Traditionally charities and foundations have been built by private enterprise, however, a new plan to attract jobs to the state could have charities and foundations build private enterprise and reap a minimal profit.

On Wednesday, the North Carolina House of Representatives Committee on Commerce, Small Business and Entrepreneurship issued preliminary approval of legislation that would create a new type of corporate citizen in hopes of funneling charitable funds into entrepreneurial endeavors to create jobs.

Senate Bill 308 creates the low-profit limited liability corporation (L3C), which already exists in five other states. The first state to pass it was Vermont in April 2008.

The corporate structure is designed to attract private investments and philanthropic capital to provide a social benefit.

The bill’s main backer in the state capitol is Burke County Senator Jim Jacumin (R) who said he hopes empty furniture and textile factories dotting the state could be refurbished and leased to entrepreneurs for new businesses through this new type of LLC.

One possible application of this type of investment could be a L3C purchasing an empty textile factory and refurbishing it to be energy efficient. Then, it would lease it to a company that might otherwise not be able to afford such a facility.

The idea is that the investors would be seeking economic development and community improvement before profit, thus they would only take in minimal leasing fees from an entrepreneur.

The idea is also that perhaps the next entrepreneur who will build a hospital wing in a North Carolina town just needs that extra push to get there.

The bill has support from both sides of the aisle.

“I believe this legislation is an attempt to develop new businesses in North Carolina,” Committee Chairwoman Rep. Margaret Dickson (D) said Wednesday. “Our state’s economy in the 20th century was dependent on manufacturing, specially of textiles, furniture, and tobacco. Our 21st century economy will be more entrepreneurial and more diverse, and this legislation could play a significant role in that economy’s development.”

Richmond County Economic Developer Rick Sago said that on the surface it sounds like a pretty good idea, and the county has empty facilities that could benefit from this type of situation.

However, there are still questions in his mind about how it would be implemented.

“If we could fill a building that’s empty right now with jobs, we’re all for that,” Sago said. “But I have some questions as to how this would actually work.”

One of his concerns is that this new type of corporation would have a competitive advantage over traditional firms.

“Another question to ask would be how is it working out in states that already have them? Is it helping them?” Sago pointed out. “As the county’s economic developer, I’m all for creating and saving jobs, but just knowing what I know right now, I still have questions I’d need answered.”

It is also unclear how much, if any, this type of investment could divert money from existing charities, but it’s clear that job loss over the last 18 months in the state has lawmakers willing to be innovative.

Americans for Community Development has been campaigning with legislators from across the country to push laws creating this type of venture.

“The L3C is not a nonprofit,” the group posted on its website. “It is a for profit venture that under its state charter must have a primary goal of performing a socially beneficial purpose not earning money.”

It also describes this type of corporation as “the for-profit with a non-profit soul.”

Non-profit law blogger Emily Chan explained that unlike a standard LLC, the L3C has a primary charitable mission with a secondary focus on profit. Unlike a non-profit, the corporation is free to distribute the profits to owners or investors.

They do pay taxes on those profits, though.

With the bill out of the Commerce Committee, it will move onto the House Committee of Finance.