This summer I have been exposed to the field of food hubs in Vermont in several different ways. Such experiences include partaking in the daily activities of the Mad River Food Hub in Waitsfield, assisting the start up of a new Food Hub Manager Training Program and attending a meeting of the Vermont Regional Food Centers Collaborative. I have been introduced me to many different types of stakeholders, from traditional LLC, L3C, NGO to State agencies. I believe each type of organization has its own strengths and weaknesses, but their collaboration is what contributes the most to creating a community-based food system in Vermont. They each play a specific role and serve different purposes.
Through my internship, I have become most familiar with the L3C model that the Mad River Food Hub uses. According to the MRFH, “an L3C is a for-profit, social enterprise venture that has a stated goal of performing a socially beneficial purpose rather than maximizing income. It is a hybrid structure that combines the legal and tax flexibility of a traditional Limited Liability Corporation (LLC), the social benefits of a nonprofit organization, and the branding and market positioning advantages of a social enterprise.”
This model is advantageous for a variety of reasons:
- The business can be run like a LLC. There is no board of directors (like in a traditional non-profit) so major decisions can be made more efficiently and timely by whoever is in charge.
- For some, being a for-profit business helps the organization be taken seriously by others. While for-profits can sometimes have a “dirty” reputation for being more economically focused than socially or environmentally focused, they can also be more respected for having a business plan and strategy for economic development.
- L3C’s also have a clear social mission. Despite being a for-profit, L3Cs still signal that they are mission-driven and are not intended to create a huge profit.
- The L3C model is only available in certain states. This can be a useful marketing strategy; being an L3C is another way to show that the business is unique and will get people interested in the organization.
One of the biggest challenges for L3Cs is receiving grant funding. For-profit models do not traditionally receive grants, particularly government-awarded grants. However, this challenge can actually offer an opportunity for collaboration with others. In the case of the MRFH, the business partnered with community-based organizations to apply for grants. This allowed the food hub to access the capital it needed to launch the project, but also involved the community and created new alliances. Community support of the project has become of the MRFH’s greatest strengths.
L3Cs are a new business model that I think can be very successful in the growing local food system. As a hybrid of both non-profit and for-profit models, L3Cs can address both the social and values-driven aspect of the food system, as well as economic development.
Learn more about the MRFH here: www.madriverfoodhub.com