What is Perpetual Social Capital™?
A complete guide to understanding PSC™—the charitable funding model that lets gifts help more than once.
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. With a loan, they must repay $100,000 plus interest—straining their budget and limiting growth.
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 the PSC fund—no interest, no debt. The fund then helps the next hospital buy their machine. And the next.
Your single $100,000 gift might fund 5+ machines across different hospitals over time, all while each hospital keeps their asset with zero debt on their books.
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 Binary
Philanthropy has always offered two choices:
- 1.Give it away—immediate impact, capital gone forever
- 2.Lend it—capital returns, but creates burden
The Third Way
PSC creates a new category:
- It's a gift—no legal obligation to repay
- It cycles—recipients pay forward when able
- It compounds—total impact multiplies over time
This "third way" is what we call Regenerative Capital—a fourth capital class alongside debt, equity, and grants. Traditional models either extract value (debt/equity) or terminate (grants). Regenerative capital strengthens systems over time.
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.
When Able, Pay It Forward
Years later, when the beneficiary is in a position to do so, they voluntarily contribute back to the fund. This is framed as "paying it forward" not "paying back."
Capital Helps Again
The returned capital is deployed to the next beneficiary. The cycle continues, with each dollar potentially helping multiple people over time.
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 |
| 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
Try the Calculator
Model your own PSC scenarios with adjustable parameters and see projections.
Open PSC Dashboard