X-Message-Number: 1794
From: 
Subject: CRYONICS More on finances
Date: Sun, 21 Feb 93 23:05:15 PST

Al Lopp asked for input on what course Alcor should take with respect 
to finances, but did not provide the background on which the current 
situation is based.  This can generate considerable confusion.

For example, Micheal B. O'Neal wrote:

>First,  I have been a member of Alcor for over four years now.  Every 
>year Alcor membership has grown, and grown substantially.  This should
>mean that Alcor revenues have increased substantially.  It would seem
>then, that expenses during this time must have grown faster than income 
>since (I believe, and correct me if I am wrong) Alcor wasn't in financial 
>trouble when I came aboard.  

You came aboard about the time Alcor started to get money from the 
Jones estate.  This money has been subsidizing an operation which is 
not fully paid for by income--though the percentage subsidy is quite a 
bit smaller now that it was four years ago.  Currently dues (at the 
350 member level are close to 100k.  They were in the range of 30k 
in 1989 (revenue and expenses are quite distorted because of high legal 
expenses and partly compensating donations for those expenses.)  The 
numbers here are very rough, but Alcor's membership has grown by a 
factor of about three since then, but core expenses have not gone up 
nearly that fast.

>Why have expenses been allowed to grow so quickly?  

Mostly they have not grown.

>Second, I need specific examples of how Alcor's services are superior 
>now to what they were four years ago and specifics on how they will
>continue to improve.  I want these specifics so that I can justify to 
>myself why an increase in costs is required.  

Since Jerry Leaf was suspended, Alcor has been much like the Red 
Queen, running as fast as it can just to stay in place.  The Jones 
money was not the only subsidy Alcor was built on.  Jerry devoted his 
life, you could even say he gave it, to Alcor.  Alcor's technical 
capital was largely built on Jerry's efforts.  It is not a matter that 
Alcor is doing better, so you should pay more, but a matter that 
members have long gotten a *LOT* more than they were paying for. 

>(1-4) Dissolving the endowment fund.  This does not strike me as a wise
>idea.  Your plan seems to say "Give us $100,000 this year" and then
>"Next year and the next couple of years after that we'll only need an 
>extra $50,000".  
>
>Why should I believe that the problem will become less acute?
>
>You state: "After six years, on January 1, 1999, the last 50,000 will be
>transferred out of the Continuancy Fund and the Fund will be no more.
>Hopefully by then, Alcor will have enough members that our operations
>break even or run with a surplus."

This assumes that there *are* economies of scale in a cryonics
operation.  (And the subsidy should be declining from year to year.)  
I think it is fairly clear that this is the case.  For example, Alcor 
maintains an operating room and a far flung "ready to roll" rescue 
operation.  It has not been used for nine months.  Not, you 
understand, that I am complaining.  I had much rather have members go 
on forever paying dues than to have to freeze them.  But this entire 
setup is an under utilized, but absolutely necessary, asset. 

There is no reason to believe that it will take more people to run 
Alcor with 700 members than it takes to run it with 350.  Twice the 
revenue and more or less the same labor should bring the income/out go 
a lot closer to balance, or perhaps even a small surplus.

>(7) A realistic, balanced budget.  Definitely.  In fact, this should
>have been the first thing you listed.  What exactly are your expenses?
>What exactly is the shortfall?  Propose specific cuts to expenses before
>drastically raising dues or raiding the endowment fund.
>
>One obvious area to consider scaling back on is the number of employees 
>at Alcor.  As I understand it, this has been one of the largest areas of 
>growth in the budget in the last few years.

Not so, Alcor has run with six or seven people for several years.
  
>                                             I am also under the impression 
>that we were told that increases in membership would make up for short 
>term deficits caused by these new employees.  If this hasn't happened, 
>LET SOME PEOPLE GO.

Mike Perry is the patient caretaker.  Hugh is the facilities engineer, 
and a jack of all trades, couldn't run the place without three to 
replace him.  Joe Hovey does the bookkeeping/ accounting.  Mike Riskin 
says its a full time job and would cost three times what he makes to 
replace him.  Tanya deals with suspension services, and is damn good 
at it.  Ralph edits the newsletter and is the perfusionist for 
suspensions.  Derek signs up new members, and is the one whose work 
has the most immediate payoff in additional income.  All that is left 
is Steve Bridge.  Take your pick. 

>In closing I would like to share with you that I am quite concerned 
>with the future of Alcor.

You aren't the only one. 

>                           You probably do not want to hear this, but 
>Mike Darwin was largely responsible for my joining Alcor.  His 
>impassioned writings and meticulous research and suspension reports 
>convinced me that Alcor was serious about the SCIENCE of cryonics.  
>With his departure (and that of Jerry Leaf) I am no longer comfortable 
>with the long term future of Alcor. 
>
>While I hope I am wrong, my impression is that suspension readiness is
>not where it used to be.  Thus, just as you are telling me that Alcor
>will require more from its members (in terms of dues, etc.) I feel I
>am getting less in return from Alcor.  I have no plans to switch to
>another organization because Alcor currently has no (real) competition.  
>But, I do not like the situation I find us all in.

Suspension readiness might not be up to where it was when Jerry and 
Mike were there, but in my judgment (and I am reasonably qualified to 
judge this) it is close to where it was before Mike left in '91.

It may seem odd to consider Alcor a startup after 20 years, but it is.  
A lawn mowing business which only mowed five or six lawns a year would 
either be a startup or run by fools.  Startup business are subsidized 
by investment capital or sweat equity or both.  Alcor is no exception,
and members have been getting a lot more then they have been paying 
for.  None the less, I feel that we don't *have* to charge members the 
entire cost of operating at this small and inefficient size because 
growth should close the gap before the money Dick Jones left Alcor 
runs out. 

Keith Henson
Board member, but speaking for himself

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