Alcor’s Self Perpetuating Board

by Ralph C. Merkle

January, 2008

Alcor is governed by a “self perpetuating Board.” In such a Board, new Board members are elected to that position by existing Board members. This is the most common way of electing Board members in non profit organizations. The duties and authority of the Board are described in the Bylaws, Articles of Incorporation, and by applicable law. The Board seeks to achieve the fundamental goals of Alcor, as described by the Mission Statement.

Alcor’s self perpetuating Board dates back to Alcor’s founding in 1972. For over 35 years, the Board has served Alcor through a wide range of circumstances and sometimes turbulent times. Over that time we have grown from a few people to an organization with over 800 members. Today’s Board members, also called Directors, continue to serve Alcor.

A fundamental rationale for selecting the self perpetuating Board structure was its ability to provide continuity of purpose over a long period of time. Existing Board members select those new Board members who they believe are best able to preserve Alcor’s core values and carry out its mission. All Board members are required by Alcor Bylaws to be Alcor members. While not required by the Bylaws, we also find that Alcor Board members are cryonicists of long standing and are well known within the cryonics community. By tradition, new Board members are usually sought from the ranks of Alcor Advisors, although the Board can and has selected Board Members who have not been Advisors. Board members have a strong incentive to choose carefully because the success of Alcor and the survival of our members — including our Board members — is heavily dependent on the abilities and character of future Boards of Directors.

One of the responsibilities of the Board is to insure that our current practices continue to be effective in achieving our fundamental goals as given in the Mission Statement. One such practice is our use of a self perpetuating Board. The primary alternative to the self perpetuating Board is the member elected Board. In a member elected Board, individual members vote for the Board members that they believe are best able to effectively lead Alcor. Is the original rationale for choosing the self perpetuating Board still as persuasive today as it was when Alcor was founded? Are there other reasons for preferring the self perpetuating Board that were perhaps not clearly recognized earlier? Or, perhaps, circumstances or our understanding of the issues have changed in such a fashion that we believe Alcor could better achieve its fundamental goals by adopting a different organizational structure? There has long been interest in how to best structure a cryonics organization (see, for example, “Defining the Cryonics Institution“). This interest continues today, and will likely continue into the future.

There is also an extensive literature on the structure of non-profit Boards, and quite a few people have devoted major portions of their careers to the study of the subject. It would be prudent to consult with this literature before reaching any binding conclusions, and to consult with some of the people who have studied the subject extensively. As an example, a quick Google search on “non profit Board” provides a number of informative examples. The first hit is the web site of BoardSource, which is “dedicated to increasing the effectiveness of nonprofit organizations by strengthening their boards of directors.”

One web page from BoardSource discusses the literature in the area. The first paragraph of this page says:

“Elusive” is the term applied to the concepts of board and organizational effectiveness by several authors of pieces listed in this section. It is not surprising, therefore, that identifying patterns of association between board and organizational effectiveness is a daunting task. Nonetheless, a number of studies have attempted just that and, according to at least several researchers in this arena (Herman and Renz, 2000), most evidence supports a positive relationship. It can still be argued, however, that much important work on the “somewhat confused debate over the relationship between board and organizational performance” (Bradshaw, Murray, and Wolpin, 1992) remains to be accomplished.

Thus, we are warned at the outset that establishing a clear relationship between some particular aspect of organizational structure — in this case whether the Board is self perpetuating or member elected — and some metric of organizational effectiveness, is likely to be difficult.

BoardSource also provides the following description of a self perpetuating Board:

By far, the most common method of board recruitment among public charities is election by peers. Board members can re-elect their colleagues and/or others to the board position. This type of a board is called self-perpetuating. A board that elects its own members has the advantage of determining its needs based on the profile of the present board. It can stress group dynamics as well as missing skills as the key focal point for the search of new candidates. It can stress the need for diversity among board members. This process clearly is labor-intensive for the current board, but it provides an opportunity to bring together a group of committed people who have had a chance to define their mutual goals.

A number of beliefs about non profit Boards are encountered frequently, giving them the status of “conventional wisdom.” Self perpetuating Boards have lower costs, make decisions more rapidly, have less political turmoil, and are more effective at oversight.

One abstract of a specific article that addresses the self perpetuating versus elected Board issue is available on the web. This article argues against self perpetuating Boards and in favor of elected Boards. It does so, however, on the grounds that non profit organizations with elected Boards provide training for participation in political democracy. It provides a useful overview of the arguments in favor of the self perpetuating Board in the process of arguing against it.

Some relevant quotes from this abstract (which is, remember, arguing in favor of member elected Boards for non profits) are:

“Today, self-perpetuating boards are the norm and members are rare, particularly among charitable or public benefit nonprofits.”

“Nonprofits avoid internal democracy because doing so is practical. Governance with members is time-consuming and cumbersome to manage. Moreover, nonprofit founders correctly perceive that members are unlikely to prevent the high-profile lapses in accountability that have plagued the nonprofit sector. … If members are ineffective monitors, and membership adds costs, why bother? Indeed, for these reasons, a self-perpetuating board is the most appropriate governance structure for many nonprofits.”

“Part III will address the potential benefits of members for individual nonprofits, by considering the roles that members realistically can play in nonprofit governance and whether, through their performance of these roles, members will make individual nonprofits more efficient and/or more accountable. Ultimately, it will conclude that the benefits of membership are uncertain, because serious obstacles reduce members’ ability to make efficient decisions and to hold other corporate actors accountable through monitoring and enforcement. When these uncertain benefits are balanced against the clear reduction in costs of administration and transacting offered by a self-perpetuating board, it is understandable that legislators have chosen to permit either structure. The same comparison predicts that individual nonprofit founders and their counsel will choose the self-perpetuating board route, bearing out the trend in favor of this option.”

While the abstract does not discuss specific “…serious obstacles [that] reduce members’ ability to make efficient decisions and to hold other corporate actors accountable,” one such obstacle is clearly the full availability of all relevant information. In non profit organizations in general, and Alcor in particular, there are many issues that must be kept confidential to management and the Board.  These can involve, for example: patient confidentiality, employee reviews and actions, confidentiality agreements signed with vendors and contractors, legal restrictions either agreed to during settlements or imposed by a court, discussions concerning the prudent management of certain legal issues, and others. While both self perpetuating Boards and member elected Boards are legally entitled to full knowledge of all these issues, members have no access or limited access to this type of information (and the absence of reliable information can result in the dissemination of unreliable information). Therefore, when members decide who should serve on the Board, they do so without full information. Self perpetuating Boards, on the other hand, have full access and can use this information in evaluating candidates for the Board. During an election, members — who necessarily have no reliable access to this information — must base their decisions on who to vote for on what is publicly known.

While the impact of this necessarily private information on the decision making process can be debated, it is clear that the availability of full information is advantageous.

Besides reviewing the literature and seeking relevant data on the question, we can also examine some of the issues that are more specific to Alcor.

One of the original rationales for Alcor’s self perpetuating Board was to prevent a takeover of Alcor. Because the Patient Care Trust Fund has significant assets, and is growing, the incentive for such a takeover continues to be present today. This argument seems most effective against a member elected Board if all members — even recent members or members whose motives might be viewed as suspect by the majority of established cryonicists — are allowed to vote. Various limitations might be imposed which would significantly reduce this risk. It is clear, though, that this issue would need to be thoroughly explored before making any significant change in Alcor’s structure. It is essential that the risk of a takeover — a catastrophic failure mode — be held to a minimum.

A number of other issues are of concern, even though they do not have a direct bearing on the relative effectiveness of a self perpetuating Board versus an elected Board. For example, Alcor’s patients now in cryopreservation cannot participate in an election — meaning they are disenfranchised. While the PCTB (Patient Care Trust Board) is responsible for insuring that the funds in the PCT (Patient Care Trust) are used for the benefit of the patients the members of the PCTB are normally chosen by the Alcor Board. While the five PCTB members have staggered five year terms, the Alcor Board would eventually be able to select all five. Other decisions besides direct payment of patient care costs that might affect the patients are also in the hands of the Alcor Board. How do we best represent the interests of the patients? A member elected Board does not offer any obvious advantage in this regard, as patients can’t vote. When you are cryopreserved, which would you prefer?

Significant modifications to the Alcor Bylaws might have an impact on Alcor’s 501(c)(3) tax exempt status, as well as have other legal and operational ramifications. As a consequence, prior to making any significant change(s) in the Bylaws, it is necessary to discuss the nature and extent of changes with someone qualified specifically in non profit tax law so that we might anticipate any potentially adverse ruling by the IRS. Historically, changes to the Bylaws have been infrequent because of the care and expense required. This is not to say that they are either impossible or undesirable — but they need to be carefully and calmly evaluated.

On a more pragmatic note, discussions with both new members and members who decide to leave Alcor do not support the idea that the presence or absence of a member elected Board directly influenced their decision. There are many other issues which they tell us are more important. As Alcor reviews its priorities, the concerns raised by those who “vote with their feet” are taken very seriously. Changing to a more expensive structure and incurring significant transition costs in the process can only be justified if there is some clear and tangible benefit.

This discussion has focused primarily on self perpetuating Boards versus member elected Boards. A wide range of other possibilities exist, and it might be that some hybrid or other form would be advantageous. Given the sheer number of possibilities, the complexity of the resulting analysis, and the difficulty of finding good data with which to evaluate the alternatives, the present discussion has focused on the two major poles in order to illuminate the major issues.

And finally, it is worth noting that when the attendees at the 2007 Alcor conference were asked whether they preferred the present self perpetuating Board structure to a member elected Board, the great majority, by show of hands, preferred the self perpetuating Board.

In conclusion, the present review supports the idea that the self perpetuating Board is better suited to Alcor’s mission than a member elected Board. This is not to say that everyone is fully satisfied with all aspects of existing Board operations or member relations, but that an undue emphasis on the issue of an elected versus a self perpetuating Board does not seem to offer significant opportunities for enhancing Alcor’s ability to carry out its mission.  This opinion is shared by a majority of Board members at this time.