For just one dollar, you can help Facing Hunger Foodbank provide six meals, but where does that number come from? For years, Facing Hunger, along with others in the industry, has touted to its supporters just how much value the food bank can create with one dollar. This happens because donors expect accountability and measurable results for their investment just as much as a Wall Street financier investing in the latest tech development. While many donors respond to the appeal of a child going without food when she is out of school, or a senior citizen struggling to choose between medicine and fresh produce, that doesn’t excuse food banks from having to objectively measure the value added by their operations using hard numbers. In order to truly justify the case for supporting a charitable organization, there must be a real-life emotional connection presented alongside a rational business perspective. Why does a nonprofit have a “business perspective”? Because we at Facing Hunger don’t view donors as someone who gives money; we view them as a community partner making an investment in the success of our mission to feed hungry people. By accepting that support, we also accept the burden of creating, measuring, and reporting a return on investment.
On a national scale, Feeding America observed the differences in how food banks make such value propositions. In order to promote consistency and transparency in reporting, Feeding America developed the meal claim methodology that Facing Hunger uses today. To make this assertion, we take the number of meals provided and divide by the dollar amount of adjusted operating expenses.
Meals per Dollar = Number of Meals Provided ÷ Adjusted Operating Expenses $
We use the average of three years’ of data when making this calculation and update the results annually. This provides a long-term assessment of the Food Bank’s value rather than focusing on just one year’s successes or challenges. Let’s take a closer look at the individual parts of the formula. We determine the number of meals by dividing the number of pounds of food products distributed by a meal conversion factor of 1.2.
1 Meal = Approximately 1.2 pounds of food*
The next piece is the number of pounds that we convert into meals. In order to provide a fair result, we exclude water and non-food items such as paper products, cleaning products, and health and beauty items, as they are not included in the definition of a meal. Basically, we’re not feeding people paper towels and hygiene products, and the calculation reflects that.
Moving along, we make adjustments to the costs incurred to provide food.
Adjusted Operating Expenses = Total Operating Expenses – Variable Cost Offsets
Variable cost offsets are incomes to the food bank, other than contributions, which help pay for the cost of operations. This includes the shared maintenance fees collected from partner agencies, delivery fees, revenue from purchased food items, and government funding. We also remove an allocated portion of expenses pertaining to water and non-food products. What this accomplishes is the removal of non-donation income from the equation. Similarly, we only consider operating expenses, which excludes general, administrative, and fundraising costs, to ensure that we are focusing on the dollars that result in providing meals to food insecure populations.
For fiscal years 2012-2014, Facing Hunger had average annual adjusted operating costs of $640,942 which helped provide an average of 4,188,154 meals. That comes out to six and a half meals per dollar. “How is that possible?” you might ask. We’re able to stretch each dollar so far because we maintain successful relationships with Feeding America and affiliated corporate donors, local retailers, manufacturers, and other partners. Rather than buying most of our product, we are able to source vast amounts of food donations through this network of supporters. Furthermore, we participate in federal programs which support those in our service area, such as The Emergency Food Assistance Program and Summer Food Service Program. These relationships help us maximize the resources generously contributed by our donors and ultimately enable us to provide more food.
* USDA “What We Eat In America” 2009-2010
Sam Sarcone, Director of Finance