Funding the Nonprofit Grocery Store: A Variety of Models at Work



March 26, 2016; Waco Tribune and NPR

In the United States, 2.3 million people live in food deserts—places without access to grocery stores offering fresh fruits and vegetables at reasonable prices. Across the country, grocery stores serving rural and low-income areas are struggling and many are dying. As the large chains leave, residents are banding together to explore new methods of maintaining their neighborhood stores, including membership, connecting to other nonprofit or business services, and crowdfunding.

In Waco, Texas, Mission Waco has raised thirty-eight percent of the funds it needs to convert a vacant 6,500 square-foot building into a vibrant “Jubilee Food Market.” Its goal is to raise $488,000 to transform the eyesore into a community asset. Many years ago, the building was home to a Safeway, but the grocery store has long abandoned the community. Now, the nonprofit is looking to donors from as far away as Maine to rebuild this essential resource.

Jubilee Food Market supporters purchase shares of stock for as little as $25, although larger investment options are welcome. Mission Waco’s project budget consists of 4000 $25 stock shares for remodeling, 10,000 shares to operate the store for the first year, and 5525 shares for the ECSIA Hydroponics Greenhouse. Shareholders receive quarterly reports on the store’s status and the opportunity to participate in the shareholders’ meeting. All donors and residents of the 76707 ZIP code receive an Oasis Club Card entitling them to discounts on store purchases. The store is scheduled to open in September 2016.

Mission Waco chose to open a grocery store after surveying residents and learning the overwhelming majority wanted a supermarket. The organization’s mission is to provide Christian-based holistic programs that empower the community’s low income. The organization also operates a World Cup Café and Fair Trade Market, Jubilee Theatre, and Urban Edibles food trailer.

In Bowdon, North Dakota, residents are also at work. They came together to continue the operation of their grocery store after the store’s owner died and no other owners came forward. The next closest grocery store is eighteen miles away.

Run as a membership store similar to Costco and Sam’s Club, the effort is working but the margin is tight. They recently opened a thrift store and bakery nearby to increase business. The tiny town surrounded by fields of soybeans, wheat, and corn lost its community school years ago. Without the grocery store, the town would disappear from the map.

The loss of community grocery stores and its effects on rural America led to six federal agencies creating an $800,000 Obama administration initiative, “Local Foods, Local Places,” to support programs to create community owned grocery stores and farmers’ markets. Twenty-seven communities were selected from over 300 applications. Each community will work with a team of experts to recognize local asset and opportunities, set revitalization goals, and develop an implementation plan using these resources.

Throughout the United States mega-grocery stores are abandoning their rural and low-income urban communities for wealthy city edges and suburbs. Without these businesses, residents lose access to fruits and vegetables and gain more processed fast food outlets and convenience stores full of fat, cholesterol, and sugar. This phenomenon is contributing to the obesity epidemic and leading to an increase in heart disease and other diseases associated with this condition.

Food is Power, a California nonprofit “seeking to create a more just and sustainable world by recognizing the power of one’s food choices,” found that wealthy areas have three times as many supermarkets as poor ones. And the disparity is even more pronounced when comparing racial makeup: White neighborhoods have four times as many grocery stores as African American communities, and the stores in African American communities are smaller with a more limited selection. Overall, according to the Economic Research Service of the US Department of Agriculture, 2.2 percent of all households do not own a car and live more than a mile from a supermarket.

Although creating and running a community-owned grocery store is a challenge, Willow Lake, South Dakota’s Lake Grocery has been a beacon for the community for over five years. Operated by Willow Lake Area Advancement, the store employs a full-time manager and two part-time employees in addition to volunteers. Although the organization described the project as a leap of faith, it has worked out well for the community and the nonprofit.

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New Partnership Will Reduce State College Tuition in Washington State


During the recession, many states drastically cut their funding of public colleges and university systems. The drop in funding led to increases in tuition, with many people giving up their college dreams and higher debt for those that chose to enroll. As higher education leaders scramble to find funding, some are exploring corporate partnerships. These donations are creating stronger connections between universities and corporations as well as expanding those between corporations and their hometowns.

The Nonprofit Quarterly has discussed the drop in state funding of public colleges and universities in many recent stories. Specifically, the 25 percent drop between 2008 and 2013 led to public university students paying 28 percent more in tuition. With the recession clearing, many state budgets remain in the red. Legislators are unable to renew funding, leading to some states and colleges finding new sources for money. Washington State is one of them.

In the state of Washington, public spending per-pupil is currently 28 percent below pre-recession levels, instigating tuition rate increases of up to 58 percent even after adjusting for inflation. But thanks to a new deal with the state’s largest employer, Microsoft, tuition will decrease by fifteen to twenty percent at public four-year colleges and by five percent at public community colleges and state funding will increase by $200 million. Specifically, the source of 30 percent of this new revenue, or 57 million over the next two years, will be generated by a new sales tax on some of Microsoft’s equipment purchases.

Microsoft started the conversation in March. At that time, its general counsel, Brad Smith, was quoted by the Seattle Times saying that the company would be “comfortable” paying higher taxes, particularly if they benefited civic causes.

Overall spending for higher education has remained critically low in a majority of states, often due to large state budget deficits. Only ten states have increased tuition funding since the end of the recession. The largest increase was in the state of New Hampshire, where per-pupil state funding increased by 28.5 percent. In thirty other states, public funding plummeted. The largest drop was in Arizona, and it led to an increase in tuition of over 83 percent and a decrease in the educational opportunities offered students.

Without these essential state funds, colleges and universities are raisingtuition and fees at an alarming rate. Sometimes students, caught by surprise by the fees, argue these increases represent a change of institutional behavior. Students and other nonprofits in a number of locales are advocating for colleges and universities to be held accountable to their students and the general communities where they are located.

The Roosevelt Institute’s Rethinking Communities Initiative is partnering with college students at several institutions to advance policies and models promoting economic progress throughout the community. The movement believes university systems are an anchor for and have a mission to strengthen the community. Students explore sources of inequality and develop strategies and coalitions to advance policies leading to greater growth and prosperity. They also work together to hold higher educational institutions accountable to the communities they are located in.

The initiative sees colleges and universities as more than a place of employment—rather, as a place of exchange among students, alumni, professors, trustees, and neighbors. The goal is to demand that institutions invest locally throughout the community to create community wealth, strong employment opportunities, and vibrant communities inside and outside of the school’s campus.

Students are also exploring purchasing habits, investment strategies, and financing policies to highlight opportunities to strengthen local communities as well as benefit the institution. For example, at Michigan State, students are identifying local companies that can provide supplies throughout the campus. At New York University, coalition members are exploring opportunities to decrease the number of people without a bank account, another factor limiting individuals and families’ ability to exit poverty. Once these policies are instituted, they often have a cost neutral effect on the university budget but have multiple beneficial effects for their students and the community they live in.

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Are Universities Acting like Parasites in Some Communities?


NPQ has written fairly extensively about the effect of large nonprofits on the tax bases of communities. This piece written by Zaid Jilani for AlterNet asserts that the vague financial relationship between a university like Syracuse and its surrounding community can exacerbate poverty in those surrounding communities.

While universities like Syracuse drive economic development and attract businesses to their region, the towns surrounding the campus often contain high levels of poverty. This poverty, according to Jilani, stems from the large number of university buildings exempted from property taxes. Without this critical revenue source, the towns struggle to fund essential public services used by university employees as well as residents not employed by the university.

In the case of Syracuse, as of 2011 a full 51 percent of its property was not taxable because it is owned by nonprofits, the city, and the state. The two nonprofits with the biggest portion of that are the University and Saint Joseph’s Hospital Health Center.

Syracuse University is a private research university with enrollment of 21,400. It is one of the flagship universities of New York State, containing thirteen colleges including business administration, public administration, and engineering. It has a rich history dating back to the 1870s as well as an endowment of $1,183 billion; it charges its students tuition and fees of over $41,000 annually.

Sadly, it is an oasis of wealth in its community. The city of Syracuse is the 23rd most impoverished city in America, according to data released last year by the U.S. Census Bureau. One-third of the city’s residents, or 48,000 people, live on incomes of less than $23,500 for a family of four. Symbols of poverty are not hard to find, from the boarded-up homes to the public services that struggle to respond to the area’s severe winters.

Although university workers tend to receive higher salaries, these resources may not trickle down to the entire community. Some towns with universities struggle with limited funding for schools and other public services because the main employer is exempt from paying property taxes. Property taxes are the main source of revenue for elementary schools, streets, and public services, but nonprofits and government agency buildings are not taxable. As schools and other public services suffer from lack of resources, more and more families leave the university town and move to surrounding communities. The families that remain are often those most requiring the services the town is unable to fully fund.

Additionally, the city is forced to depend on the taxes it receives from the smaller amount of land that is taxable. These businesses and residents subsidize the university by providing the services the university system uses. These circumstances increase the divide between rich and poor.

The 2014 Census report compares 575 of the largest cities in the country, including several cities like Syracuse. While Syracuse’s position did improve from the year before, when it ranked fourth with a poverty rate of 38.2 percent, it remained within the bottom fifteen. Syracuse’s company includes cities like Bloomington, Indiana, and Gainesville, Florida, which also contain universities.

The city of New Haven, Connecticut, is trying to utilize Yale’s university system to bridge its divide. Yale is the second-richest university in the country, as measured by its endowment of $23.9 billion. Yet the divide between those in the New Haven community living in poverty and its wealthy increased by twenty percent between 2006 and 2012 and is one of the largest in the country. The community is building a retail district to employ those with few skills, connected to an expanded university research and technology area. Additionally, it is targeting resources to its low-income students including offering summer employment and technical training in its high schools.

The theme throughout all of these cities and the country as a whole is the loss of manufacturing jobs that provide good-paying employment to individuals without advanced degrees. Society cannot substitute these opportunities with university employment without providing education and other services to upgrade the skills of these workers. The rate of inequality in this country continues to rise, and university communities stand as symbols of this divide.

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Sweet Deals for Corporations Result in Deep Losses to Residents


Philadelphia, like many large cities, is a portrait of the haves and the have-nots. Often, the source of this disparity is the sweet deals cities and states provide to large corporations to attract their corporate headquarters. These tax packages and other incentives allow corporations to skirt their tax liabilities at the expense of poor residents.

While some cities are thriving, others contain multiple neighborhoods housing low-income residents. Philadelphia is Pennsylvania’s largest city and home to rich American history, including the Liberty Bell and Independence Hall. It is also home to over 400,000 residents living in poverty, as well as the largest broadcast and cable company, Comcast.

Comcast built its current home in downtown Philadelphia in 2008. Currently, the company plans to expand its headquarters using $40 million in state and local tax dollars, although the company’s revenues topped $68.8 billion last year. Having shut down its plans for the largest merger in cable history, it still seeks to spread its 8,000 local employees into a second, $1.2 billion structure that its architect describes as a “tower…like nothing that has happened before,” rivaling skyscrapers in New York and Chicago.

Neighbors of the $1.2 billion building are not only the skyscrapers that surround it, but the homeless people who take shelter at the nearby public transit station. While Comcast is growing, its Philadelphia home is struggling. Last year, the city’s revenue amounted to slightly less than $7.1 billion, and it struggled to provide services to roughly 1.6 million residents living in poverty, including 200,000 people in families of three of more people bringing home less than $9,700 annually.

Philadelphia is currently exploring whether it should continue to allow Comcast to use its public roadways and other property to install cables and pipes for free. The city commissioned an assessment of needs and of Comcast’s performance. The results identified lackluster performance including lengthy signal outages, the lowest overall customer satisfaction rate of all areas studied, and five times the regulatory-mandated number of customers failing to reach customer service.

Equally disturbing, more than a third of Philadelphia’s residents do not have broadband access, and average Comcast fees of $154.86 are actually higher than those in other comparable markets. Comcast has a program to bring online access to low-income residents, Internet Essentials, but it has less than 15 percent participation in Philadelphia, in part because eligibility hinges on lack of Internet access for a minimum of three months prior to entering the program.

Comcast tries to defray these complaints by highlighting their contributions to Project HOME’s technology lab. Project HOME is a $29 million nonprofit serving homeless and low-income Philadelphians. According to Comcast Foundation’s 2013 tax returns (the most recent available), it provided a grant of $13,000 to the program located in one of the poorest areas of the city. Although few other corporations are interested in providing services to this community, the grant is dwarfed by the foundation’s total contributions across the country of $16 million. In addition, foundation funds are used to expand the corporation’s business by paying off customers’ old debts to encourage them to choose the cable giant again as they enter new residences.

Like Comcast, many corporations and municipalities highlight their philanthropic activities as evidence of being a good neighbor as well as reasons to offer them incentives in exchange for their corporate headquarters. Often, these activities pit one locality against another at the expense of essential city and state programs and services for the poor. (A recent example is the new billboards towering over Illinois highways asking drivers “Illinoyed by higher taxes?” paid for by the state of Indiana.) Cities need business and property tax revenue to fund education and social services yet more and more are exempting the larger corporations, leaving small businesses and individual residents to pick up the tab.

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Who Do University Police Report To?


Most large schools of higher education employ their own school security personnel, who often take the place of local police officers on campuses and have similar responsibilities. State colleges and universities are state entities, and private colleges and universities receive government funds. States have public records laws, much like the U.S. Freedom of Information Act (FOIA), requiring government bodies to provide records to citizens and press. However, courts and administrative bodies have not resolved whether colleges and universities and their contractual agents—like the campus police—are covered by public record laws, leading to situations where some students are protected at the expense of others and the public at large.

On January 15th, ESPN filed a lawsuit against the University of Notre Dame alleging the school is violating Indiana’s public record laws by withholding police incident reports linked to student-athletes involved in potential campus crimes. The university claims their security personnel are not required to provide these records because they are employed by the university rather than a government agency. Indiana administrative rulings and court decisions have not consistently ruled on whether university and college security police are covered by these laws.

During this same period, ESPN requested similar records from the Tallahassee Police Department. On December 24th, the Tallahassee Police Department released hundreds of records involving Florida State University athletes. The request was related to a story in the New York Times documenting an automobile hit-and-run incident taking place in the early hours of October 5, 2014, the day after a FSU football game victory. The driver of one of the cars was FSU quarterback Jameis Winston, who hit another car driven by a teenager on his way home from work. Both cars were totaled. Instead of waiting at the accident scene, Winston and his two passengers, also athletes, left the car and fled.

The incident happened off-campus, and the Tallahassee police reached out to university police and its athletic department. The outcome: Although the athletes fled the scene, Winston was driving on a suspended license, and there was evidence of alcohol consumption by the athletes, police dismissed the episode as “too minor” to file a report or enter the accident on the police online database.

Reporters request university and college records for reasons beyond activities of students. In the fall of 2014, a University of Delaware student newspaper reporter attempted to get information on the university’s plan to partner with a private company to build a large power plant. Delaware public information laws exempt public universities, therefore the reporter was unable to get any information on the university’s activities. The outcome: University activities remain unchecked and the student reporter was unable to learn how to utilize state public record requests, although she did learn their limitations.

Pennsylvania public information laws have similar exemptions as Delaware’s. Last June, the Pennsylvania senate unanimously passed legislation to limit these exemptions. Not surprisingly, these efforts were met by heavy lobbying activities by the state’s universities and colleges.

One state with broad public information laws is Michigan. Michigan’s Freedom of Information Act explicitly covers public colleges and universities. Exemptions in the law are very specific, protecting individual students’ loan records, general testing documents, and even some materials related to applications of those interested in becoming a school’s president.

Many universities and colleges are the size of towns or small cities. Rarely does a bright line separate a campus from the town it’s connected to, and there’s even less of a line defining school police jurisdiction. Without public record law requirements, university and college activities are easily hidden, creating potential conflict of interest and less security for all.

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Outcomes Evidence Proves Case for Youth Employment


Youth employment is recognized as a solution to decreasing the summer spike in crime, but is it worth the cost, and does it have impact beyond the summer months? A new study of Chicago youth living in thirteen high violent school areas documented a 43 percent drop in violent crime during employment plus the thirteen months afterwards.

The study explored the effect of part-time employment on 1,634 youth from thirteen high-violence areas of Chicago. Students participating in the program were almost entirely minority and more than 90 percent were enrolled in free or reduced lunch during the school year. About one-fifth of the students had been previously arrested and about a fifth had been a victim of a crime.

Students participating in the study (ages 14-21) were randomly separated into three groups. One group was employed for 25 hours a week for eight weeks at minimum wage ($8.25 per hour). A second group was employed for 15 hours a week, along with participating in ten hours of social-emotional learning classes intended to educate participants on understanding and managing aspects of their behavior that might interfere with successful employment. In addition, both groups of students were matched with an adult job mentor to assist them in managing employment barriers. The third control group was not offered employment through the program.

The objective of the study was to answer the question, does summer employment have lasting impact on youth? It was overseen by University of Pennsylvania criminologist Sara Heller. The 2012 study was a collaboration between the Chicago Department of Family and Support Services, the University of Chicago Crime Lab, and One Summer Chicago, a local and county government partnership created in 2011. The program, named One Summer Plus, employed students in diverse positions, including as camp counselors, community garden workers, and assistants in city aldermen’s offices.

The study documented a lasting impact on youth behavior. Administrators worked with the Chicago Police Department to identify results both during employment as well as thirteen months after employment. The study found that students in the first and second groups were arrested for violent crimes 43 percent less than the control group. Students were slightly more likely to be involved in property and drug-related crimes, but the amount was statistically insignificant. The study did not document any differences in behavior between students in the two employed groups.

The 2012 study results were even more significant given the high rate of unemployment among youth. The 2010 employment rate for low-income black teens in Illinois, nine percent, was less than one-fourth that of higher-income white teens, at 39 percent. During that summer, youth employment was at a 60-year low, particularly for low-income minority teens. Additionally, in 2013, One Summer Chicago received 67,000 applications for 20,000 employment opportunities.

Often, leaders measure impact of these types of programs in monetary terms alone, leading to drastic undervaluation. In the 2012 program, each employed student cost $3,000, including $1,400 in wages plus $1,600 in administrative costs. Societal benefits of reduced crime are estimated at $1,700 per student. But youth living in areas of low employment and high criminal activity experience other benefits, including learning the importance of work as well as good habits they can use throughout their lives.

With the recession ending, employment is rising, but youth are often the last to find employment. Currently, according to the Bureau of Labor Statistics, the overall youth unemployment rate is 14 percent, down only two percent from a year before. This means there are an estimated 5.6 million youth between the ages of 16 and 24 that are neither enrolled in school nor employed.

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