PSC vs
Microfinance & Debt
Microfinance recycles capital through legal obligation and interest. PSC achieves 71% more system value through voluntary pay-forward—with zero interest and no debt burden.
The Fundamental Difference
Both recycle capital. But the mechanism and human experience are completely different.
Microfinance / Debt
Capital is lent with interest. Repayment is legally required. Failure to repay has serious consequences.
Perpetual Social Capital
Capital is given as a gift with a moral (not legal) expectation to pay forward when successful. No interest, no debt.
System Value Over 30 Years
Microfinance plateaus as market saturation and defaults accumulate. PSC continues compounding.
Microfinance: 95% repayment with 20% interest | PSC: R=0.9, 0% interest
Feature Comparison
| Feature | Microfinance | PSC |
|---|---|---|
| Initial Capital | $100,000 | $100,000 |
| Interest Charged | 15-30% APR | 0% (pay-forward) |
| Repayment Obligation | Legal requirement | Moral commitment |
| 30-Year System Value | $1.92M (19.2×) | $2.67M (26.7×) |
| Default Consequences | Credit damage, legal action | No penalty |
| Beneficiary Stress | High (debt burden) | Low (voluntary) |
| Recycling Rate | ~95-100% (required) | ~80-95% (voluntary) |
| Community Culture | Transactional | Gratitude-based |
The Human Difference
Beyond the numbers, PSC creates a fundamentally different experience.
Debt Experience
"I owe $5,000 plus 20% interest. I must repay or face consequences."
Feelings: Obligation, anxiety, pressure
Relationship: Transactional, adversarial if default
PSC Experience
"Someone believed in me. When I succeed, I want to give others the same chance."
Feelings: Gratitude, empowerment, belonging
Relationship: Community, mutual investment
When Each Model Makes Sense
Choose Microfinance When:
- •You need guaranteed capital return
- •Beneficiaries are for-profit businesses
- •Legal enforcement is acceptable
- •Revenue model depends on interest income
Choose PSC When:
- •You want to avoid debt burden on beneficiaries
- •Building community is as important as capital
- •Long-term system value matters more than short-term
- •Gratitude culture aligns with your mission
Extractive vs. Regenerative Capital
The Regenerative Capital Theory paper explains why debt and PSC produce such different outcomes: debt operates on extractive logic—capital providers extract value (interest) from beneficiaries. PSC operates on regenerative logic—value flows back into the system to benefit future participants. Same recycling rate, radically different relationship between capital and people.
Read the RCT Paper (Theory)Interactive Tools
Explore the math behind PSC vs debt-based models with our interactive dashboards.
Explore Debt-Free Impact Capital
See how PSC achieves higher system value without interest charges or debt burden.