PSC:
Endowments++
PSC isn't a replacement for endowments—it's an upgrade. You get perpetual funding, legacy naming, and capital preservation—plus 22× more system value over 30 years. Allocate some or all of your capital to PSC alongside traditional endowments.
What Endowments Got Right
Endowments solved a real problem: how to fund missions that outlive individual donors. Universities, hospitals, and foundations needed perpetual funding streams that didn't depend on annual fundraising. The endowment model—invest the principal, spend the returns—provided exactly that.
This was transformative. It enabled institutions to plan decades ahead, weather economic cycles, and build the infrastructure that now serves millions. PSC builds on this insight about perpetuity.
The Structural Gap: Idle Capital
Endowments preserve capital by keeping 95% of it out of mission work.
The Math of Traditional Endowments
With a 5% spending rate, a $100M endowment deploys $5M annually to mission work. The remaining $95M sits in investment markets—benefiting financial intermediaries, but not the mission until returns are realized.
Why This Matters
The endowment model was designed for a world where capital preservation required market investment. But this creates a structural tension: the mechanism that preserves capital is the same mechanism that keeps it away from beneficiaries.
PSC resolves this tension by finding a different preservation mechanism: recycling through beneficiaries themselves. Capital is preserved not by hoarding it, but by building systems where beneficiaries pay forward when they succeed.
Same Goal, Different Mechanics
Both preserve capital in perpetuity. PSC does it by keeping capital in motion—and you can use both.
Traditional Endowment
Locks capital in investments. Deploys only the returns (4-5% annually). The principal stays untouched "forever."
Perpetual Social Capital
Everything endowments offer—perpetual funding, legacy naming, capital preservation—plus 100% immediate deployment and compounding impact.
30-Year Cumulative Deployment
Starting with $100,000, see how much capital actually works for beneficiaries.
Endowment: 5% annual payout | PSC: R=0.9, 3-year cycles
Feature Comparison
| Feature | Endowment | PSC |
|---|---|---|
| Capital Preserved | Yes (in perpetuity) | Yes (via recycling) |
| Perpetual Funding | Yes | Yes |
| Legacy Naming | Yes | Yes (named PSC pools) |
| Annual Deployment | 4-5% ($4-5K/yr) | 100% recycled at R |
| 30-Year System Value | ~$150K cumulative | $2.67M (26.7×) |
| Immediate Impact | Low (5% year 1) | High (100% year 1) |
| Management Fees | 0.5-2% annually | None or minimal |
| Market Risk | High (tied to markets) | Low (tied to R factor) |
It Doesn't Have to Be Binary
Many foundations allocate a portion of their capital to PSC while maintaining a traditional endowment. Start with 10-20% and adjust based on results.
Keep most capital in traditional endowment for predictability. PSC portion amplifies impact on suitable programs.
Split approach maximizes both stability and impact. Best for foundations with diverse program types.
Maximum system value. Keep small endowment for overhead and emergency funds. Deploy the rest through PSC.
When to Keep Some in Traditional Endowment:
- •Programs where beneficiaries cannot pay forward (emergency relief, end-of-life care)
- •Covering operational overhead that needs predictable annual funding
- •Maintaining a reserve for unexpected opportunities or crises
The Theoretical Foundation
Why does PSC outperform endowments? The Regenerative Capital Theory paper explains the fundamental difference: endowments use extractive logic (invest → extract returns → deploy some), while PSC uses regenerative logic (deploy → benefit → recycle). This isn't just different mechanics—it's a different relationship between capital and beneficiaries.
Read the RCT Paper (Theory)Explore PSC for Your Capital
Whether you're reconsidering an endowment or exploring new philanthropic structures, our team can help you model PSC outcomes for your specific situation.