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 Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=4670