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You may want to read The Watchdog Report of August 18, 2005 by Jeff McDonald entitled "The Hunger Market" to get a true picture of Second Harvest. They are so powerfull that they discourage any organizations which feed the hungry through donations, rather than purchasing the food from them. Meanwhile their board draws down huge salaries. SEE BELOW
Critics: Nation's dominant food bank cares more about bottom line than feeding poor
By Jeff McDonald
STAFF WRITER
August 18, 2005
Every week for 10 years, volunteers at First United Methodist Church in Mission Valley made the rounds of a half-dozen Pizza Huts in San Diego County, collecting food that customers never picked up.
The pizzas were packaged for individual use and piled into a church freezer, then handed out on Sunday afternoons to families and seniors on fixed incomes.
DON KOHLBAUER / Union-Tribune
The former director of the independent North County Food Bank in San Marcos said it couldn't afford to join America's Second Harvest or get much food from the San Diego Food Bank because of the fees. Peter Babbs helped out at the San Marcos food bank in March.
That arrangement ended abruptly late last year, after Pizza Hut Inc. bought the independently owned San Diego franchises. The church was cut off, and despite their best efforts, church officials couldn't figure out who was getting the leftover food.
In March, a Pizza Hut spokeswoman said the extras were going to America's Second Harvest, the Chicago nonprofit agency that dominates food banking in the United States and accepts tons of donations from Pizza Hut. The spokeswoman said the pizzas were going to Second Harvest's San Diego affiliate, but the San Diego Food Bank had no record of such donations.
Three weeks ago, the church's food ministry director, Brenda Blake, finally got an answer to her question: The pizzas were being picked up by the San Diego Rescue Mission on behalf of a for-profit company in Knoxville, Tenn.
The mission offered to return the route to Blake's volunteers – as long as they signed for the pizzas as representatives of the Rescue Mission, so Pizza Hut Inc. would get a federal tax break.
The complicated trail Blake discovered in her search for the missing pizzas is an example of how business interests influence the nation's charitable food network. Increasingly, the distribution of free food and groceries is managed for the benefit of big charities and corporations, rather than in the spirit of serving hungry people.
Perhaps nowhere is the situation more evident than at America's Second Harvest.
As the number of hungry Americans has climbed to include one out of every eight people last year, America's Second Harvest has wrested more and more control over the shrinking supply of surplus food.
SCOTT LINNETT / Union-Tribune
First United Methodist Church volunteer Tom Large (left) distributed food to Juan Valenchela in City Heights in May.
From its origins as a one-man shop, the nonprofit has grown into one of the world's most powerful hunger-fighting charities. It not only processes huge quantities of donations from private companies, but it also gets a majority of the hunger-relief dollars spent by the U.S. Department of Agriculture. It enjoys a stellar reputation with the public and operates virtually free from government scrutiny.
But some food bankers and poverty experts think Second Harvest changed as it grew. It's all about business and not charity, they say, contending that it has grown too big to be effective and too arrogant to ever achieve its stated mission of "Creating a Hunger-Free America."
"With Second Harvest, you're either with them or you're the enemy," said John Healey, who runs California Emergency Foodlink, a large, independent food bank in Sacramento. "But there are a lot of excellent charities feeding the poor around the country that are not members of Second Harvest."
Independent food bank operators say Second Harvest charges too much for handling food and doesn't do enough to curb abuses by some recipients and even by member agencies such as the San Diego Food Bank.
"The theft problem is there, the accountability problem is there and the whole concept of charging for donated goods is there," said Bryan McKinney of Children's Hunger Fund, an international ministry in the San Fernando Valley that gives away millions of pounds of food each year without charging fees to charities.
Second Harvest officials say none of that is true and contend the charity has had success in attacking hunger. Last year, it distributed nearly 2 billion pounds of food and other groceries in almost every state.
DON KOHLBAUER / Union-Tribune
Eldon Fry of Carlsbad filled boxes with food and other products from the North County Food Bank for St. Andrews Episc opal Church in Encinitas.
"Our network members help feed more than 23 million Americans at risk of hunger, including 9 million children and 3 million seniors," spokesman Ross Fraser wrote in an e-mail message.
They spend a lot of money doing the job.
According to its federal tax filing last year, Second Harvest spent $7 million on fundraising – nearly one of every five dollars it took in. It charged its members $6.8 million in fees.
Food banks that don't belong to the network complain that Second Harvest pressures grocery chains and manufacturers to give exclusively to its members. That makes it difficult for smaller, independent groups such as First United Methodist Church to obtain and distribute food such as leftover pizzas, they say.
When food banks started in the 1960s, layers of bureaucracy were unheard of. Donations were collected by volunteers and handed out to the hungry.
But the increasing popularity of food banks and the growing volume of donated food meant more organization was required. America's Second Harvest, formally incorporated in 1979, assumed that leadership role.
Today much of the burden of feeding the hungry falls to the nation's 1,200 food banks. Most are independent setups that scrounge and scrape for food and support; 210 of them, including many of the biggest and best-funded, belong to America's Second Harvest.
'Big business'
Second Harvest conducts most of its business from 20th-floor offices overlooking the Chicago River. It has a staff of 90 and, according to its 2004 federal tax records, owns a portfolio worth $18.9 million – corporate bonds, domestic equities and other financial instruments.
It listed annual revenue of $489 million last year, but more than $450 million of that was from contributions of food and other noncash donations.
Officials say they keep costs low with a minimal work force, no trucks and no warehouses.
When headquarters is alerted to an available load of yogurt or vegetables or chocolate pudding, Second Harvest arranges for one of its member food banks to pick up the donations.
The members are responsible for transporting and storing the food, and for paying millions of dollars in affiliate fees to Second Harvest. To make up those costs, they ask charities that take the food to pay a fee, usually 18 cents a pound. The charities aren't allowed to pass along those costs to needy clients.
The system helps keep Second Harvest and its affiliated food banks afloat, but the fees prohibit some relief organizations from getting the food.
"We can't afford to join up with Second Harvest" or to get much food from the San Diego Food Bank because its fees run so high, said Susan Lamb, who until earlier this year ran the tiny North County Food Bank in San Marcos.
Instead, Lamb relied on donations from small and mid-size companies that didn't have exclusive arrangements with Second Harvest food banks.
Former San Diego Food Bank employees say that the agency's reliance on fees paid by other charities helps explain why the food bank tolerated abuse uncovered during a recent investigation by The San Diego Union-Tribune.
The newspaper reported this year that obscure charities took hundreds of tons of donations, but there was no clear record of what they did with the food.
The food bank has since tightened policies and expelled six of the top seven agencies in its charitable food program. Four high-level managers also left the organization.
Despite the housecleaning, former employees blame the food bank and Second Harvest for allowing the abuse to continue for years. Records show the food bank ignored warnings that donations were being mishandled and that Second Harvest failed to do much beyond recommending improvements.
Marvin Spira, a former director of the Second Harvest-affiliated Food Bank for New York City, said his agency reacted differently a few years ago, when it suspected employees were stealing donations. It hired a private investigator and increased oversight. Last year, Second Harvest honored the New York City food bank as its affiliate of the year.
Today the New York food bank is much stricter about who can withdraw food, Spira said. Participants can no longer pick up donations; all products are delivered.
"This is big business, this hunger situation," said Spira, who built and sold three food industry companies before moving to San Diego.
Stealing from food banks is tempting, because many aren't managed well, he said. "There are loose ends. And when there are loose ends, people are going to take advantage of it."
The oversight issue is critical; although food programs have expanded in recent years, the need for their services has climbed even higher.
The number of hungry households in the nation swelled 26 percent between 2000 and 2004, according to the Department of Agriculture. More than 36 million people, including 12 million children, now go without food at some point each year. Nearly 630,000 of them live in San Diego County.
Alan Brislain, a Second Harvest senior vice president, downplayed the extent to which donations are mishandled. He said that when problems arise, he prefers to work with members to find solutions rather than expel them. Second Harvest has dismissed just one agency in the past 15 years.
"We have a lot more control if we keep them in the network," Brislain said. "If we kick them out, that community loses a lot of food. We bend over backward (to retain them) as long as they're saying they're going to make this right."
18 cents per pound
Some independent food banks distribute groceries free or for much less than the fee of 18 cents a pound that Second Harvest members usually charge charities.
John Knapp, who runs the Food Bank of Southern California, one of the state's largest, broke from Second Harvest in 1991. His food bank in Long Beach distributes 33 million pounds a year with a $1.2 million budget and a staff of nine. In comparison, the San Diego Food Bank hands out less than half as much food but has a $2.5 million budget and 27 employees.
Knapp divides the actual cost of each delivery by the number of charities sharing a specific load of goods. He said the fees usually amount to a few pennies per pound.
"Do we really want to fund hunger relief on the backs of these poor agencies?" he asked.
Knapp said he left Second Harvest because he was tired of getting truckloads of candy, soda and other products without nutritional value. He said the separation was difficult.
He believes Second Harvest tried to put his food bank out of business, in part by strong-arming donors into exclusivity agreements. He said had it not been for some powerful trustees and the fact that they own their building, his food bank may not have survived.
Now Knapp is embroiled in a fight with the Los Angeles Regional Food Bank, a Second Harvest member, over government food-relief dollars. The state distributed $4.4 million under the U.S. Emergency Food Assistance Program last year. Knapp's agency got some, but Second Harvest members got most of the money.
Joseph Spitz also ran afoul of Second Harvest.
Spitz operated a small ministry that distributed food to hungry people in Orange County for years, never charging a dime, he said. But the ministry couldn't afford the fees the Second Harvest-affiliated food bank was charging, Spitz said, so he began seeking donations directly from grocers and manufacturers.
He said that when he started collecting diapers, deodorant and other items by the truckload, Second Harvest officials revoked his eligibility from their food bank. No one from the Second Harvest Food Bank of Orange County would discuss Spitz or his allegation.
"They are very competitive," said Spitz, who now runs halfway houses in Orange and Riverside counties. "They want all the food to come to them."
Second Harvest denies requiring grocers and manufacturers to give strictly to it, saying it merely makes the request.
"Some have decided to give to us exclusively," said Brislain, the Second Harvest vice president. "We consider that a feather in our cap."
The arrangements make sense for corporate executives. When giving away surplus products, they're typically interested in two things: tax breaks and getting rid of the product with as little effort as possible. Many find it easiest to go through Second Harvest.
"There's no fair way to select some groups without denying others that are equally deserving," said Paula Long of Procter & Gamble, which is among dozens of U.S. conglomerates that donate their surpluses solely to Second Harvest.
The Internal Revenue Service allows corporations to deduct up to half the difference between what donated products cost to produce and what they sell for on the market.
The stakes in the battle among food banks have never been higher, because less surplus food is available.
Secondary food markets such as Big Lots and 99-cent stores, which didn't exist a generation ago, are buying groceries that traditionally were donated to charity.
Meanwhile, manufacturers have fine-tuned production methods to reduce the number of irregulars and discards.
At the same time, for-profit companies such as the one that now has custody of the Pizza Hut extras in San Diego have carved out a niche market of their own.
Tennessee-based Food Donation Connection finds charities to pick up surplus foods, then processes the paperwork restaurants need to receive their federal tax breaks. In return, the company collects a percentage of the rebate.
Bill Reighard, a former Pizza Hut executive who founded Food Donation Connection in 1992, said business is booming. Last year, his company handled receipts for 10 million pounds of perishable food.
Internal criticism
Independent food banks aren't the only Second Harvest critics. Some of its own affiliates complain that donated goods often aren't worth the cost of transportation and that they sometimes get food with limited nutritional value because Second Harvest doesn't want to offend major donors.
In 2003, snack foods accounted for 13.6 percent of all donations to Second Harvest. Last year, it increased to 16.6 percent. Meanwhile, the amount of cleaning products received by Second Harvest jumped from 3.2 percent to 4.4 percent.
Those statistics are significant because much of the abuse documented by the Union-Tribune in February was committed by agencies withdrawing tons of snack foods and detergents – products commonly sold at swap meets and discount stores.
Loretta Brown is a satisfied member of the Second Harvest network. Still, the food bank director in southeastern Virginia said only 7 percent of the products her agency distributes comes from the national charity.
Brown, who gets most of her food from grocers and other regional donors, said transportation costs preclude her from accepting more products from the home office in Chicago.
"Whenever you handle things a couple of times, it's not cost-effective," she said. "We're not placing blame; we're just looking at the problem. ... What we really need is an efficiency engineer. We've got to work out the whole picture, statewide and nationally."
Brown praised Second Harvest for running a successful lobbying arm in Washington, D.C., and credited the network for promoting hunger awareness.
But some food bankers say Second Harvest is more interested in expanding its base than in fighting hunger.
To keep Second Harvest in the public eye, members are required to use its logo or the words "Second Harvest" in annual reports, newsletters and other documents they produce. Affiliate contracts also require members to "expand public awareness" of the network.
As a result, some critics say, Second Harvest receives more credit than it's due.
"There's 1,000 independent food banks," said Knapp, the Long Beach food bank operator. "We are doing the lion's share of the feeding, (but) we're getting no recognition and very little of the funding."
Knapp pointed to a recent settlement negotiated by the California Attorney General's Office, which last year won $80 million from vitamin makers in a price-fixing case. The state set aside $7.2 million of that for hunger relief; 75 percent went to Second Harvest members and the rest went to the California Association of Food Banks, a lobbying group.
Tom Dresslar, a spokesman for state Attorney General Bill Lockyer, defended the disbursement, saying independent food banks may not have been able to show they would have spent the money wisely.
"There has to be full accountability for the expenditure of those funds," Dresslar said.
In reality, however, Second Harvest and its members tend to operate with something less than full accountability.
The Chicago charity, for example, refused to allow the Union-Tribune to attend one of its recent conferences for compliance monitors. And only four of California's 18 Second Harvest affiliates would say where their food goes.
Most ignored requests for that information or said they needed to protect the confidentiality of charities withdrawing food. Second Harvest spokesman Fraser said there is no rule that members disclose who participates in their programs.
"While they are part of a network of food banks and food rescue organizations, they are also separate, distinct businesses with varying management styles," he wrote in an e-mail message.
Rating charities
In April, the American Institute of Philanthropy, a charity watchdog group, downgraded Second Harvest from a B-plus to a C-plus because it spends too much on fundraising and too little on services.
"Their cash spending went down from 75 to 62 percent, and the cost to raise money went up from 22 to 36 percent," institute President Daniel Borochoff said of Second Harvest. "Hopefully, they'll improve."
Second Harvest pointed to its 98 percent rating in "charitable commitment" last year from Forbes magazine, saying all but 2 cents of every dollar reported was spent on charitable services. That ranking, however, is contradicted by Second Harvest's 2004 tax filing, which shows that nearly 20 percent of its cash revenue went to fundraising.
Charity Navigator, another nonprofit organization that evaluates charities, awarded Second Harvest three stars out of four in its most recent overall rating.
Borochoff is pushing federal regulators to require more public disclosure from nonprofit organizations, to make sure donations are used for the purpose they are intended. Too many nonprofits are accountable to no one but their board members, he said.
"Whether (donations) help anybody in need is beside the point because of the way the system is set up," Borochoff said. "The charities are hiding what these things are and who's getting them."
Better ways?
Author and professor Jan Poppendieck said food giveaways play an increasingly important role in the lives of the working poor because government budget cuts are grinding down their living standards at a pace not seen in generations.
"If they cut housing assistance, it's going to send more people to the food banks. If they cut health care, it's going to send more people to the food banks – that's where the give is in so many households," said Poppendieck, who teaches at Hunter College on the City University of New York campus and writes extensively on hunger in America.
Poppendieck thinks food banks often enjoy a better reputation than they deserve because middle-and upper-income people support them out of guilt over their overconsumption.
"It's a feel-good thing we don't want to look at too closely," she said.
Despite billions of dollars in tax money and private donations and decades of food banking and relief efforts, the nation is nowhere near tackling its hunger problem.
"We need to think about whether this is the best we can do," Poppendieck said. "We can clearly produce enough food. Are there better ways to create access to our abundance?"
Blake, First United Methodist Church's food ministry coordinator, admits she's flummoxed by the business side of charity. She expects to resume her weekly Pizza Hut rounds this month, signing for the food in the name of the San Diego Rescue Mission, so the restaurant chain will get its tax write-offs.
"I don't know about the big picture," Blake said. "In my little world, I feel kind of lucky. But what about all the other little food programs out there?"
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Jeff McDonald: (619) 542-4585; jeff.mcdonald@uniontrib.com
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