Philanthropy Front and Center - Washington, DC

Application Period Open for 2010 Echoing Green Fellowships

Echoing Green invests in and supports outstanding emerging social entrepreneurs to launch new organizations that deliver bold, high-impact solutions. Each year, Echoing Green awards 12-15 two-year fellowships to social entrepreneurs. The Echoing Green Fellowship provides up to $90,000 in seed funding and support. Echoing Green has provided support to social entrepreneurs like Wendy Kopp of Teach For America, John Alford of NOLA 180 and Karen Tse of International Bridges to Justice.

The deadline for submissions is December 2, 2009. Click here to apply - or visit http://application.echoinggreen.org.

Find out whether you qualify: http://www.echoinggreen.org/shouldyouapply.

Questions? Contact Deva Jones, Recruitment Associate, at deva@echoinggreen.org.

Thanks to Charlotte Dion, Director, Foundation Center's New York Library, for sharing this post.

The deadline for submissions is December 2, 2009. Click here to apply - or visit http://application.echoinggreen.org.

Find out whether you qualify: http://www.echoinggreen.org/shouldyouapply.

Questions? Contact Deva Jones, Recruitment Associate, at deva@echoinggreen.org.

Thanks to Charlotte Dion, Director, Foundation Center's New York Library, for sharing this post.

Social Enterprise -- Is It for Your Nonprofit?

You've heard terms like "social enterprise" and "social entrepreneurship" used a lot lately by folks in the nonprofit sector, but what is it exactly? And is it something that would be good for your nonprofit?

On Thursday, July 23 at 9:30 am, the Foundation Center-Washington, DC is holding a special program, Introduction to Social Enterprise, to help you find out more. Our guest speaker will be Sara Brenner, Director of Community Wealth Ventures. She will talk about what social enterprise is and how nonprofit organizations can look for new ways to earn income and diversify their funding base while providing positive impact in their community. New revenue ideas are particularly important now that we all are facing fundraising challenges.

For a quick introduction to this subject, you can listen to our podcast with Nicole Hanrahan of Community Wealth Ventures, or read our April post, What is Social Entrepreneurship?

Don't miss this opportunity to learn about an idea that is getting lots of attention from nonprofits in the current economic climate. Register now!

Have You Heard About the L3C Nonprofit / For-profit Hybrid?

by Sandy Pon, virtual library/learning center specialist, Foundation Center

While reading one of the many newsletters I get in my inbox, a recent BusinessWeek article, "Turning Nonprofits to For-Profits", caught my eye. (Thanks to Council on Foundations' news digest for this news item.)

It was about low-profit limited liability companies, or L3Cs, a form of social enterprise that puts mission first and profits second. "The L3C is a new form of limited liability company which combines the best features of a for-profit LLC with the socially beneficial aspects of a nonprofit. It is the for-profit with a nonprofit soul," according to Americans for Community Development, which is working with legislators across the country to enact the legal framework necessary to permit the formation of the L3C.

Nonprofit Law Blog provides a good overview and definition:

The low-profit, limited liability company, or L3C, is a hybrid of a nonprofit and for-profit organization. More specifically, it is a new type of limited liability company (LLC) designed to attract private investments and philanthropic capital in ventures designed to provide a social benefit. Unlike a standard LLC, the L3C has an explicit primary charitable mission and only a secondary profit concern. But unlike a charity, the L3C is free to distribute the profits, after taxes, to owners or investors.

A principal advantage of the L3C is its qualification as a program related investment (PRI), an investment with a socially beneficial purpose that is consistent with and furthers a foundation’s mission. Because foundations can only directly invest in for-profit ventures qualified as PRIs, many foundations refrain from investing in for-profit ventures due to the uncertainty of whether they would qualify as PRIs or use costly time and resources to acquire a Private Letter Ruling from the IRS to verify that the venture is a valid PRI. An L3C’s operating agreement minimizes this problem by specifically outlining its respective PRI-qualified purpose in being formed, making it easier for foundations to identify social-purpose businesses as well as helping to ensure that their tax-exemptions remain secure.

Americans for Community Development further argues the advantages of an L3C:

[The L3C] also facilitates tranched investing with the PRI usually taking first risk position thereby taking much of the risk out of the venture for other investors in lower tranches. The rest of the investment levels or tranches become more attractive to commercial investment by improving the credit rating and thereby lowering the cost of capital. It is particularly favorable to equity investment. Because the foundations take the highest risk at little or no return, it essentially turns the venture capital model on its head and gives many social enterprises a low enough cost of capital that they are able to be self sustainable.

First and foremost, the L3C is a for-profit organization, so it would have to pay taxes on its profits, and it can't receive traditional grants or tax-deductible charitable contributions, like 501(c)(3) public charities can. The L3C has not been legalized in every state yet, but it's now considered a legal structure in Vermont, Michigan, Utah, and Wyoming, and legislation is pending in several other states. In fact, the Council on Foundations supports federal legislation [PDF] that would encourage foundations to make program-related investments (PRIs) to L3Cs through an expedited review process by the IRS.

Regulations for limited-liability companies vary from state to state, but L3Cs formed in these states can be used in other states. Would-be L3Cs should choose the state with an L3C designation whose LLC law is most compatible with their home state's LLC law, according to Robert Lang, CEO of the Mary Elizabeth & Gordon B. Mannweiler Foundation and creator of the L3C concept.

There are 53 L3Cs in Vermont and a handful in other states so far. Examples of L3C entities created recently are:

* Monkton Community Coffeehouse, a multi-use community gathering place in an historical building
* Cool Pass, a carbon offsetter program that assists low-income homeowners with obtaining EnergyStar efficient furnaces, hot water heaters, insulation and other home upgrades
* Faithful Travelers, a travel service that matches faith-based customers with service-based excursions

Other examples are in carbon trading, alternative energy, food bank processing, social services, social benefit consulting and media, arts funding, job creation programs, economic development, housing for low income and aging populations, medical facilities, environmental remediation, and medical research.

As more L3Cs form, will foundations start giving more PRIs and fewer grants since they can get the money back, plus some interest? Charity regulators have asked the same question, along with many others. It's probably too early to tell if grantmakers will shift their giving strategies. However, you can see early responses to the charity regulators' questions [PDF], prepared by attorneys working with Mr. Lang. (One of the attorneys is Marcus Owens, who worked in the IRS's Exempt Organizations Division for 25 years, 10 of those as its director.)

To learn more about the L3C, please consult the resources below:

The L3C: Low-Profit Limited Liability Company Research Brief | Community Wealth Ventures [PDF]
Includes definition; candidates for L3C designation; current activities; implications for foundations; additional resources. Published July 2008.

Low-Profit Limited Liability Company | Vermont Secretary of State Corporations Division
One state's legal treatment of L3Cs. Vermont was the first state to adopt L3Cs in April 2008.

L3C Connect Group | LinkedIn
Intended to provide a vehicle for all stakeholders in this arena to share best practices, make professional connections and to share ideas. Requires registration as a LinkedIn user.

What do you think about this new form of social enterprise? Tell us.

While reading one of the many newsletters I get in my inbox, a recent BusinessWeek article, "Turning Nonprofits to For-Profits", caught my eye. (Thanks to Council on Foundations' news digest for this news item.)

It was about low-profit limited liability companies, or L3Cs, a form of social enterprise that puts mission first and profits second. "The L3C is a new form of limited liability company which combines the best features of a for-profit LLC with the socially beneficial aspects of a nonprofit. It is the for-profit with a nonprofit soul," according to Americans for Community Development, which is working with legislators across the country to enact the legal framework necessary to permit the formation of the L3C.

Nonprofit Law Blog provides a good overview and definition:

The low-profit, limited liability company, or L3C, is a hybrid of a nonprofit and for-profit organization. More specifically, it is a new type of limited liability company (LLC) designed to attract private investments and philanthropic capital in ventures designed to provide a social benefit. Unlike a standard LLC, the L3C has an explicit primary charitable mission and only a secondary profit concern. But unlike a charity, the L3C is free to distribute the profits, after taxes, to owners or investors.

A principal advantage of the L3C is its qualification as a program related investment (PRI), an investment with a socially beneficial purpose that is consistent with and furthers a foundation’s mission. Because foundations can only directly invest in for-profit ventures qualified as PRIs, many foundations refrain from investing in for-profit ventures due to the uncertainty of whether they would qualify as PRIs or use costly time and resources to acquire a Private Letter Ruling from the IRS to verify that the venture is a valid PRI. An L3C’s operating agreement minimizes this problem by specifically outlining its respective PRI-qualified purpose in being formed, making it easier for foundations to identify social-purpose businesses as well as helping to ensure that their tax-exemptions remain secure.

Americans for Community Development further argues the advantages of an L3C:

[The L3C] also facilitates tranched investing with the PRI usually taking first risk position thereby taking much of the risk out of the venture for other investors in lower tranches. The rest of the investment levels or tranches become more attractive to commercial investment by improving the credit rating and thereby lowering the cost of capital. It is particularly favorable to equity investment. Because the foundations take the highest risk at little or no return, it essentially turns the venture capital model on its head and gives many social enterprises a low enough cost of capital that they are able to be self sustainable.

First and foremost, the L3C is a for-profit organization, so it would have to pay taxes on its profits, and it can't receive traditional grants or tax-deductible charitable contributions, like 501(c)(3) public charities can. The L3C has not been legalized in every state yet, but it's now considered a legal structure in Vermont, Michigan, Utah, and Wyoming, and legislation is pending in several other states. In fact, the Council on Foundations supports federal legislation [PDF] that would encourage foundations to make program-related investments (PRIs) to L3Cs through an expedited review process by the IRS.

Regulations for limited-liability companies vary from state to state, but L3Cs formed in these states can be used in other states. Would-be L3Cs should choose the state with an L3C designation whose LLC law is most compatible with their home state's LLC law, according to Robert Lang, CEO of the Mary Elizabeth & Gordon B. Mannweiler Foundation and creator of the L3C concept.

There are 53 L3Cs in Vermont and a handful in other states so far. Examples of L3C entities created recently are:

* Monkton Community Coffeehouse, a multi-use community gathering place in an historical building
* Cool Pass, a carbon offsetter program that assists low-income homeowners with obtaining EnergyStar efficient furnaces, hot water heaters, insulation and other home upgrades
* Faithful Travelers, a travel service that matches faith-based customers with service-based excursions

Other examples are in carbon trading, alternative energy, food bank processing, social services, social benefit consulting and media, arts funding, job creation programs, economic development, housing for low income and aging populations, medical facilities, environmental remediation, and medical research.

As more L3Cs form, will foundations start giving more PRIs and fewer grants since they can get the money back, plus some interest? Charity regulators have asked the same question, along with many others. It's probably too early to tell if grantmakers will shift their giving strategies. However, you can see early responses to the charity regulators' questions [PDF], prepared by attorneys working with Mr. Lang. (One of the attorneys is Marcus Owens, who worked in the IRS's Exempt Organizations Division for 25 years, 10 of those as its director.)

To learn more about the L3C, please consult the resources below:

The L3C: Low-Profit Limited Liability Company Research Brief | Community Wealth Ventures [PDF]
Includes definition; candidates for L3C designation; current activities; implications for foundations; additional resources. Published July 2008.

Low-Profit Limited Liability Company | Vermont Secretary of State Corporations Division
One state's legal treatment of L3Cs. Vermont was the first state to adopt L3Cs in April 2008.

L3C Connect Group | LinkedIn
Intended to provide a vehicle for all stakeholders in this arena to share best practices, make professional connections and to share ideas. Requires registration as a LinkedIn user.

What do you think about this new form of social enterprise? Tell us.

Listen! Nicole Hanrahan Discusses Earned Income, Community Wealth, and Social Enterprise

Nicole Hanrahan, director, Community Wealth Ventures, discusses strategies nonprofits can use to generate their own revenue based on her experience as a consultant to an array of organizations pursuing business ventures in areas of economic development, education, and other major fields. In this interview conducted by Pat Pasqual, director of the Foundation Center-Washington, DC, Ms. Hanrahan shares advice, tips, and pitfalls to avoid when beginning a nonprofit social enterprise aimed at earned income. Listen!

Grant Opportunity for DC Area Do-Gooders

The Schimel Lode is a component fund of the Community Foundation for the National Capital Region and provides an annual seed money grant of $10,000-$20,000 to encourage innovation and collaboration for the public good in the Washington, DC area.

The Schimel Lode is interested in collaborative and interdisciplinary ways to build on innate strengths of individuals in groups, organizations, and communities. The purpose is to promote human development and self-sufficiency. In addition to funding, Schimel Lode board members may provide free consultations to assist with related implementation, evaluation, and promotion.

Individuals, social entrepreneurs, groups, nonprofit organizations, partnerships, collaborations, and alliances are all encouraged to apply. Learn more about the application process on the Schimel Lode web site.

The deadline for submitting a Letter of Interest for this grant is June 30, 2009. For more information, contact Ruth Schimel at (202) 659-1772 or ruth@theschimellode.net.

From the Answer Desk: What is Social Entrepreneurship?

A:The term “social entrepreneurship” broadly encompasses ventures of nonprofits, individuals, and for-profit businesses that can yield both financial and social returns. While social entrepreneurship may be a newer addition to our vocabulary, it is not a new concept or endeavor. The Skoll Foundation provides more background on the concept of social entrepreneurship.

Social entrepreneurship may be translated into an earned income venture, such as selling goods or services, that allows a traditional 501(c)(3) nonprofit organization to diversify its funding base while providing positive impact in the community. The Free Management Librarystates that “nonprofits have to recognize that they're businesses, not just causes”. For more information on starting a business venture within your nonprofit organization, visit Fieldstone Alliance's Tools You Can Use newsletter to assess whether you have the capacity and readiness to launch such a venture.

The concept of social enterprise also applies to civic-minded individuals, businesses and other hybrid organizations that engage in for-profit ventures with a strong social bottom line. Social Edge, a program of the Skoll Foundation, is a "global online community where social entrepreneurs and other practitioners of the social benefit sector connect to network, learn, inspire and share resources."

Other web resources that address the concept of social entrepreneurship:

Idealist: What Is Social Entrepreneurship? - Summarizes the concept of social entrepreneurship from a number of different perspectives.

Institute For Social Entrepreneurs - Provides seminars and training for social enterprises around the world.

Fieldstone Alliance: Short- and Long-Term Approaches to Finding New Revenue Sources - Tips and techniques for conducting a feasibility study and market research on your target audience before launching your venture idea.

The Stanford Social Innovation Review - The Stanford Social Innovation Review offers strategies, tools and ideas for nonprofits, foundations and socially responsible businesses.

National Center on Nonprofit Enterprise - Learn here about training, planning, financing and managing nonprofit risk.

Social Venture Network provides information and convenes conferences for charities and businesses interested in operation in a socially responsible and environmentally sustainable way.

Books on the topic of social enterprise include:

• Venture Forth! The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization by Rolfe Larson
  
• Social Entrepreneurship: A Modern Approach to Social Value Creation by Arthur C. Brooks
  
• Mission, Inc.: The Practitioners Guide to Social Enterprise by Kevin Lynch and Julius Walls, Jr.
  
• Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the Worldby John Elkington and Pamela Hartigan
  
• The World We Want: New Dimensions in Philanthropy and Social Changeby Peter H. Karoff and Janet Maddox

To locate more resources on this topic, search the Foundation Center's Catalog of Nonprofit Literature; you could start by searching on "Social entrepreneurship" in the subject field.

Have a question? Ask Us!

(This post is from Katie Artzner and Sarah Jo Neubauer, online librarians at the Foundation Center)

A:The term “social entrepreneurship” broadly encompasses ventures of nonprofits, individuals, and for-profit businesses that can yield both financial and social returns. While social entrepreneurship may be a newer addition to our vocabulary, it is not a new concept or endeavor. The Skoll Foundation provides more background on the concept of social entrepreneurship.

Social entrepreneurship may be translated into an earned income venture, such as selling goods or services, that allows a traditional 501(c)(3) nonprofit organization to diversify its funding base while providing positive impact in the community. The Free Management Librarystates that “nonprofits have to recognize that they're businesses, not just causes”. For more information on starting a business venture within your nonprofit organization, visit Fieldstone Alliance's Tools You Can Use newsletter to assess whether you have the capacity and readiness to launch such a venture.

The concept of social enterprise also applies to civic-minded individuals, businesses and other hybrid organizations that engage in for-profit ventures with a strong social bottom line. Social Edge, a program of the Skoll Foundation, is a "global online community where social entrepreneurs and other practitioners of the social benefit sector connect to network, learn, inspire and share resources."

Other web resources that address the concept of social entrepreneurship:

Idealist: What Is Social Entrepreneurship? - Summarizes the concept of social entrepreneurship from a number of different perspectives.

Institute For Social Entrepreneurs - Provides seminars and training for social enterprises around the world.

Fieldstone Alliance: Short- and Long-Term Approaches to Finding New Revenue Sources - Tips and techniques for conducting a feasibility study and market research on your target audience before launching your venture idea.

The Stanford Social Innovation Review - The Stanford Social Innovation Review offers strategies, tools and ideas for nonprofits, foundations and socially responsible businesses.

National Center on Nonprofit Enterprise - Learn here about training, planning, financing and managing nonprofit risk.

Social Venture Network provides information and convenes conferences for charities and businesses interested in operation in a socially responsible and environmentally sustainable way.

Books on the topic of social enterprise include:

• Venture Forth! The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization by Rolfe Larson
  
• Social Entrepreneurship: A Modern Approach to Social Value Creation by Arthur C. Brooks
  
• Mission, Inc.: The Practitioners Guide to Social Enterprise by Kevin Lynch and Julius Walls, Jr.
  
• Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the Worldby John Elkington and Pamela Hartigan
  
• The World We Want: New Dimensions in Philanthropy and Social Changeby Peter H. Karoff and Janet Maddox

To locate more resources on this topic, search the Foundation Center's Catalog of Nonprofit Literature; you could start by searching on "Social entrepreneurship" in the subject field.

Have a question? Ask Us!

(This post is from Katie Artzner and Sarah Jo Neubauer, online librarians at the Foundation Center)

A:The term “social entrepreneurship” broadly encompasses ventures of nonprofits, individuals, and for-profit businesses that can yield both financial and social returns. While social entrepreneurship may be a newer addition to our vocabulary, it is not a new concept or endeavor. The Skoll Foundation provides more background on the concept of social entrepreneurship.

Social entrepreneurship may be translated into an earned income venture, such as selling goods or services, that allows a traditional 501(c)(3) nonprofit organization to diversify its funding base while providing positive impact in the community. The Free Management Librarystates that “nonprofits have to recognize that they're businesses, not just causes”. For more information on starting a business venture within your nonprofit organization, visit Fieldstone Alliance's Tools You Can Use newsletter to assess whether you have the capacity and readiness to launch such a venture.

The concept of social enterprise also applies to civic-minded individuals, businesses and other hybrid organizations that engage in for-profit ventures with a strong social bottom line. Social Edge, a program of the Skoll Foundation, is a "global online community where social entrepreneurs and other practitioners of the social benefit sector connect to network, learn, inspire and share resources."

Other web resources that address the concept of social entrepreneurship:

Idealist: What Is Social Entrepreneurship? - Summarizes the concept of social entrepreneurship from a number of different perspectives.

Institute For Social Entrepreneurs - Provides seminars and training for social enterprises around the world.

Fieldstone Alliance: Short- and Long-Term Approaches to Finding New Revenue Sources - Tips and techniques for conducting a feasibility study and market research on your target audience before launching your venture idea.

The Stanford Social Innovation Review - The Stanford Social Innovation Review offers strategies, tools and ideas for nonprofits, foundations and socially responsible businesses.

National Center on Nonprofit Enterprise - Learn here about training, planning, financing and managing nonprofit risk.

Social Venture Network provides information and convenes conferences for charities and businesses interested in operation in a socially responsible and environmentally sustainable way.

Books on the topic of social enterprise include:

• Venture Forth! The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization by Rolfe Larson
  
• Social Entrepreneurship: A Modern Approach to Social Value Creation by Arthur C. Brooks
  
• Mission, Inc.: The Practitioners Guide to Social Enterprise by Kevin Lynch and Julius Walls, Jr.
  
• Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the Worldby John Elkington and Pamela Hartigan
  
• The World We Want: New Dimensions in Philanthropy and Social Changeby Peter H. Karoff and Janet Maddox

To locate more resources on this topic, search the Foundation Center's Catalog of Nonprofit Literature; you could start by searching on "Social entrepreneurship" in the subject field.

Have a question? Ask Us!

(This post is from Katie Artzner and Sarah Jo Neubauer, online librarians at the Foundation Center)