X-Message-Number: 8401
Date: 19 Jul 97 17:08:30 EDT
From: "Stephen W. Bridge" <>
Subject: Re: Payment up-front

To CryoNet
From Steve Bridge
Chairman, Board of Directors
Alcor Life Extension Foundation
July 19, 1997
 
In reply to:  Message #8396
              Date: Sat, 19 Jul 1997 04:04:37 -0400
              From: "Andrew S.Davidson" <>
              Subject: Payment up-front
 
I had earlier said:
 
>>At Alcor, advance payments of suspension funds cannot be used for
>>"capital."  You don't want an organization which will spend your
>>money up front and then can't afford to actually FREEZE you twenty
>>years later.
 
Andrew said:
 
>I do want an organisation which has sufficient working capital and
>assets to be able to freeze me - no good waiting until I'm due.  I've
>no objection to the capital being used as long as it isn't depleted.
 
I'm not clear on what you mean here, Andrew, especially when you say
it is okay to "use the capital" but not "deplete it."  Perhaps you
don't quite understand how suspensions are funded.  (Note: I am the
recent former President of Alcor and now Chairman of the Board; but I
no longer work at Alcor, so I could miss a detail.  And, of course,
procedures at other cryonics organizations will differ, sometimes
quite a lot.)
 
Typically, a suspension member will take out a life insurance policy
with Alcor as the beneficiary.  (There are other details, irrelevant
for the purpose of this discussion.)  The suspension member also signs
legal documents which provide informed consent and a contract for the
freezing, and which give Alcor the legal authority to act, through the
member making an anatomical donation of his "human remains" to Alcor.
 
Many years (or decades, we hope!) later, when the member becomes a
"patient" (one who is frozen), Alcor officers submit a copy of the
death certificate to the insurance company.  Payment is received by
Alcor in 2-8 weeks, depending on a myriad of bureaucratic factors.
Payment from trusts or other funding methods can be quicker or slower,
depending on how they are set up (and the willingness of the person in
charge of the member's finances to hurry things along).
 
In the meantime, Alcor has to pay most of the expenses of the
suspension up front, before the funding arrives.  With some planning,
most of these expenses can be charged to our normal vendors, where
payment can be delayed for 30 days.  Alcor keeps enough working
reserve to cover expenses of 1-2 suspensions.  This can make things
tight if we get two suspensions in one month and have to wait for
payment.  On average we figure that a whole body suspension will cost
us $30,000 in transportation, surgery and cooldown costs, while a
neurosuspension will cost $22,000 (but this can vary a great deal
depending on distance from Arizona and legal and medical
complications).
 
And a significant portion of the suspension funding is not for
expenses now, but is for the future costs of keeping patients in
suspension.  This amount is invested (now through our new Patient Care
Trust) so that the earnings will pay for expenses without depleting
the principal.  Currently, Alcor's policy requires us to place a
minimum of about $70,000 for whole body patients and $17,000 for
neuropatients into the Trust investments.
 
If we would take an advance payment and spend it on salaries,
computers, research, etc., we would be short of funds later to repay
ourselves the cost of suspension and to properly invest in the Trust
for future care.  Cryonics is a L-o-o-o-o-o-n-n-n-g-g term
proposition.  We constantly must balance between short-term needs and
long-term ones.
 
>What rate of return do the investment funds provide?
 
Since we must use federally insured funds (typically in a bank), we
are usually limited to money markets and Certificates of Deposit
(CD's).  We could get the highest rate (sometimes as high as 6 or 7%)
from long-term CD's; but then we run the risk of "penalties for early
withdrawal" if the member requires suspension sooner than expected.
In many cases, we keep some basic amount in a short-term CD and the
remainder in a long-term instrument, so we are protected in
emergencies.
 
>If I paid for a neuro today, would I be able to get my money back if
>I changed my mind?
 
Yes, with some caveats.  As a non-profit, tax-exempt corporation,
Alcor treats this funding as a "conditional donation."  That is, it
doesn't count as a donation (for tax purposes) or as income to Alcor
until the condition for its donation is satisfied.  So there is no
problem with Alcor giving it back to the donor if he decides to switch
groups or abandon cryonics entirely.  However, depending on how the
donor has labeled it for tax purposes when he gave it to Alcor, it
could complicate his taxes if he takes it back.  We aren't tax
lawyers, so we would ask anyone planning this to get independent
advice.
 
Also, if we spent the funds in advance of the suspension, we would
have a tough time giving it back if the member changed his mind!
Honesty and prudence require that we treat these funds very
conservatively.
 
Final note:  I've been on vacation this week; so I've had more time
than usual to post on CryoNet.  I won't be able to do that next week.
Anyone with further questions on this subject should contact Alcor
Membership Administrator Brian Shock at  or 1-800-367-
2228.
 
Steve Bridge

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