Regenerative Economic Architecture™
The economic foundation that makes capital strengthen systems over time—instead of extracting from them.
The 60-Second Version
Imagine a community foundation with $10M. Traditionally, they invest it, earn 5%, and give away $500K per year in grants. Once granted, that money is gone.
Now imagine they deploy the same $10M directly—but as regenerative capital. Recipients use it, succeed, and then return 80-85% to the pool voluntarily. Same $500K now helps 5× more people over time, and the fund never runs out.
REA defines the structural rules that make this possible: what "regenerative" actually means mathematically, and how to design systems that achieve it.
Why Old Approaches Don't Work
Every capital type has a fundamental economic structure that determines whether it builds or depletes systems over time.
Extracts value from the system—interest payments and shareholder returns drain capital away from the mission
Depletes after single use—once spent, the money is gone forever. Requires constant fundraising.
Still relies on extractive underlying instruments. Reduces extraction but doesn't eliminate it.
Zero extraction, perpetual horizon. Capital strengthens through use rather than depleting.
The Core Insight
Traditional View
- •Capital is a stock that depletes when used
- •Giving away money = losing money
- •Must preserve principal, only spend returns
- •Impact is limited by available funds
REA View
- Capital is a flow that recycles through use
- Deploying capital = multiplying capital's impact
- Deploy principal, recycle it back, redeploy
- Impact compounds with each cycle
The key equation
Total Impact = Capital × Cycles × (1 + Capability Return)
Where traditional capital has 1 cycle, regenerative capital has ∞ cycles
The Four Capital Types
REA identifies four fundamental capital types based on extraction rate and time horizon:
| Type | Extraction | Horizon | Effect |
|---|---|---|---|
| 📉Debt | High (interest) | Short (repayment term) | Depletes borrower |
| 📊Equity | Medium (returns) | Medium (exit) | Demands growth |
| 💸Grants | None | One-time | Depletes after use |
| ♻️Regenerative | None | Perpetual | Strengthens system |
Real-World Examples
See how the same capital works differently under traditional vs. regenerative structures:
Community Foundation
Traditional Approach
Setup: $10M endowment, 5% annual payout
Problem: Grants $500K/year that disappears after use
Outcome: Same $500K impact every year (inflation erodes over time)
REA Approach
Setup: Same $10M as regenerative capital
Mechanism: Recipients return 80% when successful
Outcome: $500K recycles into $2.5M impact over 5 cycles, then continues perpetually
Hospital Equipment
Traditional Approach
Setup: $5M for MRI scanner replacement
Problem: Budget depletes → 10-year wait for next replacement
Outcome: Equipment ages past optimal, patient care suffers
REA Approach
Setup: Same $5M as PSC™ pool
Mechanism: Funds cycle back through operational savings
Outcome: Continuous renewal aligned with equipment lifecycles
Student Aid
Traditional Approach
Setup: $1M scholarship fund
Problem: 20 students × $50K, then fund is empty
Outcome: Next cohort needs entirely new funding
REA Approach
Setup: Same $1M as regenerative loan
Mechanism: Graduates contribute back when earning above threshold
Outcome: Fund helps 100+ students over time, perpetually
The Four Structural Requirements
For capital to be truly regenerative, four conditions must hold. REA calls these "invariants"—they must remain true over time.
R — Recycling Rate
Must be > 80%
What fraction of deployed capital returns for redeployment? High R means the pool persists.
γ — Capability Return
Must be > 1.0
Does deployment create value beyond the capital itself? High γ means compounding impact.
Δ — Decoupling
High = good
Is capital protected from external fragility (politics, markets, funding cycles)? High Δ means stability.
Λ — Alignment
High = good
Is capital synchronized with mission needs? High Λ means funding arrives when impact is possible.
R and γ determine whether the system is sustainable (can it persist and grow?).
Δ and Λ determine whether the system is resilient (can it survive shocks and stay aligned?).
Frequently Asked Questions
Isn't this just a revolving loan fund?
Revolving loans still extract interest. REA structures have zero extraction—beneficiaries return capital without paying for the privilege of accessing it. The key difference is structural: no interest, no penalties, no forced repayment timelines. Returns are voluntary and triggered by success.
How do you ensure people actually return the capital?
Through Architectures of Ease™—making the right behaviour the easy behaviour. This includes: identity coupling (returns as demonstration of values), future-cycle access (continued access requires participation), and social proof (visible community patterns). Enforcement-free compliance achieves 85-95% return rates.
What if everyone just takes and never returns?
This is the 'free rider' objection. REA addresses it through (1) selection—people who opt into these structures are already values-aligned, (2) architecture—not requiring returns eliminates the adversarial frame, and (3) reciprocity norms—humans naturally want to reciprocate gifts. Empirically, voluntary return rates exceed forced repayment rates.
How is this different from traditional endowments?
Traditional endowments preserve principal and spend returns. REA deploys principal but recycles it back—same capital does multiple tours of duty. An endowment earning 5% spends 5% per year. A regenerative pool with 85% return rate and 3-year cycles multiplies impact 5-10× over the same period.
Where REA Fits
REA provides the economic foundation that underlies the entire research program: