Members of Evanston’s Downtown Performing Arts Center Task Force reported on conversations they’ve had with leaders of other theater groups and got a briefing on a new form of legal organization for such projects Thursday night.
The committee, short-handed after the resignation of two members, and with several others unable to attend Thursday’s session, heard from Marc Lane, a Chicago attorney who’s been instrumental in developing the concept of Low-profit Limited Liability Companies, or L3Cs, in Illinois.
Lane said the legal form, a variation on the more common Limited Liability Company, or LLC, structure, has only been available in the state since 2010 and that so far about 1,000 of them have been formed around the country.
With revisions to the statute that Lane says he expects will be adopted by the legislature this year, Illinois “will have the most flexible and comprehensive L3C structure of any state.”
The structure lets non-profit groups like foundations join with mission-driven private investors who may still need some level of profit from their funds, to form businesses that have both charitable goals and the expectation of profitable, self-sustaining operation.
It becomes “a win-win for both for-profit and non-profit investors,” Lane said.
The organization can be structures so that different participants get different mixes of benefit.
As Lane described it, a foundation might agree to a one percent financial return, but get a high social return.
A socially-conscious investor might get a modest financial return, perhaps 3 percent, while advancing his social goals.
And, to close the remaining funding gap for the project, the group might include more market-driven investors who would take on more market-rate risk, but get a closer to a market rate return, say 6 percent.
The organization could also potentially gain funds through government grants and similar sources.
While committee members saw the structure as potentially ideal for the theater project, it can be used in a wide variety of situations.
Lane said one L3C was formed by a group of organic milk farmers in Maine who formed a cooperative to better market their product to stores and received a state grant as part of their start-up funding.
Meanwhile, committee members Judy Kemp and Penny Rotheiser reported on their conversations with operators of a variety of theater facilities, ranging from Stage 773 on Belmont Avenue in Chicago to the Logan Center for the Arts at the University of Chicago.
They said they’d learned a lot from those conversations about the opportunities and challenges of organizing a property that’s meant to serve a combination of different theater groups.
The task force is currently scheduled to hold its next meeting next Thursday at the Civic Center.