PSC vs
Traditional Grants
Traditional grants are one-and-done: capital is spent and gone. PSC recycles that same capital through beneficiary pay-forward, generating 33× more system value over 30 years.
What Grants Got Right
Grants embody something beautiful: pure gift. No strings attached, no returns expected, no intermediaries extracting value. When a foundation gives a grant, 100% of that capital goes directly to the mission—immediately.
This directness matters. Unlike investments that require commercial returns, or endowments that lock up 95% of capital, grants put every dollar to work on day one. For emergency relief, capacity building, and catalytic interventions, this immediacy is exactly right.
The Structural Gap: Terminal Capital
Grants solve immediate problems but create fragmented, unsustainable systems.
The Fragmentation Problem
When grants end, organizations scramble for the next one. This creates a nonprofit sector perpetually running on fumes—chasing funding cycles instead of building sustainable programs.
For Organizations
- • 40% of staff time on fundraising
- • Programs pivot to match funder priorities
- • Institutional knowledge lost between grants
- • Mission drift to "what's fundable"
For Beneficiaries
- • Programs end mid-impact
- • Relationships severed at funding end
- • Progress lost when staff turn over
- • No continuity of support
Why This Matters
The grant model treats capital as consumable fuel: burn it, seek more, repeat. This works for one-time interventions but creates structural fragility for ongoing missions. Organizations become dependent on the fundraising cycle rather than the communities they serve.
PSC transforms capital from fuel to flywheel. Instead of being consumed, capital cycles through beneficiaries who contribute when they succeed. The grant becomes self-renewing— still 100% deployed immediately, but now regenerating for the next cohort.
The Fundamental Difference
Both deploy 100% immediately. But what happens next is completely different.
Traditional Grant
Capital is deployed once and consumed. The grant ends when the money is spent. New impact requires new fundraising.
Perpetual Social Capital
Capital is deployed immediately, but it recycles. Beneficiaries pay forward when they succeed, regenerating the pool for future impact.
Cumulative System Value Over 30 Years
Starting with $100,000, see how PSC's recycling mechanism creates exponentially more value.
Grant: One-time deployment | PSC: R=0.9, 3-year cycles
Feature Comparison
| Feature | Grant | PSC |
|---|---|---|
| Initial Capital | $100,000 | $100,000 |
| Immediate Impact | 100% deployed | 100% deployed |
| Capital After Use | Gone forever | Recycled at R factor |
| 30-Year System Value | $100K (1×) | $2.67M (26.7×) |
| Beneficiary Connection | Ends at grant | Ongoing relationship |
| Sustainability | Requires new funding | Self-sustaining |
| Administrative Simplicity | Very simple | Moderate complexity |
| Impact Measurement | Often unclear | Built into R factor |
The Math Behind the Difference
Understanding how recycling creates compound value.
Traditional Grant
Year 0: Deploy $100K
Year 1+: Capital consumed
Total value: $100K
SVM = 1×
PSC (R=0.9, 3yr cycles)
Cycle 1: $100K → 90K returns
Cycle 2: $90K → 81K returns
Cycle 3: $81K → 73K returns
... continues for 10 cycles ...
SVM = 26.7×
Formula: SVM = 1 / (1 - R)
Where R is the recycling rate (0.9 = 90% of capital returns each cycle)
When Each Model Makes Sense
Choose Grants When:
- •Emergency relief with no pay-forward possibility
- •One-time equipment or infrastructure purchases
- •Beneficiaries have no future income potential
- •Administrative capacity is very limited
Choose PSC When:
- •Beneficiaries can pay forward when successful
- •Long-term, sustainable impact is the goal
- •You want to build community among beneficiaries
- •Education, healthcare, small business contexts
Grants Are Terminal. PSC Is Regenerative.
The Regenerative Capital Theory paper formalizes this distinction: grants follow terminal logic—capital flows to beneficiaries and stops. PSC follows regenerativelogic—capital flows through beneficiaries and continues. This isn't about requiring repayment; it's about designing systems where success naturally cycles back.
Read the RCT Paper (Theory)Transform Your Grant Into Perpetual Impact
See how your next grant could generate 30× more value through PSC's recycling mechanism.