Business Rx: Food Recovery Networks seeks steady income stream

October 28, 2012

College senior Ben Simon couldn’t stand to see good food going to waste at his college dining hall. So he and his University of Maryland classmates worked with the university to deliver the excess to people in need. In September 2011, the Food Recovery Network was born. Last year, the group delivered more than 30,000 meals in the Washington region, and they recently teamed with students at three other universities to expand nationally.

The pitch

Simon

“The Food Recovery Network unites students at colleges to fight food waste and hunger by recovering excess food from their dining halls, sports events and other venues, and donating it to people in need. We didn’t invent food recovery, we just recognized that the majority of colleges in America still don’t have a program.

“We now have four chapters: at Maryland’s College Park campus, Brown University, the University of California, Berkeley, and Pomona College. We are becoming a 501(c)(3) nonprofit organization, and in the next few years we hope to have 500 chapters recovering 5 million meals a year.

“There is another nationally focused organization doing food recovery on college campuses, and that’s the Campus Kitchens Project, a project of DC Central Kitchen. CKP is an amazing organization, and Robert Egger, CKP’s founder, serves on FRN’s board of advisers.

“FRN’s model differs from CKP’s in that we just focus on transporting food that was already cooked by our campus dining halls to food pantries and homeless shelters, and we let them handle all the meal planning. This saves us staff time, and makes it easy for a motivated group of students to bring FRN to their campus.

“While FRN is a nonprofit, we are seeking out a revenue stream to make us financially self-sustaining in the long term, so that we don’t have to rely solely on writing grant applications. We are also helping Montgomery County start a food recovery program. Do you think a consulting role like this could be monetized? What are some ideas for ways to generate revenue?”

The advice

Melissa Carrier, assistant dean, Center for Social Value Creation at the University of Maryland’s Robert H. Smith School of Business

“There are a few models you could look at. One is the franchise model, where you support the start-up of other Food Recovery Networks around the country, providing your brand, processes and training. This is similar to the model Goodwill Industries International operates. They have more than 165 independent, community-based Goodwill agencies around the country.

“The second revenue model you could employ could be based around a consulting practice, as you suggest. Your staff could offer their expertise to help other organizations and jurisdictions set up their own food recovery networks. The nonprofit Share Our Strength has a very successful consulting arm called Community Wealth Ventures.

“A third model involves ‘charging’ donor corporations a portion of the tax revenue savings they receive from their donations to sustain the organization. An example of an organization that is doing this well is Good360, which recovered $7 billion worth of products from companies to reallocate to nonprofits.

“I recommend you evaluate each model, taking into account FRN’s assets and capabilities. Go with the model that works for your organization right now, but also be sure you have a long-term plan. You can explore other revenue models as your organization grows.”

The reaction

Simon

“The third model of taking a portion of tax savings is currently being used very successfully by a peer, the Food Donation Connection. Unfortunately, most of FRN’s donors are nonprofit colleges and universities, which can’t write off donations. But it could be a good revenue stream for us in the future if we see more donations come from corporations.

“We’re shying away from the model of charging chapters a fee, since a lot of them might not be in a position to pay it.

“We hadn’t considered the idea of creating a for-profit subsidiary, but we’ll look into it more.”

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