A more thorough explanation:

A Low-Profit Limited Liability Company (L3C) is a type of business entity that is created mainly for charitable reasons. It is allowed in eight states and Puerto Rico. The main goal of an L3C is to pursue charitable ends, but it can also make a profit for its owners as long as the charitable goals come first. This is different from non-profit corporations, which cannot make a profit.

For example, investors could use an L3C to invent a new type of solar panel that could revolutionize clean energy while eventually making a profit. This means that the L3C can make money for its owners, but the charitable goals must always come first.

L3Cs allow the owners to retain the benefits of the limited liability corporation (LLC) form. This means that the owners are not personally liable for any debts or legal issues that the L3C may face. L3Cs follow many of the same requirements of management, filings, and taxes of any LLC, but may have to provide evidence of their charitable activities.

Many individuals create L3Cs as an avenue for their foundation to meet program-related investment (PRI) requirements. Foundations often use the tax-beneficial tool of PRI to invest in charities, but they face many hurdles in proving that the investment meets the requirements to receive the beneficial tax treatment. L3Cs can avoid this difficulty as they can be set-up to begin with to fulfill the requirements that PRI be for charitable purposes, with limited profit motives, and not being for political purposes.

The Internal Revenue Service (IRS) tends to be unpredictable regarding treatment of PRIs, but foundations have been able to rely on investing in L3Cs without facing IRS skepticism of the charitable goals.

Overall, L3Cs are a unique type of business entity that allows for both charitable goals and profit-making. They are a useful tool for investors and foundations who want to make a positive impact while also making a profit.