The L³C concept provides that the primary purpose of the organization must be charitable, with the production of income permitted to be a secondary purpose. As with a tax-exempt charity that must have a charitable purpose by law, yet also must, from an economic standpoint, have sufficient revenue to conduct operations, institutional decisions must be made with the L³Cs overarching charitable purpose in mind. Thus, the L³C brings together foundations' PRIs and investments by nonexempt parties to accomplish L³Cs primary charitable purpose through a business that, because of its inherent risk and low likelihood of profit, simply would not be attractive solely to for-profit investors.

Precisely the same analytic framework that applies under current law to assess the purpose and fiscal operations of a taxexempt charity will apply to an L³C. When assessing whether a "significant purpose" of a foundation's proposed investment is the production of income for purposes of the PRI rules, Treas. Reg. § 53.4944-3(a)(2)(iii) states that is is "relevant whether investors solely engaged in he investment for profit would be likely to make the investment on the same terms as the private foundation." However the fact that an investment produces significant income or appreciation in the absence of other factors, is not conclusive evidence of a significant purpose involving the production of income or the appreciation of property. In fact, Treas. Reg. § 53.4944-3(b), Ex. 1, states, in analyzing an investment by foundation "Y," that the investment "is a programrelated investment even though Y may earn income from the investment in an amount comparable to or higher than earnings from conventional portfolio investments."

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