L3C Information

The Crow Tribe has passed legislation allowing for Low-Profit Limited Liability Companies (L3C) in the Crow Nation.  “This is an amazing step forward for the Crow and for our state.  The Crow are leading the way for additional economic investments.  This sets an example for other tribal nations and our state to enact legislation that increases investment opportunities for socially responsible organizations.  In our current economic times this is especially important.  We congratulate the Crow Tribe for being so progressive.”  Said Tom Jacobson, Executive Director of Rural Dynamics, Inc.

L3C’s provide an additional source of economic investment in business and non-profits whose primary mission is to serve socially beneficial purposes.  Carl E. Venne, Chairman of the Crow Tribe, stated:  “I am proud to continue the Crow Tribe’s efforts, with the support of our Tribal Legislature, to be on the leading edge of adopting new legal infrastructure tools, such as the L3C legislation, that will support long-term economic development for our Reservation.

Foundations are required by federal law to distribute 5% of their net assets every year for charitable purposes. They can fulfill this requirement by making grants, which is typically done, but also may make Program Related Investments (PRIs). PRIs are investments made by foundations, often into for-profit ventures, to support a charitable project or activity. PRIs may involve high risk, low return, or both, but are made anyway because they are intended to achieve a socially beneficial purpose. Currently it can be difficult and expensive for foundations to make PRIs.

Foundations often have to engage in costly discussions with the Internal Revenue Service (IRS) to prove that a proposed investment qualifies as a PRI. This makes PRIs relatively rare in the investment world. One important thing the L3C accomplishes is to simplify the process of non-profit foundations making PRIs. The language in an L3C’s operating agreement is required by law to mirror the IRS rules for qualifying as a PRI. This should facilitate a proposed investment in an L3C to qualify as a PRI and streamline the IRS approval process, saving the foundation great amounts of time and money.

Representative Deb Kottel has introduced legislation in the state legislature that will go to the Judiciary committee sometime next week.  The bill HB 235 revises the limited liability codes to allow for L3Cs in Montana.

"In our current economic times, opportunities such as this are especially important for socially responsible businesses.  Two states have passes similar legislation and numerous others have bills pending.  Being an early adopter of this legislation allows for greater investment in Montana which not only directly benefits our communities through more capital being invested from large foundations and corporations into our local non-profits but can also be a tax revenue generator for Montana.  We congratulate the Crow Tribe for their fore sight and will work with them to build awareness.”  Jacobson said.  

For more information on L3C contact Steve Davis with Rural Dynamics, Inc., 454.5718 Click here for more information.