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					Rather than toss out 100,000 hot dogs that couldn't be sold because they were made one - sixteenth of an inch too thin, Oscar Mayer donated the batch to the Greater Chicago Food Depository.
By Delroy Alexander Tribune staff reporter May 25, 2003 Rather than toss out 100,000 hot dogs that couldn't be sold because they were made onesixteenth of an inch too thin, Oscar Mayer donated the batch to the Greater Chicago Food Depository. With that decision, the giant meat processor spared itself disposal costs--and got to write off the dogs on its taxes as a charitable contribution. Now, such donations--ranging from canned and packaged goods to fresh food from farms and restaurants--stand to dramatically increase as a result of proposed tax breaks being considered by Congress. The push comes amid an economic slowdown that has cost millions of Americans their jobs and left some food banks unable to keep up with demand because of shrinking grants and contributions. Other than the needy, however, the biggest beneficiaries of the proposed increase in tax breaks would be major food companies. Tucked in obscure legislation that the Senate passed last month and that is now before the House is a proposal to boost the tax incentives that will allow companies to write off as much as 20 percent of their profits for food-related donations. The current cap is 10 percent. "Do you think they [major corporations] donate just out of the goodness of their hearts?" asked Mike Mulqueen, who in 1991 took over running Greater Chicago Food Depository, one of the largest in the country. "They all have a philanthropic bent. But it's a business decision, and it's a cost-avoidance measure." The legislation passed by the Senate would cost the U.S. Treasury an estimated $2.1 billion over the next decade, according to Congress' Joint Committee on Taxation. That estimate may be too low because companies are not required to publicly reveal deductions for food donations. It is "impossible" to quantify the scale of tax benefits, said Treasury spokeswoman Tara Bradshaw. She said corporations wrote off $10.7 billion in charitable contributions for 2001. In 2001, Chicago-based America's Second Harvest, the

nation's largest network of food banks, received more than $450 million in donated provisions, including some cosmetics and other goods, according to the non-profit's report filed with the Internal Revenue Service. Of that amount, about $210 million, or 46 percent, of the group's donated food came from just 10 major food companies, including Northfield-based Kraft Foods, which owns Oscar Mayer and Nabisco. Also on the list were: Coca-Cola, Kellogg, General Mills, ConAgra Foods, Pfizer and Pepsi Co.'s Tropicana. America's Second Harvest officials declined to list their largest 10 donors by donation size but said five top donors each gave more than $20 million worth of food, and the largest single corporate contribution topped $38 million. Nancy Peck, program manager for ConAgra Foods Foundation, was unsure how much the company writes off in contributions. But she said ConAgra is committed to battling child hunger through its Feeding Children Better program. "The legislation is great," she said, "but this is something we are passionate about and would have done anyway." Other donors also shied away from discussing their tax breaks from donating food. Doug O'Brien, director of public policy and research for America's Second Harvest, said he doesn't begrudge corporations such tax breaks. "Whether [the legislation] benefits big or small companies, the issue is almost always one of economic benefit," O'Brien said. "It's a small price to pay for mitigating the risk and making sure there's enough food to feed the poor." The proposal also would extend the same tax incentives that the big corporations receive to small restaurateurs and farmers who now get little in tax breaks on donations because much of their food isn't packaged or canned. In the past, food banks accepted little perishable food. But that is changing as food banks become more sophisticated in handling and storing such donations. The U.S. Department of Agriculture estimates about 130 pounds of food per person, worth about $30 billion, typically ends up in landfills each year. Peelings and bones are included in the estimate but are a small portion of the total. In other cases, farmers simply plow under some produce rather than incur the cost of harvesting it. “The legislation before Congress would provide farmers an incentive to harvest crops that might be discarded,” said Tom Chandler, Executive Director of the Mid-Atlantic Gleaning Network, a non-profit group that helps farmers distribute food in the Washington, D.C., area.

Chandler distributed almost 4 million pounds of fresh and perishable food last year but estimates that "more than 10 times that amount is wasted just in our area." For farmers, the write-offs also would help pay for the cost of packaging their produce, said Doug Heitman, a spokesman for Western Vegetable Produce, a group of California farmers. "It would mean that [the farmer] does not have to pay for that expense, too, and would allow millions of Americans that are hungry to be fed." But some analysts worry about the challenges the food banks might face as more companies unload unwanted inventory. "It can be very expensive to warehouse food and consumer goods," said Daniel Borochoff, founder and president of the Chicago-based American Institute of Philanthropy, a watchdog group that monitors national non-profits. "In many respects, the food banks are doing [companies] a favor by taking certain types of goods because it can be very difficult to dispose of them." Borochoff also questions whether food banks may be forced into accepting more questionable goods in exchange for more nutritious products. "My big worry is that charities have to take stuff they don't want to get the food they do," he said. Limiting the amount of dumped food can bring large savings for companies, according to estimates from the Agriculture Department. For example, if just 5 percent of the food discarded by retailers, manufacturers and consumers in 1995 had been recovered, landfill costs alone would have been about $50 million less. An Environmental Protection Agency study showed the extent to which some industry players could benefit. In 1997, New Jersey-based Shop Rite Supermarkets, which had 25 stores at the time, was able to donate 3,000 tons of food that it typically had dumped. It cut its disposal costs to $33 from $90 a ton. More sophisticated distribution systems and technology also have helped the Greater Chicago Food Depository and other food banks avoid collecting questionable produce, much of it supplied at the last minute, said executive director Mulqueen, a decorated former Marine Corps brigadier general. Food is transported more quickly, reducing the loss of perishable fruit and vegetables from 25 percent to less than 10 percent over the last five years, Mulqueen said. The Depository also hands out some non-food products, many with a restricted shelf life. Such products as diapers and skin lotion could be costly and difficult for manufacturers to dispose if the food banks didn't accept them.

Pfizer works hard to ensure food banks get goods quickly, said Sharon Eggert, who oversees donations and liquidation sales of the drugmaker's consumer products. About $15 million to $18 million in Pfizer consumer products, including Listerine mouthwash, lotion and soap end up in the America's Second Harvest network, Eggert said. The push for increasing the donation tax incentive comes as some food agencies face budget woes because of the sluggish economy and diminished funding. Farm Share, a South Florida food bank, had to stop distributing food to more than 2 million families after state lawmakers cut $400,000 in funds. A major food bank in Washington, D.C., also faces a budget shortfall that could top $1 million. "Our country's charities face a crunch," said Rep Roy Blunt (R-Mo.) earlier this month when he and Rep. Harold Ford (D-Tenn.) introduced a more conservative version of the proposal approved by the Senate. The Greater Chicago Food Depository has stepped in to help sister organizations, including the Central Illinois Food Bank, said Tracy Ryan, executive director of the Downstate agency, which has seen the need for its services increase 50 percent. "Our food bank is struggling to keep pace with the demand." 2 area groups help deliver food locally, nationally America's Second Harvest in Chicago Central office oversees a network of more than 200 regional food banks and food-rescue non-profits serving all 50 states, the District of Columbia and Puerto Rico. - Funding: Donations come from individuals, corporations and charitable foundations. For each donated dollar, America's Second Harvest estimates it secures 28 pounds of food and groceries for food banks. - Food, other groceries: It solicits and secures surplus food and grocery items from more than 500 national food growers, processors, manufacturers, distributors and retailers-enough to feed 23 million Americans a year. Phone: 312-263-2303 The Greater Chicago Food Depository The food bank distributes food and groceries to more than 310,000 Cook County adults and children annually. - Food, other groceries: Items are donated primarily because of overruns, labeling errors, changes in marketing. Volunteers and employees inspect, sort, repackage and distribute

the donations to 600 local food pantries, soup kitchens, shelters and community kitchens. Last year the depository distributed food valued at more than $54 million, the equivalent of 83,500 meals a day, 365 days a year. Phone: 773-247-3663 Business model ensures food flows to needy As the trucks roll up at the loading bay of the Greater Chicago Food Depository, police officers keep a watchful eye. The police almost disappear into the background, amid the thuds of boxes being shunted around and workers sharply calling out orders. They are there to oversee the work of people serving community service sentences, not to secure the goods going out. Just yards away inside are volunteers--school kids sticking labels on letters to potential donors. It's clear this is no ordinary warehouse. The depository is the biggest of six Illinois food banks, which together help feed more than 500,000 people a year. As part of America's Second Harvest, the depository is one of 200 food banks that make up the nation's largest network of non-profits aimed at eradicating hunger. While Chicago-based America's Second Harvest is the umbrella group that coordinates and solicits food donations from manufacturers and retailers, food banks such as the depository are the system's hub. The depository collects, stores and organizes the distribution of food for Cook County's needy. Most people identify with the soup kitchens and the pantries they see handing out food. But it is the depository, which works with 600 such agencies, that collects the food and prepares it for distribution. As the third-largest food bank in the country, the depository helps feed about 310,000 people annually. "It has to be run like a business," said executive director Mike Mulqueen. "If it's not, we just can't do the things we need to do, which is provide over 40 million pounds of food." Locked inside the 90,000-square-foot warehouse at 4501 S. Tripp Ave. are between 3.5 million and 4 million pounds of donated goods--enough to feed Chicago's homeless for about a month.

It takes 85 full-time employees and thousands of volunteers to run the depository, which spends $8 million a year on salaries, transportation and other services. More than half the cash for those costs is stitched together from thousands of local donations. The operation attracts college graduates from around the country. "People didn't take a vow of poverty to come work here," said Mulqueen, who is paid about $200,000 annually. "Our employees are compensated fairly. I've got people here that have MBAs from Kellogg." The chief financial officer is a graduate of Stanford University. The operations chief has a doctorate in aeronautical engineering. Just-in-time inventory systems govern pickups by the food pantries and kitchens, which have to meet scheduled slots. Web-based ordering systems are in place but not yet available to most soup kitchens because many lack the technology. And like all of the food-rescue outfits that form the America's Second Harvest network, the depository is regularly inspected by the companies that donate food. To ensure that the food actually feeds the hungry, the depository monitors the 600 soup kitchens and pantries it supplies. One such agency is the Pacific Garden Mission in the South Loop, which the City of Chicago wants to condemn to allow expansion of a neighboring school, Jones College Prep. In addition to distributing food, the city's oldest and largest shelter provides 700 emergency beds. For the past decade, Floyd Trumbull has been going to the mission, first when he was battling his own troubles with drug and alcohol addiction and now as the mission's foodservice director. Each day, the mission serves about 1,800 meals. "A lot of people have nowhere else to go," Trumbull said. "We are here with a meal. It is vital for many people." The real economic payoff, Mulqueen said, comes with the realization that when someone comes to a pantry, he or she can get a week's worth of food that would cost as much as $400 in a store. Over the last six years, the depository has seen demand soar.

"Our food distribution has gone from about 22 million to 24 million pounds a year to over 40 million pounds," Mulqueen said. In response, the depository is building a new warehouse and training center. Now, a 217,000-square-foot facility, which also will have a 48,000-square-foot mezzanine floor, is taking shape nearby. Mulqueen has raised $16.4 million of the $30 million he needs to finish the center. With an untouched $11 million line of credit and $12 million endowment, the depository figures it has the resources to meet the needs of Chicago's poor for the next 25 years. -- By Delroy Alexander, Tribune staff reporter

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