This is the third post on a Financial Model to provide mobile food service to ‘unsheltered’ homeless around Portland, Oregon. The last post gave insights into the Hobson choice homeless advocates have in continuing with temporary fix programs because financially viable long term solutions requiring greater upfront investment don’t have the required support. Also, the challenges homeless advocates face maintaining these temporary but necessary programs. The Financial Model will seek a path making such efforts both financially sustainable and expandable or scalable. These are two separate criteria that must be judged within their own context. While it is obviously good that a beneficial social effort is sustainable that does not alter the immediate need. Further, an inability to scale to assist more people does not make local efforts to meet such needs unhelpful. What the financial model will do is help prevent wasting resources on unviable enterprises and expand them if possible.
Part of developing the Financial model was looking for greater efficiencies in delivering the service. One early idea was to develop an app to address the food distribution challenges discussed in the first two posts. Apps like Cerplus, OkCupid, Leftover Swap and Spoiler Alert, which was built by MIT graduate students, can help individuals and organizations meet food waste reduction goals. There is also a growing awareness by companies like Starbucks which took action after workers fretted over wasted food
"We are affected at a human level when we see something that's perfectly good that could feed needy families going to waste," the Starbucks manager said.
After a year of research and food safety testing, Starbucks rolled out food-donation pilot programs in Arizona and California.
The food is delivered within hours to food banks and agencies where yogurt parfait may go into children's lunch bags or be served along with Starbucks breakfast sandwiches on a food line.
It also demonstrates the level of the challenge in delivering food to those that are not only without means of sustainable nutrition but also without minimally proper, decent shelter of any type. We are speaking of the inefficiencies of two different systems, first within the food system.
“Food waste happens not because businesses intend to waste the food but because they’re often disconnected from one another and lack a real-time solution,” says Ricky Ashenfelter, co-founder and CEO of Spoiler Alert.
Then the further challenge of serving the unsheltered homeless when even the basic efforts are difficult.
"It takes so much planning," said Al Brislain, CEO of Feeding America San Diego. "All the routes, all the-- you know, making sure the temperature is right, making sure that the food is still nutritious and fresh."
Other efforts, in different parts of the globe, seek to address the food wastage problem but this still does not translate readily into solving the problem of feeding the homeless. Denmark opened WeFood, its first food waste supermarket in the country and perhaps the world, selling produce at prices 30 to 50 percent cheaper than normal supermarkets not just to low-income shoppers but anyone who is concerned about the amount of food waste produced in the country.
This is still, it can be argued, an inefficient solution as WeFood does nothing to address the underlying cause(s) of the massive amounts of food wasted in the food and service industry which happens because of consumer demand for price competition. The food industry depends upon massive overproduction to remain profitable which WeFood does nothing to address. WeFood helps maintain overproduction through tax incentives created specifically to make surplus supermarkets viable.
Our own United States Congress passed an important piece of tax legislation as part of the 2016 fiscal year omnibus budget to increase food donations and thereby prevent food waste. Businesses that donate could benefit from this federal legislation allowing more businesses to get tax deductions for donating food. The Food Law and Policy Clinic (FLPC) applauded the passage of this portion of the legislation, which provides for a more comprehensive tax incentive policy for food donations. Again, though, this does not readily reach the homeless.
This then can be seen as a version of the Traveling Salesman Problem which could involve perhaps the use of apps in finding the most efficient routes. The term “Last Mile”, which was used in the title of the project, “Last Mile Mobile Food and Community Bus” came from the public transportation sector, based on the idea that it is easier to get a thousand people from point A (Station) to point B (Station) and back again than it is to get that same thousand people from point B to point B1, B2, B3, and so on for each individual destination. People may be willing to ride a bullet train or light rail but don’t because they can’t cover that last mile to their destination. At this next level of need differences in outcomes can depend upon economic factors. Bullet train riders are often upper income, riding instead of flying, and their businesses often cover the extra costs. Those who are low-income use services which are often undependable, then when they don’t use those services that is used as an excuse to cut them.
Similarly, the unsheltered homeless often cannot cover the last mile to get to the food so the intention is to cover it for them but the difficulty of doing so is comparable to that of public transportation challenge because of multiple changing sources and targets.
Now we can start building an enterprise to address these challenges. The first step in creating our Financial Model was to “Bound the Operational Unit,” revealing what makes one’s approach uniquely suited as a start-up. This means creating from a “bottom up” perspective of a single “operational unit”.
The operational unit is the smallest self-sustaining component of a larger enterprise responsible for conducting sale or service in a defined territory. It is what is replicated when one scales or expands. This assumes multiple operational units whose activities need to be coordinated and by which cost savings can be attained through such coordination. While a non-profit's operational unit often does not generate revenue, it is still a basis for calculating donor or grant funding required to cost and effectively serve targeted beneficiaries at scale.
Our venture was urban mobile in nature according to criteria set by the course. Our operational unit was to be a food truck, a fifth wheel, bus, or other large vehicles. This was to be the enterprise's engine (ignore any suggestions of a pun) generating the money not only for its own operations but also for any enterprise-level activities performed from a head office or central office, as well as revenue to continue growing the enterprise to enable it to scale properly.
I found online, a 1998 Chevy Collins Used (short) School Bus, CARB legal, for $12,500 and a 1991 International Blue Bird School CARB Compliant for sale at $24,500 online which I used as the numerical input for my model. Buses are closer to 10 miles per gallon so they could carry more food but could cost more in fuel delivering it.
Jo ended up working with a local nonprofit, first looking at the donation of two buses at $45,000 each then working on obtaining an RV to be refitted for this purpose. Technical assistance with the retrofitting is to come from a creative individual with the necessary experience who is currently homeless, again demonstrating an ABCD philosophy of focusing on what is strong rather than what is wrong.
Under the concept of all models being wrong, we can include nonprofits not being able to select, or which could be modeled, a reality favorable to them as the one they work in. They have to take the resources made available to them and make them work rather than depend upon abstract models of numbers that might add up but don’t have any real substance. The challenge is putting these approaches together in a viable manner.
Next Part 4
Next Part 4
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