For the past three years Community Records (http://www.crl3c.org/) has connected musicians and at-risk students in Willow Run, Ypsilanti, and Westland. According to co-founder and creative operations officer Jesse Morgan “self-expression is the main goal here.” But Morgan, a former public high school English teacher and classically trained pianist, doesn’t just dump a guitarist with a tape-deck into a classroom. The songs featured on their website are remarkably slick because Community Records also brings in professional producers and audio engineers to record and mix the tracks. Morgan stresses that their mission is to bring affordable, high-quality recording services to entire communities, not just beleaguered schools.
Interestingly, Morgan and the other founders of Community Records elected to organize not as a traditional 501c3 non-profit, but as an L3C, a low-profit limited liability company. L3Cs are for-profit companies with an explicit goal of benefitting the community, not maximizing profits.
The L3C is a relatively newly-recognized business entity, and mimics the organizational flexibility, limited legal liability, and simplified tax status of the more familiar LLC (or “limited liability company”). This simplified structure means that most LLCs can be formed and operated without the expense of frequent legal and accounting consultations (making them the favored model for most small businesses today). This low-cost simplicity also means that, until recently, many community organizations on tight budgets have chosen to form LLCs, rather than delve into the legal complexity of incorporating as recognized non-profits. But, the for-profit nature of LLCs makes them ineligible for most grants or support from private foundations, the major source of funds for social action groups.
The L3C was specifically designed for such small-scale altruistic ventures. It makes it possible for private foundations and for-profits to connect without inadvertently violating tax law (which places certain strictures on how foundations distribute funds). Plus, many private foundations and donors are attracted to the streamlined LLC-style structure of an L3C, since donations go directly to supporting actual community action, not paying for administrative overhead.
According to Justin Fenwick, business strategy officer for Community Records, the L3C was a perfect fit for their project. “For us, it was practical, it was cultural, and it was energizing. . . . We want our programs to be self-sustaining [rather than subsisting on grants], and being for-profit provides that emphasis . . . but the L3C option . . . still legally holds us responsible to our mission, which meant we were being pulled in the two directions that define us: We want to meet the social mission, and we want to have self-sustaining programs.”
Pura Vida Color Studio
Pura Vida Color Studio (207 S. Fourth Ave, Ann Arbor, 734.717.0108. http://mypuravida.com/)–a relaxed, Italian-inflected “tropical resort” of a hair salon–doesn’t smell like a hair salon: no eye-stinging bite of ammonia, no fog of artificial flowers.
Co-owner Raine Reggans explains that in most hair coloring products “the ammonia . . . swells up the hair shaft and allows penetration of the color, so they can lock into each other inside the cortex.” In her salon, Reggans favors hair-care and color products from Davines (http://www.davines.com/). These are light on the harsh chemicals and heavy on supplemental nutrients, like milk proteins. “If the hair is damaged, it can’t shrink back down and hold the color . . . the milk proteins help bond and reconstruct” the hair. The result–hair that feels freshly conditioned, not dry and brittle–a superior experience, especially for those who like to add a little color frequently.
“We want to stand out as a color salon in Ann Arbor,” Reggans says, but salon marketing is a tricky business. Clients are loyal to their hairdressers, not the salon itself, since hairdressers are usually freelancers renting space. High rental rates are one of many obstacles for new hairdressers, especially specialists. Reggans decided to keep booth rental fees in her studio very low, subsidizing with a small commission from each client (a bit like a waitress “tipping out” to the restaurant’s support staff). This allows Reggans to bring in newer hairdressers and specifically train them to do quality color work, giving them an opportunity to specialize and build clientele.
Lisa Waud’s Pot & Box (http://www.potandbox.com/) was featured in the December 2010 Biz Buzz column, but we failed to credit the creator of the photos: Ann Arbor-based Abby Rose Photography (http://www.abbyrosephoto.com/).
Also, the final paragraph of the January 2011 column was inadvertently typeset as a quote; that paragraph represents my own optimistic opinion of the B-cycle program, not Dave Askins’ considerably less sunny assessment.