Alcor Financial Report - 2009

All topics about cryopreservation costs, membership dues, etc.
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Kitty Antonik Wakfer

Alcor Financial Report - 2009

Post by Kitty Antonik Wakfer » Mon Jan 09, 2012 10:40 pm

I looked at the latest Alcor Financial Report available at the website - for year ending 2009 - which was signed off to the Board of Directors on August 5 2011 - http://www.alcor.org/Library/pdfs/Alcor ... nt2009.pdf
When was this report made available to Alcor members? Why was it not available a year earlier, 8 months after the end of 2009 (or at least before end of 2010)? When will the 2010 and 2011 reports be made available to Alcor members?

I am not an accountant but I do keep records of my own family expenses and have done so for almost 40 years, so more than a few items under expenses totaling $1,754,998 are puzzling.

Breaking out the expenses in more detail is essential for understanding and hopefully identifying potential measures for reduction. The following are ones I think very much need to be broken out in more detail with explanations, where necessary:
o Payroll - by far the largest item, $514,175; needs to be broken into amount of salary/fees paid to each staff member (full & part-time).
o Cryopreservation expense - 2nd largest expense item, $298,467; provide details of what is being included here and expense for each.
o Professional fees - 3rd largest expense item, $283,351; what services are being provided, by whom and the cost for each?
o Insurance - 4th largest item, $102,859; what items are insured, against what & for how much?
o Taxes, licenses & permits - $58,078; to what government agencies, how much to each and for what purpose?
o Repairs & maintenance - $31,001; on what?
o Contract services - $27,136; what services, how many individuals, how much to each?
o Bank charges - $10,038; specify what charges does this include.
o Travel - $23,528; to where, for what by whom?
o Royalty - $26,975; specify on what.
o Lease expense - $13,243; cost of leasing? Of what?
o Bad Debts - $13,741; to how many individuals? How and why incurred?
o Management fee - $6,779; to whom for what?
o Interest expense - $4,184; cost of borrowing? If so, why?
o Miscellaneous - specify since far too much - 9th largest amount of expenses, $43,192 - to be "incidentals" Clearly these need to be detailed.

These are not rhetorical questions/comments, but ones for which I would like to see full answers/responses - all for the purpose of searching for ways in which Alcor can reduce its costs and thereby not continue to increase yearly membership AND also cryopreservation fees, while not sacrificing patient cryopreservation quality.

southbay

Re: Alcor Financial Report - 2009

Post by southbay » Tue Jan 10, 2012 12:31 am

This is a common sort of accountant's breakdown for the board. What members perhaps want to know is how to break down the expenses in terms of various patient services: Standby, Transport, Suspension, Storage, Administrative. Things like travel will include travel involved with suspensions, and travel to support the org. Prof services again the same thing.

Of course, some resources are not really unique to a particular operation. While a flight to suspend a member is easily allocated, the salary of a staffer applies to many things, and you can't really hire a staffer just to do one thing until you are large, nor can you always easily hire a person 1/3rd time if that's what it would really take. And you have capital expenditures which may be allocatable but don't all go out in one year.

But still, what people want to know is, what is it costing to suspend people, and what is it costing to do admin and marketing and research etc.

How many suspensions does Alcor do in a year? I presume it's modest. If there were 1 a day you would start getting economies of scale but that's a long way away. Even getting to 10/month would probably regularize it, while also creating the problem of the occasional double and even triple simultaneous suspension. Because of the peak load need, Alcor will always probably have to be able to have on-call part timers who can do suspensions.

Kitty Antonik Wakfer

Re: Alcor Financial Report - 2009

Post by Kitty Antonik Wakfer » Tue Jan 10, 2012 7:50 pm

southbay wrote:This is a common sort of accountant's breakdown for the board.
While I did write in my previous post, "I am not an accountant but I do keep records of my own family expenses and have done so for almost 40 years, " this does not equate to my never before having read a financial report or to being for those years simply a homemaker and therefore in need of being told the above. This was far from the first financial report I have seen (and I even have some very old experience myself, from a high school college accounting class - not simple bookkeeping - in learning how they are created). However, this "accountant's [expense] breakdown" is far from sufficient for members, and even interested board members, to support their effort to determine if the monies spent were/are appropriate for achieving/maintaining a viable cryonics organization in providing cryopreservation service to members at prices that those member/clients/customers will continue to support/purchase.
southbay wrote:What members perhaps want to know is how to break down the expenses in terms of various patient services: Standby, Transport, Suspension, Storage, Administrative. Things like travel will include travel involved with suspensions, and travel to support the org. Prof services again the same thing.
Perhaps some members (and all board members) are satisfied with the breakdown of expenses into the very general categories provided in this report to the Board of Directors. I, OTOH, want to read more specifics in order to determine if the purpose and amount of the money spent truly contributed to the initial and maintained cryopreservation of the 5 member patients for that year, (http://www.alcor.org/cryonics/Cryonics2010-1.pdf) and by implication is doing so with expenses in 2010, 2011 and now in 2012 for the 12, 7 patients cryopreserved in the previous 2 years through Nov 2011 (http://www.alcor.org/cryonics/Cryonics2011-1.pdf and http://www.alcor.org/cryonics/Cryonics2011-4.pdf ) This concern of course extends to the continued cryopreservation storage of ALL 110 patients (to published date) at Alcor.

Only the management of Alcor can state specifically whether actual cryopreservation and/or "Standby" travel expenses by Alcor staff (and maybe contract personnel) is included in the "Travel" category and not in the "CryoPreservation expense".

As for Payroll expense, 8 paid staff members are listed for 2009 (http://web.archive.org/web/201003291013 ... staff.html) that would definitely be included in the $514,175 (an average of $64,271.88 per each), which could reasonably include benefits and employer-required government payments. (Alcor management, please correct me if "Payroll" is not the category being used for these & maybe instead Insurance and Taxes.) I do not view it as unreasonable to want to know how many other paid part-time positions were paid out of that amount and for what tasks in general - similarly for wanting details of Professional Services and all the other categories on which I commented.
southbay wrote:But still, what people want to know is, what is it costing to suspend people, and what is it costing to do admin and marketing and research etc.
Since the published number of cryopreservations for 2009 was 5 and the total expenses were $1,754,998, it is simple arithmetic to see that Alcor spent at most an average of $350,999.60 per cryopreservation. But of course, this figure is far higher than the actual cost since the amounts spent to maintain the previously cryopreserved patients, to obtain new members, and to simply maintain existing members and the facility - all numbers not possible to determine by way of this report - should have been deducted from the gross expenses before dividing by 5.

While these numbers for which I am asking detail are over 2 years old, there is no indication from Alcor that there has been even a moderate decrease in the amount and/or type of expenses.

I suggest that an "Explanation of Expenses" be provided for members that supplies significant details of what is included in the various expense categories. This can be general without being vague/ambiguous and therefore require a minimum of adjustment from one year to the next. BUT it would enable interested members (including those on the self-appointed Board of Directors) to be aware of what it truly is costing to perform cryopreservations - even neuro vs whole body if sufficiently inclusive - to yearly store the two types of patients, to obtain new members and to maintain the existing members and facilities. The actual dollar amounts can be compared year to year via the Financial Report, but I contend that a "road map" of sorts with the "Explanation of Expenses" is necessary to understand where one actually is and going.

Lastly, for those who want to know more about me beyond the statement on my member profile, "Retired from mechanical engineering" (if they have bothered to look), see: http://morelife.org/personal/index.html

TDK
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Re: Alcor Financial Report - 2009

Post by TDK » Tue Jan 10, 2012 10:23 pm

It would indeed be very useful to get a more detailed picture of how the organization spends it's money.

southbay

Re: Alcor Financial Report - 2009

Post by southbay » Fri Jan 13, 2012 7:26 pm

I was of course not suggesting that anybody had not seen a financial statement before. This was not an attack and I'm surprised it was even considered like one.

We do want too see the numbers differently but I expect it to be hard to do. As noted with 5 suspensions there's a lot of stuff that has to be there though it is only in use on 10 days out of the year. What would be worth learning is how it works if there are 100 suspensions a year and so capital equipment and staff are fully used. The incremental cost of a suspension can possibly be figured out, and that can factor into the decision about whether it is better to lose a customer if they can't pay the "full" cost but are funded to well above the incremental cost.

Kitty Antonik Wakfer

Re: Alcor Financial Report - 2009

Post by Kitty Antonik Wakfer » Fri Jan 13, 2012 10:11 pm

southbay wrote:...As noted with 5 suspensions there's a lot of stuff that has to be there though it is only in use on 10 days out of the year. What would be worth learning is how it works if there are 100 suspensions a year and so capital equipment and staff are fully used. The incremental cost of a suspension can possibly be figured out, and that can factor into the decision about whether it is better to lose a customer if they can't pay the "full" cost but are funded to well above the incremental cost.
Knowing what the cost per cryopreservation (more accurate term than "suspension") would be if 100 were being performed yearly rather than the current 7 so far published for 2011, or the 5 with costs published for 2009, is of questionable value to the current situation or even 5 years from now. One can determine what the average rate of increase of membership cryopreservation has been in the 40 years of Alcor's existence and then extrapolate that out to determine when 100 cryopreservations per year would be expected to take place, given no major change in rate of cryopreservations per member. I'll leave that math for someone else, but I expect it will be several more decades before that happens.

What the costs are NOW, have been in the recent past (the only published data is 2009), and will likely be for the near future (without major alterations) are what will have a major effect on Alcor membership numbers. Costs determine the cryopreseration funding requirements and the yearly membership fees, the former perhaps not high compared with current major medical procedures (although inflated by CMS bundling and a one-size-fits-all approach), but the latter is enormously high, particularly considering that it is money totally used up and possibly for many, many decades. Without detailed knowledge of what is currently going on cost-wise for the purpose of significantly reducing these fees in the very near term, any desire to determine an incremental cost for the projection of 100 cryopreservation procedures per year is time wasted, IMO.

southbay

Re: Alcor Financial Report - 2009

Post by southbay » Sat Jan 14, 2012 3:34 am

Well yes and no. Most Alcor members will not die for decades. What matters, actually, is what the rate of preservations will be when they die, and the resulting economics.

This is of course very difficult to predict. Not only will the economies of scale change, the it would be highly surprising if the procedures and chemicals don't change. Some elements of the technology will get cheaper (those governed by Moore's Law rules will get much cheaper) and others may get more expensive. We can predict certain costs like transport, land and staff with better accuracy, but other costs are even harder, like legal.

And it is not just the patients who can't predict this, it's Alcor. The reality is, the prediction is a shot in the dark with very wide error bars.

That leaves no easy solution. If Alcor says, "We will set your price at $X and that's the price no matter when you die" then Alcor is taking a big risk if the price goes up a lot, and that's the cause of this debate. If Alcor says, "We won't promise a price, you had best do some serious overfunding just in case, or otherwise we may leave you, quite literally, to rot" then members do indeed have to overfund their insurance and take a big risk -- they would rather know they have done their bit and gotten very good odds of the best available preservation. In today's situation, large numbers of members would die funded well below the prices currently charged, with associated consequences.

So who should take the risk? Alcor, the members, or a mix? One reason for Alcor to take it is that many members are in this to eliminate the biggest risk in their existence, and there may be many more who would not sign up with the added uncertainty. Fewer signups means less economy of scale and less research for everybody. On the other hand, if Alcor takes the risk, you create a giant all or nothing. If the cost goes vastly higher than funding, the org is faced with either collapsing on everybody, doing emergency fundraising debates like this one, or cutting some fraction of the membership loose.

No easy solution indeed. But I do think that a solution does depend on getting the membership up to a place where you're doing a suspension a week and getting economies of scale. How to do that is another problem.

criley
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Re: Alcor Financial Report - 2009

Post by criley » Sun Jan 15, 2012 11:40 am

Great summary. The part I quoted below is key, and everyone loses under that scenario. The fact is someone has to pay. The question is whether everyone will pay their own share at some point, someone else will, or whether Alcor will run out of money and everyone's chances will be lost.

Personally, I think Alcor would also lose lots of members if the Board was not taking the steps now to ensure (as well as they can guess) that Alcor won't collapse in 10, 20, 30, 40 or 50 ... years.

The PCT is a great step to ensure those in stasis will remain there, but without adequate funding, won't last. Keeping costs in line is obviously important as is projecting funding and keeping amounts up to date.

I believe the best thing for everyone who can afford to do so is to increase their insurance funding for Alcor's benefit. It gives you a cushion.

southbay wrote:On the other hand, if Alcor takes the risk, you create a giant all or nothing. If the cost goes vastly higher than funding, the org is faced with either collapsing on everybody, doing emergency fundraising debates like this one, or cutting some fraction of the membership loose.

No easy solution indeed. But I do think that a solution does depend on getting the membership up to a place where you're doing a suspension a week and getting economies of scale. How to do that is another problem.

TDK
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Re: Alcor Financial Report - 2009

Post by TDK » Tue Jan 17, 2012 6:51 pm

One thing that springs to mind, when you mention the patient care trust running out,
is that it should be financially stable, regardless of new membership. Who knows
if cryonics will become cheaper, more expensive, more popular or unpopular?

Ideally, the money you leave to Alcor will be enough to keep you in stasis
for 100 years or more. The interest from that account should be adequate
to pay the rent, supply the liquid nitrogen, etc. There should not be any
dependence on new members to keep things going.

What if new technology lets people live much longer lives, so they don't
feel a need for cryopreservation? Maybe after living 200 or 300 years,
they have had enough life, and are ok with dying. Or people will be
so focused on interstellar travel, or on military conflicts, that the whole
business of cryonics could become non-existent. Perhaps membership
will fall off. So that fund needs to be capable of keeping people intact
for a very long time, regardless if new patients are being cryopreserved or not.

There are many funds that accomplish long-term sustainable programs and charities.
Without needing additional donations or funding to keep things going.
They run completely off of the interest of their funds.
But they have to keep things lean until the fund gets big enough to
provide significant interest payments...

criley
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Re: Alcor Financial Report - 2009

Post by criley » Wed Jan 18, 2012 1:52 pm

Hi,
I certainly hope it will be cheaper and more popular. ;-)

What I was referring to was the cost for whole body patients and the drawdown was projected to be higher than the 2% rate Alcor wanted - something around the 3.5% rate (take a look at the *draft* report here: http://www.alcor.org/forums/viewtopic.php?f=13&t=51 it is on the top of page 11)

He also talks about the whole body/neuro percentages - there were many whole body sign-ups vs neuro. While I certainly think even a 3.5% drawdown rate is sustainable, Alcor seems to have tried for a 2% rate. I'd prefer to be over cautious given the long time frames. Likewise, before the big bequest about 18 months ago the Alcor web site says it was drawing at 5% due to underfundings, which may be stable, but well above what Alcor wants. Just throwing it out there. ;-)

Have a good one!
Chris

TDK wrote:One thing that springs to mind, when you mention the patient care trust running out,
is that it should be financially stable, regardless of new membership. Who knows
if cryonics will become cheaper, more expensive, more popular or unpopular?

Ideally, the money you leave to Alcor will be enough to keep you in stasis
for 100 years or more. The interest from that account should be adequate
to pay the rent, supply the liquid nitrogen, etc. There should not be any
dependence on new members to keep things going.

What if new technology lets people live much longer lives, so they don't
feel a need for cryopreservation? Maybe after living 200 or 300 years,
they have had enough life, and are ok with dying. Or people will be
so focused on interstellar travel, or on military conflicts, that the whole
business of cryonics could become non-existent. Perhaps membership
will fall off. So that fund needs to be capable of keeping people intact
for a very long time, regardless if new patients are being cryopreserved or not.

There are many funds that accomplish long-term sustainable programs and charities.
Without needing additional donations or funding to keep things going.
They run completely off of the interest of their funds.
But they have to keep things lean until the fund gets big enough to
provide significant interest payments...

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