The L3C from A to Z, June 6, 7 at NU’s Kellogg School, Levy Entrepreneurship Center

Americans for Community Development is hosting its first conference exploring the intricate financial and legal aspects of the L3C with true experts in the field. As Liaison for the Media Working Group for ACD, I’ll be hosting a conversation with others in the journalism field about the possibilities of an L3C newsroom. This is an everything you ever wanted to know about L3Cs, what they are and how they relate to 501(c)3s and the whole concept of social enterprise and sustainable social change.

The L3C (Low-profit Limited Liability Company) is a hot topic in the nonprofit sector that up until now has only received minimal attention at all the nonprofit conferences and meetings. It may change the way socially beneficial services are delivered. It may represent a whole new paradigm in private public partnerships. And it may finally bring substantial amounts of market rate investment dollars into the social sector.

Americans for Community Development and The Levy Entrepreneurship Center of the Kellogg School of Management at Northwestern University have partnered along with Supporting Sponsor Council On Foundations to present the first conference devoted exclusively to the L3C.

Do you work in the charitable sector, an economic development agency, a foundation, a government agency, social finance,
healthcare? Are you interested in how we can do more with less from government, while rebuilding our infrastructure? Is social enterprise your thing? If any answer is yes, you need to be in Evanston, Illinois June 6th and 7th, 2011.

For additional information or questions
Karen Woods: (231) 578-0905
Janice Lang: (914) 248-8443

To register, visit the ACD website.

PRI-Makers open to choices, including L3Cs

“The jury is out,” as to whether new corporate forms like the L3C (low profit limited liability company) and the B-Corp certification will make it easier for social enterprises and foundations to work together, agreed foundation executives at a 2010 meeting of PRI-Makers in Chicago. But foundation executives also said they are open to having more choices. [see note about program related investments at end of this entry.]

Discussions of the L3C and other forms are emerging on the social enterprise landscape with rapidity these days. The Internet gives them viral energy but the question of how philanthropy responds during this adaptation phase is key to how effective these forms will be moving into the future.

“I am really interested in these forms of innovation,’” said Jeff Clarke, from Alaska’s Rasmuson Foundation. “The conversation we are having is ‘How do foundations adapt and test these new forms?’ There’s all kinds of activity happening in the capital markets — How do we participate and how do we influence?”

In a conversation about what PRI-Makers call “this alphabet soup” of new corporate forms a collective light bulb went off as to their usefulness. The following is an interview with Mary Anne Rodgers of the David and Lucile Packard Foundation. Rodgers moderated a session on new corporate forms at the PRI-Makers conference.

“We had a good discussion about the move to L3Cs and other kinds of corporate forms,” Rodgers said. “What we learned is that the growing interest in corporate forms addresses different needs that are perceived to make not just funding — but also receiving — PRIs easier.

“One of the challenges for a PRI is to establish the charitable purpose and establish that the principal purpose is not to make money but to achieve some other mission,“ she said.

“When you are giving to a 501(c)3 public charity, that test is pretty easy because by definition the organization is a charity and by definition they will not make much money,” she said. “But if you are giving to a for-profit organization, you need a harder test because it is expected the corporation is going to make money, yet you have to be sure the organization is really not just about making money.”

“The point of these different corporate forms is to somehow embed in the corporate structure a charitable purpose or a partially charitable benefit so that the test for foundation investment is easier to meet,” Rodgers said.

“The benefit to the organization is that the manager using that form [the L3C entrepreneur] would not be subject to criticism if in fact they were not maximizing profit but were instead maximizing the charitable benefit.”

“I think the jury is out,” Rodgers said. “These forms are new. They are being adopted at some states. Some states are taking different approaches. The jury is out as to how effective they will be but I think most people in the audience [of PRI-Makers] think the more choices the better. Some forms will work for potential recipients and for potential funders. Others will not .”

“These forms may well make it easier for people to come together and meet the fundamental tests of charitable investing,” she said.

“I think PRIs are things smaller foundations can do. Absolutely,” Rodgers said. “If you want to get started and you are not sure what to do, one terrific thing you can do is find your local community development organization and make an investment that supports community development [through a CDFI, community development financial institution.

“You get a federally insured investment,” Rodgers said. “That’s simple.”

PRI stands for program-related investment, which PRI-Makers define as a type of mission or social investment that foundations make in order to achieve their philanthropic goals. Like grants, PRIs are vehicles for making inexpensive capital available to organizations that are addressing social or environmental concerns. Unlike grants, PRIs are expected to be repaid, often with at least a modest rate of return. Once repaid, PRIs are reused for other charitable purposes.

NOTE: I received this comment from Robert Lang, head of Americans for Community Development. “The statement that PRIs are expected to be repaid is very wrong,” Lang says. “Although PRIs can be loans they may also be equity investments, loan guarantees, low cost leases and anything else that would classify as an investment in the commercial world. This is a common misconception even among some PRI Makers,” Lang says. “If PRIs are to repaid they must be used for a new PRI or grant within one year of receipt,” he says.

As dots connect, whole is emerging for future of news

Chicago Journalism Townhall
Chicago Journalism Townhall (Photo credit: sally garden)

As dots connect, whole is emerging for future of news

The online dots are quickly connecting. Gov2.0 entrepreneurs are building a strong backbone for a hyperlocal new stream. And much of it is happening here in Chicago.

Continue reading As dots connect, whole is emerging for future of news

CMW panel on L3C and some thoughts on PRI-Makers Network

The Community Media Workshop held a panel May 7 on the future of news as a social enterprise and the L3C [low profit limited liability company] model.

The following Monday, I attended the bi-annual conference of the PRI-Makers Network. PRIs are Program Related Investments and they are posed at the center of the L3C model. A PRI is an investment made by a foundation — in various forms —  at below market rates. The foundation expects a return on the money – with varying degrees of rigidity. And this investment is “program related” because its is tied to the program areas funded by the foundations. Pretty simple concept!

I will be sharing more of what I learned during those three days in some upcoming posts. Meanwhile, some of my thoughts going in were confirmed: only a small number of foundations are making PRIS. PRIs are only a tiny percent — 1%— of total funding by foundations. As I say in the clip, PRI makers are similar to angels in that they seek and expect a dollar return for their investment.

Their money is, however, patient, [unlike venture capitalists] in that they are asking a below market rate return and will work with the social venture to ensure its success over time. Topmost they are expecting a return in social good for their investment. Foundations are typically working with many partners to make these deals work and there is a lot of haggling at the table over details as in any deal. Foundations themselves are going through a vast culture shift themselves over PRIs and how they fit into philanthropy.

I informally floated the idea of a journalistic operation as a social enterprise by a few PRI-Makers and the idea was met with interest, albeit reserved, as to be expected. More to come

Video 3 from Community Media Workshop on Vimeo.

L3Cs — time to define terms.

It seems we have our work cut out for us.

As we collectively blue sky different operational models for new media companies, we really have to work very thoroughly at helping our new news entrepreneurs and would-be entrepreneurs understand what we are talking about.

I was on a panel Friday with veteran social entrepreneur John Plunkett, hosted by Thom Clark, President of the Community Media Workshop, discussing the low-profit limited liability company (L3C) and its potential for media. It was the first in-depth conversation about L3C operations I have participated in here in Chicago. And deep indeed did Plunkett and Clark take us. Maybe —for this group at least —just a tad too deep into the operational and budget linkages of Plunkett’s new, first ever L3C.

We had a great turnout and I was glad to see many colleagues there, notably Steve Rhodes of the Beachwood Reporter, Andrew Huff of Gaper’s Block and Gordon Waleck of LISC New Communities. Occupying the front row were Vivian Vahlberg from the Chicago Community Trust/Knight Foundation Community News Matters program and a few seats down sat Clark Bell, head of journalism programs for the McCormick Fundation.

I learned quite a bit. I could see Vivian — as well as a few others — very happily scribbling away. But I came away with the impression that we need to back up a few paces before we can host an informed and informative conversation of this type. Foundations, corporations, corporate foundations, and every other kind of entity in between, have very different reasons for giving money. And they have different pots of money that they give from. If we are going to ask for that money, we need to know what those pots are and what the foundation requires in return.

This is not the stuff journalist’s dreams are typically made of.

So it seems it’s time we define our terms, to see if they are terms the new news can live with.

That is one of many reasons that I volunteered to report and blog from the PRI Makers conference next week, a gathering of those foundations that make those elusive “Program-Related Investments” at the heart of the L3C model.

I’ll be Twittering as I go at hashtag #PRI10. Read along and learn with me.

What do PRI Makers care about?


What do PRI Makers care about?

Well it says it right there on their website.

Says Alaina Smith, Communications Manager for Philanthropy Northwest, who is running the conference here.

Innovate. Leverage. Grow.

Innovate: In making PRIs, foundations are employing new and evolving approaches to philanthropy. By making inexpensive capital available to enterprising organizations, they are encouraging new approaches to addressing social needs.

Leverage: Foundations use PRIs to make the most of their resources. PRIs are recyclable. Their proceeds can be reused over and over to extend their value. Strategically timed and deployed PRIs can attract additional investment from private public sources, multiplying their impact.

Grow: While grants are instrumental in testing ideas and establishing programs, additional kinds of investment are necessary to build sustainable organizations and bring effective programs to scale. PRIs can accelerate that process and help organizations reach greater numbers of people.

There’s also a clue in the language revealed under one of the PRI Maker home page drop-downs

Finding Deals
Investment opportunities
PRI Activity Database
Deals Clearinghouse
Intermediaries

Doesn’t sound much like charity, does it? That’s why I like the sound of it for media.

Sally Duros on Chicago Tonight, future of news and what’s happened since

After I wrote a series of articles for the Huffington Post on the promise of a mission-based news room L3C and the struggles of Chicago’s nascent news blogosphere I was invited to serve on a committee hosted by the Chicago Community Trust. With our input, the Chicago Community Trust in conjunction with the Knight Foundation and the MacArthur Foundation decided to develop a seed fund to fortify the city’s emerging news streams.

I was fortunate to land some consulting clients later in 2009 that lined up my work life squarely with my passion. That passion, to bring journalistic writing standards to the web and to bring the Web’s innovations to newsrooms – has absorbed my life for the past 20 years. I’ll be writing about that in columns to come.

One of my new clients was Andy Shaw, former Channel 7 news reporter and new Executive Director for Chicago’s Better Government Association. Together we developed a strategy and series of proposals for the BGA’s online presence. The other client is LISC-Chicago, whose anti-poverty and community development work is stretching the boundaries of community based multimedia. LISC-Chicago is also working in partnership with other news rooms like that of the Chicago Reporter and Catalyst to build a hyperlocal news bureau.

It was a year ago [March 31, 2009] that the Chicago Sun-Times declared bankruptcy and I was on a Chicago Tonight segment discussing the future of news in Chicago, the L3C mission-based newsroom and the state of the Sun-Times newsroom. Much has happened since then. The Sun-Times was bought by James Tyree and a group of investors. The Chicago Tribune unveiled its Chicago Now blog group. The Chicago News Cooperative, a “possible” news co-op and “maybe” L3C was unveiled. And Geoff Dougherty’s flagship NPO newsroom, The Chi-Town Daily News, closed its doors.

I have traveled extensively researching new media trends and surfacing ideas. I am still at it. There is more to come. And I am excited to share.

Update on U of C Booth L3C event

This is from the Linked In L3C Connect and Marc Lane:

Group: L3C Connect
Subject: Announcement from L3C Connect — U. of C. Seeks Foundations to Invest in Promising Medical and Scientific Research
Many university tech transfer offices are struggling with the funding gap associated with “translational research” that brings “orphan drugs,” medical devices, complex computing solutions, new materials and other technologies to market. While public and private-sector grants fund the initial stages of commercialization, the universities have struggled to secure funding to get to specific becnhmarks where angel or venture capital, or a licensing arrangement with a major company, would be attractive.

Booth Graduate School of Business at the University of Chicago is doing something about it. Booth will be hosting a Mission Investment Forum — the first of many, it is hoped — built around the L3C. Students and professors will actively source and screen potential translational research deals coming from the University and other parts of the Chicago community. This same team will select three or four strong deals, conduct further research and then prepare the companies to make a presentation at the Forum. I’ve been asked to provide the educational component.

If you know of a foundation whose management may be interested in participating, particularly a foundation that has previously supported medical or scientific research through grants or investments, please let me know (at 312-372-5000) and I’ll be happy to provide the particulars. This is an extraordinary opportunity.

Marc

Ill gets L3Cs and Chicago Community Trust/Knight $ offered for news orgs of all types!

banner_2jpg.jpegWhat a week – Gov. Quinn signs L3Cs into law AND the Chicago Community Trust with the Knight Foundation Community Information Challenge offers funding for Community News that Matters to NPOs, to for-profits [we hope like the L3C], as well as to individuals – an incredible offering to the future of Chicago’s news stream!

Oh please, let’s see some collaboration here.The deadline is tight and fast approaching: Sept. 15.

Community News Matters

The Chicago Community Trust has created an innovative new program, Community News Matters, to spur the growth of new sources of local news and information about the Chicago region, in conjunction with the Knight Community Information Challenge. Through September 15, the Trust is soliciting proposals from nonprofits, for-profit businesses and individuals for new activities and projects that:

• Increase the flow of truthful, accurate and insightful local news and information in the Chicago region in new ways that engage residents, bring important issues to light, help people make sense of things and enable them to work together to find solutions;

• Help the Chicago region’s cutting-edge media innovators develop new forms, methods and models for providing this information that can be sustainable in the future.

There’s also a special information meeting:

Friday, August 21, 2009
10:00 a.m. to 12:00 p.m.
26th Floor Conference Room
111 East Wacker Drive
Chicago, IL 60601

The New News: Journalism We Want and Need, was the first part of the Community Trust’s initiative. The CCT went on to say:

Based on the findings of this report and recommendations received from the project’s advisory committee members, the Trust is issuing this Community News Matters Request for Proposals (RFP). The purpose of the RFP is to support and stimulate development of new ways to provide the Chicago region with the local news and information residents need to be good citizens and to improve both their quality of life and the vitality of their communities.

In November, the Trust will award grants and contracts to nonprofit organizations, individuals and for-profit companies for
activities and projects.

The CCT says awards may be as large as $100,000, most will be in the range of $25,000 to $50,000. But the CCT does not say how many grants it will be making or how large the fund is.