Although the L3C has not yet been applied to a journalistic enterprise - the first U.S. state to authorize the L3C was Vermont, just a year ago - some people in the business have high hopes. As Poynter columnist Bill Mitchell writes in his column:
The new hybrid model makes it easier for companies to attract investors with different objectives and expectations. It also addresses a fundamental conflict of publicly traded news companies: the obligation to increase shareholder value while spending what it takes to provide communities with the journalism needed to inform civic life.
Mitchell offers this quote from Brian Murphy, a Vermont attorney and an expert on L3Cs.
The L3C sanctions a low-profit model - it makes it explicit that you don't have to maximize profit. You can have a tiering of interests - for-profit investors who need, say, 10 percent return; people looking to support socially-beneficial enterprises willing to settle for 3 percent; and charitable investors willing to take 1 percent
Perhaps the most attractive aspect of the L3C is that it automatically designates the company's activity as a "program related investment." Those are the magic words for a foundation, which must prove to the IRS that its grant furthers its mission and also benefits society.
While L3Cs are relatively new in the United States, they're old hat in the United Kingdom, where they're called "community interest companies." Although Vermont remains the only state to authorize the L3C, L3Cs formed in Vermont can operate in any state or territory. States such as Georgia, Michigan, Montana and North Carolina are considering similar legislation, according to a recent post in the California-based Nonprofit Law Blog.