What is Perpetual Social Capital™?
A complete guide to PSC™—the fourth capital class alongside debt, equity, and grants, where capital cycles indefinitely through a networked pool, creating compound social value.
A visual introduction to Perpetual Social Capital and regenerative funding
The 60-Second Version
Imagine a hospital needs a $100,000 dialysis machine.
With a traditional grant, the hospital gets one machine and the money is gone forever—generating about 1.7× cumulative value over time. With a loan, they must repay $100,000 plus interest—creating balance sheet liabilities and requiring R ≥ 96% just to match grant performance.
With PSC, the hospital receives $100,000 as a gift to buy the machine. The machine generates revenue from patient treatments. As the hospital earns from the asset, they pay forward to a shared networked pool—no interest, no debt, no liability on their books. The pool then deploys capital to the next hospital. And the next.
Over 30 years, your single $100,000 gift generates 8.5×–51× cumulative system value depending on recycling rate—while each hospital keeps their asset with zero debt.
Why Do We Need This?
Every approach to charitable funding has trade-offs. Here's what's been tried:
Carnegie Model
Large perpetual endowments
Limitation: Capital locked up, only 5% deployed annually
Program Grants
Direct project funding
Limitation: One-time impact, grant fatigue
Impact Investing
Financial + social returns
Limitation: Requires profitable ventures, excludes most need
Microfinance
Small loans to underserved
Limitation: Interest burden, debt traps, ~95% repayment pressure
PSC
Gifts that cycle back
Trade-off: Requires cultural shift
The Core Insight
The Old Triad
Capital has always come in three forms:
- 1.Debt—creates liabilities, extracts interest
- 2.Equity—requires returns, often causes mission drift
- 3.Grants—capital depleted after single use
The Fourth Capital Class
PSC introduces regenerative capital with four essential properties:
- Zero interest—no cost of capital
- Non-liability status—soft, mission-aligned obligations
- Perpetual recycling—capital returns to networked pool
- Regenerative structure—value compounds across cycles
PSC is the first implementation of Regenerative Capital—a fourth capital class alongside debt, equity, and grants. Traditional models either extract value (debt/equity) or terminate (grants). Regenerative capital strengthens balance sheets while generating multi-cycle social value.
Read the theory behind it →How It Works
Donor Gives a Gift
A donor contributes $100,000 to a PSC fund. This is a complete, tax-deductible charitable gift—not a loan, not an investment.
Beneficiary Receives & Uses
A carefully selected beneficiary receives the funds as a genuine gift. They use it for their stated purpose—education, business, housing, whatever the fund supports.
Recycle to the Networked Pool
When the beneficiary is in a position to do so, they voluntarily contribute back to the shared networked pool—not to the original donor, but to the common fund. This is framed as "paying it forward" not "paying back."
Pool Redeploys Capital
Capital flows from the common pool to new beneficiaries—this is networked architecture, not bilateral. The pool continuously deploys to whoever needs it most, and the System Value Multiplier (SVM) grows with each cycle.
See The Difference
Compare cumulative impact: traditional one-time grant vs. PSC over 10 years.
Initial Gift
$100,000
System Value Multiplier
5.0x
Total System Value
$500,000
PSC vs. Impact Investing
Impact investing has been heralded as a way to "do well while doing good." But it has fundamental limitations that PSC addresses.
| Dimension | Impact Investing | PSC |
|---|---|---|
| Return expectation | Financial return required | No financial return to donor |
| Balance sheet impact | Creates liability for recipient | Non-liability status |
| Capital architecture | Bilateral (investor ↔ venture) | Networked pool |
| Eligible recipients | Must be profitable ventures | Anyone with genuine need |
| Recipient obligation | Legal repayment requirement | Voluntary pay-it-forward |
| Tax treatment | Investment (capital gains) | Charitable donation |
| Failure mode | Investor loses money | Lower R factor (still helped someone) |
A Note for Donors
PSC donations receive the same tax treatment as traditional charitable gifts. Your contribution is fully tax-deductible, just like any donation to a qualified nonprofit.
The difference is what happens after you give. Instead of your gift helping once, PSC's pay-it-forward structure means your capital can cycle back to help again—potentially multiplying your philanthropic impact without any additional cost to you.
Common Questions
If there's no obligation to pay forward, won't people just keep the money?
Research on gift economies and paying-it-forward programs shows surprisingly high voluntary return rates when framed correctly. The key is cultural framing: recipients see themselves as part of a chain of giving, not as debtors. Early PSC pilots have seen R factors above 0.7.
How is this different from a revolving loan fund?
Revolving loan funds create legal obligations with interest. PSC creates no legal obligation and charges no interest. This fundamental difference affects everything: who can receive funds, the psychological burden on recipients, and the tax treatment for donors.
What happens if the R factor is very low?
Even at R=0.5 (meaning only half the capital returns), your donation creates 2x the impact of a traditional grant. At R=0, you've simply made a traditional grant—which still helped someone. The downside is limited while the upside is substantial.
Can beneficiaries keep assets they purchase with PSC funds?
Yes—this is a crucial advantage over loans. If someone uses PSC funds to buy equipment or property, they own it outright. They pay forward from their improved position, not by liquidating assets. This enables wealth building, not just temporary relief.
Explore Interactively
Key Terms
Try the Calculator
Model your own PSC scenarios with adjustable parameters and see projections.
Open PSC Dashboard