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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2 Foundations Choose Higher Payouts, Inviting Others to Do the Same


February 16, 2016; Philadelphia Inquirer

NPQ has often advocated for foundations to consider higher payout rates, taking up the issue in some detail in Buzz Schmidt’s classic, “‘Deliberate Deployment’ or Perpetuity: Questions to Inform Timing Strategies for Philanthropy.” Since then, we have seen a number of foundations moving to deploy more of their assets in the here and now—if not by “spending down” more quickly, then by investing more of their full assets in mission-related activity. But Schmidt also suggests that foundations consider a set of questions in a more “deliberate deployment” strategy, and that is what we see in this story.

Two influential leaders in the Philadelphia area philanthropic community passed away this past January: Patricia Kind and Harold Taussig. The foundations they created, the Patricia Kind Family Foundation and the Untours Foundation, are memorializing their legacy through increased grantmaking. Together, foundation leaders are asking other foundations to join them in giving away more than the five percent required by law.

Throughout Patricia van Ameringen Kind’s long life, she supported some of the most vulnerable. She was trained as a nurse, and this training influenced her philanthropic support of those living in poverty in her community. She and her husband founded the Patricia Kind Family Foundation in 1996 to support the needs of Philadelphia’s poor. The foundation recognizes the essential work of smaller nonprofits by focusing its giving on organizations with budgets under one million dollars.

A day after Mrs. Kind’s death, another of Philadelphia’s most generous leaders, Harold E. Taussig, passed away at the age of 91. Mr. Taussig never forgot his roots as a small-business owner and entrepreneur. He was one of the first to see the value of offering vacationers the opportunity to stay in apartments instead of hotels. Through his Untours Foundation, he provided low-interest loans to startup businesses and other enterprises to create economic opportunity to alleviate poverty throughout the world. Since its inception, the foundation has made more than $7 million in low interest loans.

Although their methods differed, Mr. Taussig and Mrs. Kind shared a dedication to those living in poverty. To memorialize their generosity, the foundations they created are reaching out throughout the philanthropic community, asking other foundations to dedicate more of their resources toward alleviating poverty and underwriting second chances.

Foundations are only required to give away five percent of their assets to maintain their tax-exempt status. Administrative expenses, including staff salaries, are eligible to be included in that five percent, so even less than five percent of their assets may be given in grants each year. Leaders of the Patricia Kind Family and Untours Foundations are advocating for a different use of resources.

“The standard foundation structure of using only 5 percent of foundation assets to address a foundation’s mission is a waste of 95 percent of its assets,” said Elizabeth Killough, director of the Untours Foundation. “On top of not addressing mission, that 95 percent is often invested at cross purposes to the foundation’s mission.”

As the divide between rich and poor continues to expand, will these foundations’ efforts toward building a movement to spend more of their assets on the work of social change catch on?—Gayle Nelson


2 Foundations Choose Higher Payouts, Inviting Others to Do the Same

Fees and Inequality in the Kenyan School System



October 2, 2015; Quartz

Throughout the world, education is considered at least part of the lifeline to new opportunities, particularly for children living in poverty. In 2003, Kenya declared primary school education to be free and compulsory. In the decade that followed, foreign aid poured in, the number of schools increased, and today most children are enrolled. At the same time, school fees have multiplied, even for families living in the slums of Nairobi. Since most of the schools serving children in the capital’s poorest areas are unregistered, the quality of education they provide is difficult to measure. As a result, many wonder whether Western donations are well spent.

Kenya is located on the eastern coast of Africa. It is a country of 44 million people and boasts the biggest economy in east Africa. Twelve years ago, the government focused a significant portion of its resources on educating its children, and as a result nearly nine out of ten Kenyans under the age of 11 are now enrolled in school.

While the number of children in school is increasing, so have the school fees that families pay. Not surprisingly, wealthy children are sent to private schools with correspondingly high fees. At the same time, even less well off Kenyans question the quality of the public schools and opt instead for low-fee private primary schools. Between 2010 and 2014, the number of children in public schools dropped by over six percent. Even those families that do send their children to public schools are subject to some fees, including uniform and testing fees.

Kenyan families have reason to believe public schools are failing. According to a 2013 World Bank report, public school teachers were absent almost half of the time, leading to children receiving on average slightly more than two hours of instruction. A second study discovered that only one-third of teachers at these schools scored a minimum of 80 percent on exams of curriculum it was their job to teach.

Additionally, research completed by Concern Worldwide found that the schools located in the slums of Nairobi were suffering a cumulative shortage of 250 teachers. (Schools located outside of the slums are only short around seven teachers.) The shortage has led to more than eighty percent of classrooms in the slums exceeding the government-stipulated ratio of 1 teacher per 45 children; three of these schools have a ratio of over one hundred children per teacher.

The growth in private primary schools began in the 1980s as the population ballooned by almost four percent, one of the largest rises in such rates in the world. At that time, the Kenyan government encouraged education entrepreneurs to build schools to help keep up with demand. Outside funds increased as the schools and their leaders attracted the attention and support of foreign donors. From 2001 to 2009, the number of private schools doubled.

The Africa Population and Health Research Center, a leading research institute located in Nairobi, found more than 60 percent of Kenyan children, or 300,000, attend the low-fee schools. Families earning less than $1 US a day, barely able to put food on the table, still pay between $1500 and $3000 US to send their children to these low-fee schools. Those lucky enough to continue schooling at the secondary level attend schools with more modest fees, starting at $1200 in the poorer communities.

Sadly, while fees are rising, the quality may not be. Most of the low-fee private primary schools are not registered with the Department of Education, leaving the educational entrepreneurs running them with the opportunity to pocket the fees and foreign donations. Unregistered schools don’t get the same scrutiny as registered schools, and therefore the quality of education is unclear. Adding to the injustice, unregistered schools are not eligible for the public grants provided to registered schools, including those attended by the wealthy.

The winners are the children living outside of the city, attending registered schools and paying less in tuition. Enrollment at these schools has tripled from four percent in 2005 to twelve percent currently. Competition for children is fierce, and only stellar teachers are employed. According to research from the Brookings Institution, fees for these schools are two-thirds of what schools in the “free” public system charge.

Sadly, the injustice continues at the secondary level. The quota admissions process at these schools sets aside one of every four places for public feeder schools. Therefore, the children attending the low-fee schools in the nation’s capital compete with wealthy children attending high-performing private schools for the limited number of spots.

Fixing this dysfunction begins with the Kenya Ministry of Education, Science, and Technology. First, all schools need to be scrutinized and regulated. Second, governmenteducation grants must follow children, and if the schools they attend do not deserve the funds, the grants should be given directly to the families to subsidize fees and other educational expenses.

The Next Recycling Frontier: Prescription Drugs


A 2012 study by the Commonwealth Fund entitled Insuring the Future discusses the link between poverty and healthcare coverage. It found, among many other things, that about one in four American adults, or about 50 million people, have neglected to fill a prescription due to cost. Many experience dangerous conditions due to their inability to afford these essential drugs. Thirty-eight states have laws allowing prescription drugs left over after a person dies or is otherwise unable to use the drugs to be provided to low-income people who cannot afford medicine. These programs cost a few thousand dollars, but recycle millions of dollars worth of lifesaving medications.

Tulsa County in Oklahoma began its drug-recycling program in September 2004. The state was one of the first to develop a program to capture unopened previously prescribed drugs from large institutions including nursing homes. It utilizes twenty-two retired doctors to travel to sixty-eight long-term care facilities collecting the medications for the county run pharmacy. The prescription drugs picked up are dispersed free of charge to low-income citizens of the county. Over the past eleven years the program has filed 172,149 prescriptions worth $16.8 million dollars. Incredibly, the cost of the program over the same period was less than $6,000.

In 1997, Georgia was the first state to create a prescription drug recycling program. In the eighteen years since that time, thirty-seven other states have created similar programs. These programs are lifelines for low-income residents, especially seniors. Seniors take an average of four to five medications a week, and one in five report cutting back on food, heat, or other necessities to afford their prescription drugs. Those that cut back on their medications, including those with cardiovascular disease, can experience serious conditions—for example, strokes or non-fatal heart attacks.

While some states and counties created their own programs, others utilize nonprofit organizations to deliver and provide the medications. SIRUM (Supporting Initiatives to Redistribute Unused Medicine), located in California, has a staff of five and a budget of less than $200,000. The nonprofit was started by three Stanford graduates in 2005; in 2014, they won the prestigious Grinnell prize for work related to social justice. SIRUM uses a patent-pending computer program to match 200 organizations with unused prescriptions to a dozen county-owned and federally-qualified health centers andclinics around the nation. The donating organizations pay nothing to access the program, letting them save the funds they once used to destroy the drugs. Recipient programs with means pay a membership fee equal to twenty-five percent of the value of the medications received. In the years since it opened, the program has expedited the transfer of $3.7 million worth of prescription drugs to 35,000 patients.

Lincoln-Glen, a nursing home in California, takes part in the program. Once a quarter, Deane Kirchner, the director of nursing, spends less than an hour logging and packaging the prescriptions for shipping. Throughout the year, the 50–75 bed facilitytypically donates about $6,000 in medications at a cost of $40. The recipient is the Santa Clara County Public Health Pharmacy, who distributes the prescriptions countywide based on need.

The largest state-run program is the Iowa Prescription Drug Corporation. In Iowa, the drugs come from the drug manufacturers and pharmacies themselves. They maintain prescription safety stocks to avoid shortfalls. About three percent of drugs worth 270 billion reach their expiration dates and are destroyed. The budget of the nonprofit organization’s program distributing the drugs is $500,000. In the eight years it has been in existence, it has delivered $13 million worth of drugs to 52,000 low-income patients.

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Deep Recession Cuts at State Colleges and Universities Persist


During the recession, many states slashed their higher education budgets, affecting students at their community colleges as well as four-year universities. Now that the recession is over, some states are beginning to increase spending to make up for lost ground. Unfortunately, Arizona is part of a small number that’s continuing to cut resources.

Last week, Arizona’s governor and legislature voted to eradicate state funding of two of their largest state community college systems, Maricopa and Pima. These cuts follow additional decreases in 2011 and 2012 of over $38 million and add up to approximately $80 million over a seven-year period. Thankfully, the Legislature saved the third, Central Arizona College in Pinal County. This system will continue to receive $2 million in state support.

These cuts are in addition to cuts in funding across the Arizona college system. In turn, university leaders are drastically increasing tuition, leading to an escalation in student debt as well as a decrease in the quality of education offered. According to the Center on Budget and Public Priorities, Arizona tuition at four-year colleges increased by almost $4,500 per student, or more than 80 percent (adjusted for inflation) since the 2007-8 school year. At the same time, faculty was reduced by over 2100 positions, and 182 colleges, school programs and departments were reduced as well as the elimination of eight extension or distant learning programs.

Throughout the country, state funding per student is down 23 percent, or over $2,000, due to the recession. All states except Alaska and North Dakota are spending less than they did before the recession. These cuts in funding are at a time when colleges are struggling to educate more students. Over one million or 10 percent more full-time students have enrolled since the recession. These are diverse students, including 18- through 24-year-olds who are part of the “baby boom echo” as well as older workers looking to retool and gain new skills.

Although many are turned away from higher education as tuition rises, those that enroll are seeing a growth in student debt. By the last quarter of 2013, student debt across all institutions swelled to $1.08 trillion, more than car loans and credit card debt. In four years, the median amount of those with student debt obtaining a bachelor’s degree at a four-year public institution grew from $11,900 to $14,300 (in 2012 dollars.) This translates to a 20 percent increase.

Increased tuition is leading to a growth in inequality between low-income and equally qualified upper-income students. According to a 2008 article by Georgetown University scholar Anthony Carnevale, tuition increases led to highly qualified students (top testing 25 percent) from upper income families going to four-year colleges at almost twice the rate of low-income equally qualified students.

Thankfully, in the last year many states are beginning to rebuild their college systems. States like Tennessee are dramatically increasing government support of their community colleges. In addition, ten states increased funding to their public college systems. The largest increases per pupil were in New Hampshire with an increase of 28.5 percent, North Dakota increased by 20.3 percent and Florida with an increase of 18.8 percent. While these increases are encouraging, eight other states continue to cut government funds. The largest decrease was in Wyoming where state government slashed funding by 7.2 percent.

Unlike the state government leaders, who are unable to see the connection between strong community college systems and productive workforces, Arizona corporations like Marriott International, Ford, and Amazon are teaming with Maricopa to create Maricopa Corporate College. These new partnerships are offsetting a portion of the state’s cuts. In addition to the concerns these types of partnerships create, the community college system is limited by the amount of private funds it can raise due to legal regulations.

In Arizona, Maricopa college leaders voted to not raise tuition. Instead, they are focused on increasing funds from alumni as well as other development efforts.

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Gates Foundation Invests in Corporation to Fight Disease


The Bill & Melinda Gates Foundation is investing $52 million in CureVac, to fund a new factory in Germany. The factory will make drug products using mRNA. This represents the foundation’s largest ever investment in a corporation. It is also a symbol of what the world learned since the Ebola outbreak, diseases in poor countries affects health across the world.

The Gates Foundation’s majority equity investment will be used to build a $76 million factory developing products using mRNA, a messenger chemical that provides information from the gene into cell parts making proteins. It is believed that mRNA can be used as a platform for rapidly producing low-cost drugs and vaccines. These products are “thermostable,” meaning they do not need cold-chain storage, a major hurdle in supplying vaccines in developing countries.

Additionally, the two organizations are forging a larger partnership as part of the foundation’s focus on vaccines that fight global diseases that disproportionally affect people in the poorest countries. The Gates Foundation’s mission is “guided by the belief that every life has equal value….[The] Foundation works to help all people lead healthy, productive lives. In developing countries, the emphasis on vaccines leads to better health thereby increasing individuals’ ability to lift themselves out of extreme poverty.” This initial project is part of a larger plan to invest billions to develop vaccines for viral, bacterial, and parasitic infectious diseases including rotavirus and HIV.

This investment is part of the trend of foundations turning to corporations rather than nonprofits or other foundations to solve the world’s inequities. These partnerships are part of socially responsible investing, or SRI. SRI includes impact investing, shareholder advocacy, and community investing, and is designed to encourage corporations to act in a socially respectable manner in addition to making a profit.

Because the majority of medical research is driven by the desire to make a profit, corporations and the world’s scientists are focused on drugs and vaccines that will make the largest monetary return on investment. These are rarely realized in medicine that’s focused on outbreaks in the world’s poorest countries. World NGOs have described this as “the 10/90 gap”; ten percent of global health research is focused on ninety percent of the world’s diseases. Ignoring these diseases leads to epidemics like the recent Ebola outbreak.

While there are clearly questions embedded in such tight relationships between nonprofit and for-profit organizations, these types of partnerships are gaining support with conservatives as well as liberals. Prime Minister Stephen Harper of Canada recently met with Bill Gates to discuss their shared goal of improving the lives of women and child around the world. Canada is funding twenty research teams of African and Canadian scientists to expand immunizations in order to eradicate polio and eliminate tetanus.

The CureVac factory is expected to produce additional products funded by the foundation. The corporation will hold the licenses created by the partnership and sell the products at an affordable price in poor countries.

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Esquire Spread May Be Bellwether in Public Attention to Prisons


Less than 40 years ago, there was a huge shift in crime-related policy. Many believed if we increased the punishments associated with “low level” nonviolent crimes, criminals would be deterred. They were not, and our prison population exploded. Many were poor and unable to post even a $500 bond. The jail population exploded as well. The result: shattered lives and ballooning government deficits. Many believe it is time for a change.

For years, the prison population (excluding celebrity wrongdoers) has been largely invisible in media, but this month, Esquire magazine published a spread of people with their poetry that does not fit the “faceless horde” model. This, we hope, may signal a cultural shift.

On the second Tuesday of every month, a class begins in the basement of a house near the West Side of Chicago. They debate lines and prose. They write poetry full of feelings few have discussed before.

Though the learning is transformative, it isn’t part of a school curriculum. It is lead by a volunteer, Brandon Crockett, and all of the students are former inmates attempting to turn a new page in their lives. Many live in housing provided in the rooms above.

The program is held by St. Leonard’s Ministries, a nonprofit that’s served former inmates for over 60 years. In addition to both temporary and more permanent housing, the organization provides substance abuse treatment, physical and mental health services, and employment training. It serves over three hundred men and women every year. Eighty percent of the men and women completing the program sever the pipeline back to prison and jail, compared to less than 50 percent of all Illinois’ formerly incarcerated.

In the ’90s, few were interested in this impressive success rate, choosing instead to support “three strikes” and other laws extending prison terms for those convicted of nonviolent crimes. Locking them up with little mental health services and fewer employment training programs, the cycle began, and so did spending millions on confining them. Thanks to these practices, many state budgets, including Illinois’, are stuck in the red.

According to a study released earlier this month by the Vera Institute, those in the nation’s jails are more likely to be convicted and to spend time in prison. Even a jail stay of only a couple of days increases the likelihood of broken families and unemployment. Three-quarters of those found guilty are convicted of possession of a small amount of an illegal substance or other low-level nonviolent offenses. Their stay in prison, without access to any of the essential services organization’s like St. Leonard’s provides, costs a minimum of four times more.

Every year, 12 million people are locked up in the nation’s jails. No wonder the MacArthur Foundation, who financially supports the Vera Institute’s work, recently released a request for proposals for a new funding initiative aimed at reducing America’s reliance on incarceration. The five-year, $75 million initiative will fund state and local government programs seeking to develop a more fair and effective justice system.

Breaking the nation’s reliance on jail and prison is the first step. Funding the programs that help these men and women heal and begin living productive lives is the next. To support St. Leonard’s and change the public’s views of those living in prison and jail, Brandon teamed up with world-renowned Chicago photographer Sandro Miller to create an art book of photos and poetry like the excerpt above. The book,Finding Freedom, will become a reality if the Kickstarter campaign launched last week is successful. Miller is best known for his recent project, “Malkovich, Malkovich, Malkovich: Homage to Photographic Masters,” in which he recreated some of history’s most famous portraits using the actor John Malkovich as the subject. It is now running at the Fahey/Klein Gallery in Los Angeles.

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