X-Message-Number: 4670
Date:  Wed,  Jul 95 17:49:43 
From: Steve Bridge <>
Subject: Alcor's 10% Rule

To CryoNet
>From Steve Bridge, Alcor
July , 1995

In response to:  Message #4666
                 Date: 25 Jul 95 01:35:10 EDT
                 From: Mike Darwin <>
                 Subject: DMSO and correction

     I don't have any comment on DMSO; but I would like to offer a 
different point of view on Mike's "correction," which he turned into a 
somewhat one-sided "opinion."

Mike said:

>Yesterday in my long response to Bob Ettinger I commented on the 10% Rule
>which I implemented at Alcor years ago (it has since been abandoned).  
>There was a typographical error of serious consequence in my discussion:

>>My working assumption has always been that crises will occur.  One 
>>reason I put the 10% rule in place at Alcor when I was CEO (i.e., 10% of 
>>all *NON*-cryopreservation revenue went into the patient care fund) was
>>because I anticipated problems based on my understanding and knowledge 
>>of history, and because I felt that active provision should be made to 
>>deal with the issue of the costs of revival.

>In my original post I said "cryopreservation revenue" rather than
>*non*cryopreservation revenue.  Obviously, much more than 10% of the 
>money for the patient's cryopreservation goes into the Patient Care Fund 
>(PCF) or Trust. The purpose of the 10% rule was to have 10% of all OTHER 
>revenue flow into the PCF or PCT.  This idea was taken with a grain of 
>salt in its early days since there was so little revenue,  period.

>But, as I anticipated, it was the tiny acorn that grew into the mighty 
>oak.  By the time major changes were made to erode the 10% rule and 
>finally eliminate it, it was paying for a high fraction, and if I recall 
>correctly, ALL of the patients' cryogenic storage marginal expenses, 
>allowing for the PCF to retain and reinvest ALL interest.  I still think 
>this is a sound policy and a way to shore up the fund so that people who, 
>as Bob puts it, are "a nickel short don't not get frozen."  

     "Eroded" and "abandoned" are pretty loaded words, here; so I want to 
briefly state Alcor's current position.  As opposed to the tiny Patient 
Care Fund (about $40,000) which existed when the 10% Rule was first 
passed, Alcor's current PCF is worth over $1,300,000 with expenses and 
investment income running pretty close to even.  Since the basic expenses 
of overall Patient Care don't change that much as new patients are 
suspended, each additional amount of capital added to the PCF makes it 
stronger yet.

     It is true that placing *extra* funds into the PCF is an excellent 
way to provide more security for the patients.  It is JUST as true that an 
organization which cannot keep its normal operations in business is not a 
secure place to place patients.  Going out of business while the PCF grows 
is not "sound policy."

     It is also true that an organization which ignores research into its 
suspension methods and (eventually) revival methods will not inspire 
confidence, will not learn to do better suspensions, and will get 
criticized on CryoNet for not doing so.  (not exactly a "grin", but the 
irony is intended.)

     Raising donations for research has been difficult (and we are not the 
only organization to discover this).  I suspect most people will not 
donate money for research until they already see us doing large amounts of 
research.  Unfortunately, "large amounts" of research require large 
amounts of money FIRST.  Some kind of seed money for equipment and initial 
experiments was needed.

     It is the job of the President and the Directors to allocate 
available funds in the best way possible.  We'd all love to have three 
times as much money as we do, so we could easily finance daily operations, 
membership growth, far-reaching research, and accelerated growth in the 
Patient Care Fund.  None of us have that luxury, so we make decisions.

     At the May 8, 1994 Alcor Board Meeting, the Directors looked at those 
factors.  We were still getting along with daily operations, although 
things were tight as usual.  The PCF was pretty robust, and we had just 
gone through several months of detailed evaluation of both our suspension 
costs and our Patient Care expenses.  This evaluation included our best 
predictions for future costs as well, and the answer appeared to be that 
most likely our financial assumptions and suspension minimums were 
reasonable.  

     Research, however, was lagging way behind.  The Riverside City 
Council had forced us not to do any animal research in Riverside for the 
preceding year or more, and we needed to get moving in that direction 
again.

     So the decision was made, by Board vote, to stop assigning 10% of all 
unrestricted operating income to the Patient Care Fund and instead reserve 
that 10% for the Research Fund.  Maybe Mike Darwin would have chosen 
differently, maybe not.  He also understands the importance of research.  
But the decision was made in a completely responsible manner and then only 
after several months of deliberation.

     If Alcor's new research plans eventually result in substantial 
research donations from members, we may switch the 10% Rule again, either 
back to Patient Care or leaving it in the Operating Fund, whichever needs 
the support the most at the time.  The 10% Rule is not a Holy Icon; it is 
a tool.  There is nothing unsound about making such decisions; they are 
part of doing business. 

Steve Bridge, President
Alcor Life Extension Foundation


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