.) or think the 501c3 process will be too long or arduous. In response, they incorporate as other types of 501s that do not allow donations or make it easy to receive grants. Just as often, many seem to not do any incorporation which, until a terrible thing happens and those running the thing are held financially responsible and lose their personal property as a result, may feel like enough. This is particularly of concern to me when markets are run by a farmer and therefore operating without a corporation or LLC designation may mean endangering the farm itself.
One of the options may ultimately be the L3C designation. As I was beginning this post, I received a call from a friend who works with a foundation (that does not fund food work, sorry!). Upon hearing what I was writing about she shared that she is also researching the L3C as a way to help innovative social enterprises that will not be covered under their grant-making rules.
While still largely untested, the low-profit limited liability incorporation may become useful for food enterprises, such as farmers markets. It means that profit is possible but profit is secondary to the general purpose and good of the organization. It allows for program-related investments (PRI) from foundations in states that have authorized it. So far, legislation has been passed in Illinois, Louisiana, Maine, Michigan, North Carolina, Utah, Vermont, and Wyoming with many other states having introduced legislation.
So take a look and I’ll have more on this later…