The Need for Hybrid Businesses

Examining Low-profit Limited Liability Companies and Benefit Corporations

Valeriya Avdeev, JD, LLM, and Elizabeth C. Ekmekjian, JD, LLM

The economic recession has highlighted the need for socioeconomic reform. As businesses find themselves in the aftermath of the housing crisis—accompanied by an ongoing credit crunch with unprecedented unemployment rates, massive federal bailouts, plunging state revenues, and incomprehensible budget deficits—they are forced to reconsider and restructure their traditional methods of doing business. Similar to forprofit enterprises, nonprofit organizations are now searching for ways to generate a return. As the lines between the nonprofit and for-profit worlds blur, entrepreneurs worldwide continue to search for new legal structures that better suit the present economic reality. Some are turning to hybrid entities, including the low-profit limited liability company (L3C), which was specifically designed to increase the number of program-related investments that private foundations can make to such socially centered businesses.