DAFs, PRIs, L3Cs - Tools of Social Impact Investing

The use of for profit entities financed by both nonprofit and for-profit dollars provide a nongovernmental free enterprise way to solve many social issues while adding to the wealth of the populace rather than depleting government funds and herald a bright future. We commonly call these entities Social Enterprise. The L3C was created to provide a unique business structure for forming a Social Enterprise. The outcomes are not charity but a fully integrated part of our free enterprise system. Social Enterprise, however, is often less profitable than regular business and as a result is often challenged when it comes to raising capital. This paper from Americans for Community Development outlines an entirely different way to get a significant portion of the capital needed while providing a charitable deduction. Truly the best of both worlds - a free enterprise that does good financed by charitable dollars. This paper is divided into two parts - the story and the legal background. You will come away with a new view of these tools and recognize their potential for truly making a difference.