The Social Enterprise Alliance North Texas Chapter convened entrepreneurs, nonprofit executives and social enterprise practitioners in June to learn about new legal and tax structures for social enterprise organizations. New hybrid organizations are adopting emerging social enterprise models, employing innovative strategies, and creating business alliances to drive positive social change. This interactive presentation helped nonprofit leaders and social entrepreneurs understand a myriad of legal, tax, and governance challenges in the Fourth Sector and learn ways to overcome them by using business efficiencies to achieve nonprofit goals. Marc Lane, a national-recognized expert on social enterprise law, led the discussion and offered his practical advice and answered questions about these issues and others: The L3C business model and how social enterprises are already benefiting Relieving legal tension between financial and social objectives Understanding social enterprise legal issues · Reducing the risks and financial burden of earned-income social ventures · Leveraging foundations' "program-related investments" to attract private-sector capital for earned-income ventures Converting nonprofit funders into social venture capitalists

1. Are you a [ .com ] or a [ .org ] ? Marc J. Lane June 30, 2011 Copyright © 2011, by Marc J. Lane Advisors, L3C. All rights reserved.

5. Program-related investing and the L 3 C

15. Capital Structure Illustration #1 Foundation incurs high financial risk, earns low (1%) financial return, but high social return Social Return Financial Return Foundation

16. Capital Structure Illustration #1 Mezzanine investor Socially conscious investor incurs lower financial risk, earns higher (3%) financial return. Social Return Financial Return

17. Capital Structure Illustration #1 Market-driven investor Market-driven investor incurs market-rate risk, earns market-rate (6%) financial return. Social Return Financial Return

18. Blended rate of return: 4% - - which L 3 C can generate, but not without the catalyst of the foundation’s PRI.

19. Capital Structure Illustration #2 Development agency makes a grant, seeking high social return but earning no financial return. Social Return Financial Return Government

20. Capital Structure Illustration #2 Foundation earns low (2%) financial return, but high social return. Social Return Financial Return Foundation

21. Capital Structure Illustration #2 Outside investor incurs market-rate risk, earns market rate (7%) return. Social Return Financial Return Market-driven investor

22. Blended rate of return: Again, 4% - - which the L 3 C can generate, but not without the catalyst of the foundation's PRI.

25. 1. Reliance on applicable constituency statutes Texas Business Organization Code § 21.401 Sec. 21.401. MANAGEMENT BY BOARD OF DIRECTORS. (a) … (b) In discharging the duties of director under this code or otherwise and in considering the best interests of the corporation, a director may consider the long-term and short-term interests of the corporation and the shareholders of the corporation , including the possibility that those interests may be best served by the continued independence of the corporation. (Source: Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.)

31. L 3 C Legislation 2008 Vermont 2009 Michigan Utah Wyoming 2010 Illinois Louisiana North Carolina 2011 Maine 2012 Rhode Island

32. The Benefit Corporation: Creating a “Public Benefit”

37. Benefit Corporation Legislation * 2011: Benefit LLC legislation ** Sustainable business corporation legislation 2010 Maryland* Vermont 2011 New Jersey Virginia Hawaii**

38. Pay-For-Success Bonds (aka Social Impact Bonds)

44. For further information: The Law Offices of M ARC J . L ANE A PROFESSIONAL CORPORATION 180 North LaSalle Street Chicago, IL 60601-2701 (312) 372-1040 (800) 372-1040 Fax (312) 346-1040 www.MarcJLane.com