X-Message-Number: 2421
Date: 28 Sep 93 15:06:36 EDT
From: STEPHEN BRIDGE <>
Subject: CRYONICS Metzger answer
To Cryonet
>From Steve Bridge
September 28, 1993
Added reply to Perry Metzger's Message: #2419 - some questions
Date: Sun, 26 Sep 1993 23:01:31 -0400
As I'm sure Perry has already realized, he jumped the gun by one
day. My posting on regular Cryonet was a response to David Brandt-
Erichsen's question. My response to Perry went on CRYONICS.POLITICS the
next night.
Since Perry has re-asked his questions here in the cold, hard light
of the open Net, rather than the dark alleys of CRYONICS.POLITICS, I'll
also repost my answer here, at the end of this message.
A couple of other comments:
>We heard promises at one point that if less than $400,000 had been
>raised by the LLC from sources other than Alcor itself that there
>would be no purchase.
Perry, I don't believe that was the promise. I don't remember
quotes, but I think most Directors indicated they needed to see a strong
show of interest in the investment or donations and needed to see some
substantial portion of the money raised outside Alcor. And remember,
only $300,000 was for the building purchase. The other $100,000 portion
was an estimate of what was required in donations for Alcor's move, with
several safety factors thrown in. We may in fact need a bit less than
that if our moving and renovation estimates are lower than we budgeted.
>Does this mean that this much has in fact been raised from outside
>sources, or has the board decided to commit a third of the patient care
>fund to an investment in Arizona commercial real estate?
The full amount has not been raised from outside sources yet, but
we are still selling Interests and taking donations. The Board has NOT
decided to commit a third of the PCF, as you will see below. Even if
the PCF invests in some Interests in the LLC, those can be made
available for Alcor members to buy back for quite a while.
>On a slightly different topic, I still haven't heard an answer to my
>question that I posted to the politics subgroup a few weeks ago during
>the "great eerie silence" following the board elections, which was
>this: is Alcor in fact running an operating deficit, how large is this
>loss, and what does my board of directors plan to do to stop the loss
>if it exists?
>Perry Metzger
Your question was posted on September 17, and my answer was posted
on CRYONET.POLITICS the 25th. Eight days is hardly "a few weeks." For
anyone who thinks the answer should have been faster:
1. It could have been, but I asked several people to look it over.
I felt it was better for the answer to be right than be fast.
2. It is much easier to write a one sentence question than compose
the several page answer it requires. This is a good lesson for
everyone. (Your next test question: Describe the universe. Give three
examples.)
3. I have five or six major projects going on right now. I'm
already working 12 hours a day. I can't take the time to spend hours
each day answering Cryonet questions, even ones like these which deserve
answers. And I know everyone wants *thoughtful* answers from me, not
knee-jerk responses.
One cost-saving measure I did not suggest below, but which may
happen, is dropping Alcor from the CryoNet list. It would save an
immense amount of time and several hundred dollars per year.
Here is my answer to Perry's earlier questions, moved here from
CRYONICS.POLITICS. Can we please confine our responses BACK to
POLITICS?
Steve Bridge
****************************************************************
To Cryonet
>From Steve Bridge
September 23, 1993
> Subject: CRYONICS.POLITICS
****************************************************************
REPLY TO PERRY METZGER
>Message: #0014.322 - Queries for the Alcor Board
Date: Fri, 17 Sep 1993 21:56:28 -0400
From: "Perry E. Metzger" <>
>I have two questions for the Alcor board.
>
>1) What is Alcor's current operating deficit, and how soon will it be
> stopped?
>
>2) Does the board intend to spend more than 10% of the Patient Care
> Trust on the new building and related expenses?
>
>Perry Metzger
I'll answer the second question first.
2. First, any money provided to purchase the Scottsdale building will be
INVESTED, not "spent." There is a major difference.
The Board DOES NOT intend to invest more than 10% of the Patient Care
*Fund* (sorry, it's still not a trust, but we have a new attorney who
appears to be making some progress on that) on the new building, and has
voted on that.
I just got back from Scottsdale, Arizona last night. While I was
there, Cryonics Property, LLC (an Arizona limited liability company)
closed escrow on the Acoma Drive building. We are moving quickly to get
estimates on the maintenance work required and on Alcor's proposed
interior construction. There are several companies interested in the
empty space in the center of the building, and I think we will have it
leased by November 1st or shortly thereafter.
Not all of the potential investors have made up their minds yet, so
the private offering has been extended through October 15, 1993. It is
too early to tell what percentage of the LLC is owned by Alcor and what is
owned by individuals. I hope we can have final figures sometime after
October 15.
Now the longer and harder question.
2. Most start-up companies run at deficits. While Alcor has been in
business for 21 years, any business which only performs its primary
activity 3-5 times a year has to be considered "start-up." Alcor has been
running on a substantial deficit for several years. We have never come
within 50% of covering our expenses with membership dues (emergency
responsibility fees). However, until this year we had enough donation
income (in the past few years much was from Dick Jones estate) to cover
that deficit. The theory was that these expenditures were required to
handle and propel Alcor's growth and that this growth would eventually
overcome the deficit.
Currently, from figures given to me by our bookkeeper, Joe Hovey, it
looks like our *operating* deficit (NOT Patient Care) is about $8,000 per
month. Coming up with this number is complicated by the many unusual
expenditures we had this year, some of which were not truly "operating"
costs.
We are still catching up on legal expenses from past years, although
our new legal expenses have been comparatively low. Some amount of extra
expense has been incurred in determining the extent of our building code
problem at the Riverside facility. We have paid several thousand dollars
in remodeling expense and in hiring an architect already.
The fourth major problem was in suspensions. In 1992, the operating
budget gained about $23,000 from suspension funding left over after
expenses and after the Patient Care Fund had been paid. So far in 1993,
the operating fund is MINUS about $20,000 for expenses it had to make up
on the suspension done in April. The insurance company (Met Life) has
refused to pay on the policy, claiming the patient had not disclosed that
he had cancer and AIDS when he took out the policy -- less than two years
ago. We still have some options on this and may yet get some money from
Met Life, but I'm not counting on it.
We have had only one other suspension this year, a financial break-
even on the suicide in February. In 1992, we had FIVE suspensions before
the end of July.
One problem with our budget this year was that in late 1992, when we
looked at the 1991 financial statements, we misunderstood what percentage
of 1991 donations was from members and what was from the Dick Jones estate
and other sources. So we budgeted our 1993 income to include about
$40,000 too much in donations.
One "almost sure thing" income source fell through. We really
expected to net $50,000 or more from our motion for legal fees against the
California Department of Health Services. For technical reasons, we did
not get a cent.
Also, our membership growth suddenly slowed down dramatically, to
nearly zero growth in the past six months. No doubt the arguments between
various Alcor members contributed to this; but we also may have hit a
temporary plateau, perhaps based on a poor US economy. The poor economy
has definitely affected our ability to gain contributions, and it has made
fund-raising for the Scottsdale building much harder. Based on my
conversations with 70-80 Alcor members over the past month, no more than a
handful are better off financially this year than in 1992.
This year's budget was based on what we saw as the average between
the worst possible situation and the best possible. Nothing about this
year has been average, however, and I cannot predict when we will see
"average" again.
Our budget deficit might still be acceptable if we could see
that it was steadily shrinking and that membership growth would clearly
wipe it out in a reasonable time period. This doesn't seem to be the
case.
As we have had these shortages, as major unplanned expenses came
about, or as bills mounted and had to be paid, the Board has borrowed
money from the only available borrowing source: ourselves, via the
Endowment Fund. As of August 31, the Operating Fund had borrowed
approximately $102,000 from the Endowment Fund (about $20,000 of that
amount was left-over from the end of 1992). The Research Fund (which
covers suspensions) had borrowed more to cover part of the unpaid
suspension and a promissory note we owed on Cryovita equipment we had
to buy last year. The Building Fund has also borrowed $30,000 for
the deposit on the Acoma Building and the payment to the attorney to form
the LLC. I expect this amount to be paid back to the Endowment Fund from
donations to the Building Fund.
I think we will have to continue as we are until we get moved to
Scottsdale. Several Directors have stated that the next big project for
the Board then becomes to reduce expenditures and raise income. Some
Directors think that we may actually do better in donations and other
income areas once we get settled. We have learned some valuable things
about our members from the Building Fund drive. But we probably have to
accept a lower budget for 1994. If we cannot find ways to improve our
income before the end of the year, via suspensions, growth, and donations,
we will have to make some large cuts. This will have to include either
staff or salaries for staff, and will almost certainly include major cuts
in publications, public relations, and in services to the members.
Suspension services will be cut last.
Finding "fat" in the budget is not as easy as one might think. We
are spending much less already than we should be if we want to make
progress. Any cuts are likely to result in decreased exposure for Alcor
and in decreased membership. It is expensive to add new members, although
that expense is necessary to get people involved for the long run. Cuts
in expenditures may also result in decreased ability to react quickly to a
member's medical emergency.
These are some pretty difficult choices and perhaps some of those
choices should have been made in years past. But here we are at the end
of 1993 with the choices in our faces. You may well get an Alcor which
loses little money and accomplishes just as little. Part of this is up to
us. Part of this is up to you members.
In another message (#0014.324), Perry Metzger writes:
>I want to pay fees for services, and if the services are badly priced I
>will gladly pay more, but I do not want to donate.
>I want to be able to pick whomever I like to suspend me and to manage
>my money, and I don't want to be told what to do. I don't want
>paternalism, politics, or egos in the way of *my* decisions about what
>to do with *my* little pink fanny.
>In short, I don't want to vote or to give. I want to buy. I hate
>voting, and I hate being a part of affinity groups.
Perry is looking for a world which does not exist yet. No cryonics
company is currently going to make a profit from doing suspensions. They
might survive by having other income sources, such as donations, shared
staff and facilities with other organizations, or lucky outside
investments, or by having a number of retired people run the organization
for free. Each of these methods has disadvantages and dependencies which
should be readily apparent.
Perhaps Perry can do fine by just being a "customer." However, he
and other cryonicists must realize that cryonics cannot yet support a base
which has a majority of "just customers" and may not be able to do so for
a long time. Perhaps there is a philosophical difference between paying
higher required fees and donating the same amount. There is no practical
difference. If you want cryonics to work and you can afford to pay more
than others, you gain nothing by complaining that others are not better
customers. Oddly, for all of our talk about wanting to live forever and
saving our "little pink fannies," only a very few people have contributed
significant amounts of money to cryonics. Except for three or four, most
of the significant contributors have been those with only modest incomes.
And as much as I also would like to see them eliminated,
"paternalism, politics, or egos" are just as much a part of capitalism as
they are of whatever structures that exist in cryonics. As I have heard
someone say (and I can't imagine this being anyone but Curtis Henderson),
"Save those complaints for the worms."
Steve Bridge
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