Full Transcript of CFO StudioLIVE: Interview with Paul Henrys, CFO, Feeding America
Andrew:
Welcome to CFO Studio live. Part of the CFO Stay Connected Initiative and Intelligence platform designed by CFO Studio to assist CFOs and remaining connected to peer CFOs and the highest caliber service providers. CFO Studio live presented by CFO Studio offers live stream realtime interviews with highly accomplished CFOs from prominent New York stock exchange, NASDAQ and large privately held companies as well as notable tax exempt organizations in North America. During today’s interview, guests can pose questions and hear interviewees live responses. CFO Studio live video interviews are available in podcast at www.cfostudio.com/podcasts.
Hello everyone. I’m Andrew Zezas Publisher and Host CEO of CFO Studio. Welcome. Nice to have you with us today. We’ve got a very interesting interview lined up for you today, but before I introduce our guest interviewee, I’d like to remind you that we’ve got some other exciting events happening over the next few weeks. On August 11th, CFO Studio live we’ll interview Leonard Williams, a friend of CFO’s and the CFO of the Nature Conservancy, on August 20th, we’ll interview David Chambers another friend of CFO Studio, the CFO of Jaguar Land Rover North America.
We’ve got other interviews scheduled or in the process of being scheduled with the CFOs of ConAgra Gogo Air, Horizon Blue Cross Blue Shield of California, IFF, NBCUniversal and a bunch of other companies. A number of our podcasts are already up on our podcast site and you can go back and see some of the interviews we’ve already done. In addition, we’ll be hosting CFO discussion series. CFO business Intel briefings, and other digital events. Visit us at cfostudio.com to reserve your seat at those events as well. I’d like to introduce you today to an old friend, CFO Studio live interviewee Paul Henrys. Paul is Chief Financial Officer of Feeding America. He oversees the organization’s finance and corporate strategy. In his role, Paul Henrys helps maximize Feeding America’s resources to get more food to more people in need and maintain its position as a leader in financial transparency and efficiency.
Paul also serves as treasurer of the Feeding America Board of Directors. Prior to joining Feeding America in 2013, Paul spent eight years in finance at US Foods, a leading food service distributor. His most recent role at US Foods was Senior Vice President of Financial Planning and Analysis. Paul also has five years of experience in the supply chain technology industry, where he held several leadership positions in marketing and consulting. Paul successfully managed several consulting projects and developed corporate and product messaging to drive brand identity and broad market awareness. Paul Henrys began his career in strategy consulting with a firm known as Oliver Wyman. At that firm he managed project teams to identify and successfully implement supply chain and strategic business opportunities. Paul has a BA from Harvard university. He lives in Chicago with his wife and his two children.
Now, a little bit about Feeding America. Founded in 1979, formerly named America’s Second Harvest. It was the largest network of food banks, pantries and meal programs in the country. Feeding America is the leading organization on the fight against hunger in the United States. 200 food banks strong, Feeding America serves more than 40 million people virtually every community in America. Since their beginnings 40 years ago, Feeding America has made innovative strides in combating food waste and providing fresh food to hungry people across the country. Feeding America believes that everyone, individuals, charities, businesses and government has a role in ending hunger in America. I would agree with that comment.
Today, Paul Henrys we’ll discuss how the pandemic is impacting the work of Feeding America and its network of food banks, as well as providing details as to how the organization has taken extra measures to support individuals and families struggling with hunger in these unprecedented times. Ladies and gentlemen, it gives me great pleasure to introduce you to my friend today’s CFO Studio live interviewee Paul Henrys, Chief Financial Officer of Feeding America. Paul, welcome to CFO Studio. It’s so nice to have you with us.
Paul:
Thank you, Andrew. I really appreciate you and CFO Studios for giving me the opportunity to talk about the work that we’re doing right now and I know that it’s work that we believe was very important prior to the pandemic and continues to be utmost important for those that are struggling with hunger right now. And-
Andrew:
Well there’s no doubt you’re doing good work and necessary work and work that’s sorely needed. So congratulations to you and to the organization for all the wonderful things that you’ve accomplished. We’ve got a lot to talk about. I’m so pleased that you agreed to be interviewed with us today. There are some folks from your industry who have logged in, who are listening. There are folks from other industries, and I’m sure we’re going to have some very exciting questions and a reminder to our guests, if you’d like to post questions to Paul, there’s a Q and A feature at the bottom of your screen, please use that. And we’ll review your questions during the interview and pose those to Paul at the end of the interview. So Paul let’s jump right into our discussion, share with us if you will, how has the pandemic impacted the overall work of Feeding America and the network of food banks beyond Feeding America itself?
Paul:
And for us, when I say us, it’s the Feeding America national office food banks and food pantries across the country, the pandemic really has represented a perfect storm. When you talked about Feeding America, you referenced the fact that we prior to the pandemic we’re providing food and other services to roughly 40 million Americans. With unemployment now, roughly at around 11%, our estimates suggest that there are another 17 to 18 million Americans that are struggling with hunger. That’s unprecedented for us, unprecedented for the country.
Now with the pandemic has put a spotlight on as well which has been known is that Black Americans, Hispanic Americans, Native communities are unfortunately disproportionately impacted, not only the pandemic itself but by other challenges. I would be remiss if I didn’t talk about it and reflect on the racial justice conversations that are going on right now. They are raising the issue that has long existed in the country and as shown up in clearly the work that we do and as we think about how we continue to support those struggling with hunger, we recognize that we need to think critically about how we support those communities that are disproportionately impacted by what’s going on. So more important the need has grown tremendously and at the same time if you think back to the conversations in March the food supply chain was unbelievably disrupted.
So you’ve got demand at the grocery retail location going up anywhere from 80 to 200%. You have online retail doubling and buying which means that a consumer brand and manufacturing in retail, both very important channels to us from a food donation perspective, changed materially. And so our traditional sources of donations shifted understandably, but it created constraint for us. I would say a third is the charitable food system relies heavily not only financial and food donations, it relies heavily on volunteers. And so at the beginning of the pandemic what we saw was an important need for our country to socially distanced, which then meant our volunteer labor disappeared in a lot of communities since-
Andrew:
Wow. Haven’t figured that part out on my own.
Paul:
Right. Yeah. And so you’ve got booze dynamics going on making it a challenge and opportunity for us to think through knowing that we have an obligation and a need to address it. We can’t have 30 million people struggling with hunger and not do something about it. That’s the role we’re in, the role we accept and the role we need to play.
Andrew:
Paul for our guests, would you explain how Feeding America works with other food organizations and hunger service organizations around the country? The hierarchy, if you will of how Feeding America sources products and how it makes its way down to the person who’s challenged with hunger.
Paul:
Yeah. So and I’m glad you use the word hierarchy. From the perspective of mine clicking on your hierarch, but the way we talk about it is, the person’s struggling with hungers in the middle. So whether it’s us as the natural office or the food banks, we need to work together to ensure the assets and resources that we have are all aligned to support that individual and those families. And so Feeding America is a national organization, there are certain skills and roles and capabilities that we focus on. One is on the advocacy side. So the public sector is an unbelievably important partner in addressing hunger, both at the federal level and the state level. And we make sure that we work with our food bank partners and other social service partners to engage legislators to talk about those federal nutrition programs and how they get executed at the state level and articulate why they’re important and articulate the impact that they have, not only in supporting those struggling with hunger, but in supporting the overall economy. There is a real benefit to those federal nutrition programs.
In addition, from a national perspective, we engage with national and multinational organizations and companies, whether they be retailers, manufacturers to ensure that we are building relationships, not only at the national level, but making sure they cascade it locally to the food banks and the food pantries to ensure that there’s an understanding of the need for food donations. We also play a role in purchasing food. So they are sometimes limits to our ability to access food donations and so, we try to leverage the scale of the entire network to purchase food for the network.
And in addition, we play a role in raising awareness on the issue of hunger and the wonderful work that’s going on within each community. We have an obligation to talk about the great work going on in New York City, the great work going on in San Antonio Texas, the great work going on in Milwaukee, Wisconsin, a great work going on in Los Angeles California, you name it. There food banks and other partners that are on the ground supporting those struggling with hunger.
But those are some elements of the role that we play in support of the work that is going on locally. Food banks also are doing similar things in terms of advocating state governments, but they are ensuring that they are getting access to those food resources, identifying where the need is, and making sure that the distribution of that food is as efficient as effective as possible while also engaging in partnering with their local community partners, whether they be from public sector, local government perspective, or other social service organizations in the community.
Andrew:
So in addition to advocacy, Feeding America basically acquires food either through donations or purchases, distributes it to the food banks and then food banks in turn distribute to kitchens as well as pantries who in turn distribute to individuals and families. Is that pretty much the way it flows?
Paul:
Yes. In a very sort of high, yeah. This conversation is somewhat simplified. Where we are like a connector. There are elements of, let’s say it’s like in the for-profit side, it’s like you’re sourcing and buying food. Let’s say, if you are a distributor you’d source five food, you’d make sure it gets got to a distribution center and then you ship it. Our role is to those partners to help identify where we need to, where the sources of supply are and act as a connector. Ultimately, there’s an important role that the food banks play in then potentially managing that transportation from the sources of supply to their food bank. Sometimes we do that as well. So it really all depends on who’s in a better position to manage that transact.
Andrew:
So the Feeding America has been around for what 41 years now, been accomplishing a lot. This pandemic took everyone by storm. Has Feeding America taken any particular steps during the pandemic to ensure that individuals and families struggling with hunger are well taken care of?
Paul:
Yeah. I mean, I think our focus first and foremost has been on making sure we’re getting access to as much food as possible. So given the increase in need and the constraints on the supply, our focus has been on how do we engage our very important partners and as well as how do we identify new partners? So an example been and I talked about the volunteers and the real risk that the pandemic has created for that volunteer workforce, we reached out to organizations like Team Rubicon. They are a social service organization volunteer veterans. They work all over the country and it was important for us to strengthen that relationship to see whether there were opportunities for them to work with our food banks on the ground as volunteer workforce.And a number of communities we worked with State governments on national guard deployments. So that is another way for us to make sure that we are advocating on behalf of food banks to ensure they have the resources that they have.
And in addition, I talked about raising awareness during the pandemic, we’ve done everything possible, and we know there’s always more we can do to raise awareness but also get access to financial resources and distribute anything that we’ve raised as it relates to COVID to the food banks. That for us was our commitment to make sure that we could get access to resources for those struggling with hunger and those resources not only went to food, but also went to trying to get access to PPE. So there non-food needs that individuals and families need that we’re trying to get access to as well.
Andrew:
Wow. So Paul, you never thought it was quite as complicated as it is, and you guys are really doing a heavy lift. Tell me about prior to the pandemic, how was Feeding America structured? Did you have a significant work from home workforce at that point prior to the pandemic?
Paul:
And I’m sure a number of organizations and companies had, but similar reality where there’s probably about 10 to 12% of our workforce that we would have considered remote. And then there was probably another 40 to 50% of the workforce and staff that probably worked from home one or two days a week. So we were familiar with working remotely but I would say that the paradigm we operated under was, “How, in person always feels better.” And so the experience that we’ve gone through right now completely disproves that. It disapproves it from the perspective of we can be effective, we can continue to build relationships remotely. And so it’s not a foregone conclusion that you’ve got to be in the office to be successful.
Andrew:
Well, I think I still think that in person feels better. Although this does work, doesn’t it? Digital video does work?
Paul:
Right.
Andrew:
During the pandemic, has the organization put in place any particular technologies that supported either employees or the overall mission?
Paul:
Yeah. So prior to the pandemic, we, I mean, we had investments in video conferencing capabilities. That is something that over the last several years we’ve focused on a lot. Knowing that how we work was evolving and so we were testing out different solutions. Clearly they’re getting a workout now. I wouldn’t say that was the main focus of our investment. Every staff member, almost every staff member has a laptop. And so when we went remote, it was relatively easy for folks to get at least to work from home. But the pandemic raised a number of other issues.
Just our conversations around to be effective as a laptop enough, do you need a brand? And it depends on what you’re doing. And so if you live and love Excel, a monitor helps. If you’re on the phone a lot in video meetings you may not have a nice microphone like you have. So head since [inaudible 00:21:07]. And so I think those are the learnings that we’ve had, is as we’ve got through this is pausing and really engaging the staff and asking them what they believe will make them more effective in support of the mission and trying to provide within reason what those resources are.
Andrew:
So Feeding America basically has other than management leadership, you basically have two lines of, I’ll use the term workers. You’ve got salaried staff and you’ve got a large volunteer force as well. How in this time has Feeding America kept both of those groups motivated? How have you maintained the organization’s culture and ensure efficiency?
Paul:
Our focus first, our immediate staff and, my answer is specific to Feeding America, not necessarily the food banks. I think that I can highlight examples of what I’ve heard, but I haven’t [inaudible 00:22:16]. As it relates to our staff, I want to start with a comment I made around listening to the staff and empowering them. I think that’s as we had gone through this, I suspect this happened in across companies and organizations in the US where pandemic hits, depending on what your industry is, you’ve got office staff at least who go home. And everyone’s life is very different. We’re in the same pandemic, but we’re experiencing it very differently.
You could have young children or you could live alone, or you could live with elderly parents. And so I think for us, it’s pandemic hits need skyrockets, supply chain, disruption, all this stuff is going on while the line between work life and personal life is completely destroyed. And I think for us, our immediate response was responding to the pandemic itself and then realizing hold on a second, we need to pause and really reach out to the staff, listen to them and hear from them what they need. In addition, we need some outside experts on how people need to think about, what skills or behaviors they should employ to find that balance.
And those are the types of things we did to help staff find balance as well as trying to find out where we could supplement them again from a technology perspective mostly, but also what we started doing probably a few months in is asking people to take time off. Even if for a day mandating that people take at least a day off, shut down so that the following day or the following Monday if it was a Friday, it would be different. We’re trying to ensure that staff take care of themselves given that this year we’ve had this sprint, but this is a marathon. This isn’t going anywhere. The need is there and we recognize the importance of ensuring that we give them the space, the resources to be healthy with their families and we’re individually. Yeah. And as it relates to the food banks, it’s very similar. I think for our food bank leaders and food bank staff who are on the ground day in, day out and handling food, engaging with those struggling with hunger it’s been a lot. It’s been grueling.
And they have done an unbelievable job at rising to the occasion, and they too have thought about how they support their staffs to get the time. But also they’ve thought about how they ensure that their staffs have the resources they need to live their lives. Again, as I said, everyone is experiencing this a little bit different. And the Feeding America leaders and the food bank leaders are finding ways to make sure that everyone has what they need. You asked about volunteers. It really focuses on communication. Making sure that those who are still able to come in can come in and understand what is required and have visibility to the knee, but also making sure that we’re communicating what doing to ensure their health and safety when they do come in. That’s been an important focus and effort.
Andrew:
So Paul, you talked before about acquiring food either through donation or purchase. And I remember at the early part of the pandemic, we heard a lot of noise about prices dropping and it being too costly for farmers to bring their products to market and pouring out thousands of gallons of milk onto the ground and deciding that livestock wouldn’t be brought to market, et cetera, et cetera. Tell me about how the economic suspension effected Feeding America’s ability to secure food.
Paul:
Yeah. It has required us to really lean into our, what I would call sort of public private partnerships. I mean, you can use that phrase pretty generically and I think for us using in the example that you shared it meant that we not only reached out to our donors, but also reached out to dairy industry groups. Partners of ours, one explain the need that’s out there, but to understand the environment that exists for farmers. So that is really important for us to understand to ensure that as we’re thinking through a model that encourages capture of commodity like milk and then packaging and distribution of that commodity that we’re doing it in a way that is reflective of the realities. And I think that’s not always easy in prior to the pandemic.
And as I noted, the supply chain operating model was such where excess agriculture products, whether it be produce protein or dairy in particular, there’s a market that allowed it to flow down to the food banks that pandemic and the cost to Susie with pandemic changed the dynamic and values putting us in a position where we’re having different conversations with our partners to think through, how the model have to change? How do we fund that model? I think the challenge for us or opportunity for us to think through what the funding model is now for the longterm, knowing that this dynamic may be here for the foreseeable future.
Andrew:
Let’s move on to larger market, the not-for-profit industry, how is the and let’s lump in not just Feeding America, not just food banks, but all not-for-profits, how enough for profits in general fairing through the crisis?
Paul:
It’s interesting. Prior to the pandemic, this is a data point from a national council of non-profits, but prior to the pandemic, about half of all non-profits had less than three months of cash on hand as a reserve.
Andrew:
Wow.
Paul:
It’s a lot. Pandemic hits and given some of the surveys that have been done and our charity navigator did one, the responses are in North, let’s say three quarters of respondents say they’re suffering financially. So the access to financial resources or donations has been going down. That then means, so if you’ve got 80 plus percent of the respondents, and you’re not saying, “Oh, non-profits,” but other responses to the surveys, if their financial resources are going down, that means that they’re also cutting program. So those programs are intended to support those struggling with housing, employment, health, you name it, it’s being cut. And then what’s also then happening, which is also seen on for-profit side, they’re cutting staff. And I think that’s the broader nonprofit landscape. You’ll see that it’s the non-profit landscape is experiencing the pandemic similar to the for-profit landscape in the sense that if there’s contraction.
Andrew:
Okay. So now we went from Feeding America to not-for-profits, let me bring it back down to the hunger relief industry going forward as the crisis continues eventually the world finds balance. What do you expect the hunger relief industry will face as it relates to recovery?
Paul:
I think first and foremost and I know I’m repeating myself a bit, but it’s the sustain demand. So to go from roughly 40 million Americans struggling with hunger to almost 60, we don’t know where that’s going to go. So unemployment could continue to go up if in the fall there’s another strong resurgence of the virus. The increased demand is a challenge and opportunity in the sense that we’ve got to rise up to address the demand. I think an opportunity for us is and I talked about this a little bit when I talked about public private partnerships, but thinking through how we continue to work with our national and local partners. Everyone has a set of resources that they can bring to bear to support those struggling with hunger.
Yeah, our resources, the scale and the access of the food, but there are other resources out there and we want to make sure that we continue to find those opportunities to ensure that one plus one equals three, not just two. I think another key piece it comes back to, and this is all sort of highlighted by the pandemic. I referenced sort of the volunteer network. Volunteers historically at least in the charitable food system are older. And so given that, I think there are a number of questions that we have around, how do we think through a model that creates more diversity from a volunteer perspective to ensure that we are safeguarding against future challenges and constraints to the operating model.
And I think the one other piece, how do we provide access to food on the ground? We tend to use the term the last mile and I’m sure you and many of the folks that are online right now, seeing the pictures or the news stories about lines of cars. And I think for us, we’re thinking about are there different delivery models or delivery systems that we can put in place to make sure that we are more effectively getting food out to folks?
Andrew:
So before you talked about your staff and your volunteer staff as well, in a recent conversation I had with a CFO at a Midwest based branded food company, he shared an interesting bit of information. You talk about how the pandemic really affects organizations. I hadn’t thought about the fact that volunteerism available volunteer resources, dissipated when the pandemic picked up. That makes perfect sense in hindsight. Pardon me. This particular CFO shared with us that one of the things that they recognized very quickly was because they have primarily unskilled workforce with a high population of folks who were recently immigrants to this country, and with a larger concentration of those employees in certain ethnic groups that tend to be very close knit families with a lot of folks living in small environments, in small apartments, small homes, they recognize that their employees were not necessarily following social distancing and taking precautions at home, and we’re in essence safer at the factory than they were in their own homes. Which if you think about the ramifications of that poses some very significant issues.
So everything’s changing, everything’s different including how we manage people and including supply chain. Share with me if you will, relative to hunger relief in particular the permanent changes that you expect will stick around after the world finds balance, whenever that is. And you feel free to address that from an employment perspective, from a volunteer perspective, from a supply chain perspective, however you’d like.
Paul:
Focus on the sourcing piece. So our ability to get access to food, historically the biggest sources of food for us come from the retail channel and the manufacturing channels, for consumer packaged goods. We called them mature channels and for the last five plus or so years, we have been focusing on what I would say is called Agra sourcing, produce protein dairy. Your referenced area earlier. And understand the availability of food at that stage, you could consider it more like a raw material. Our goal is to get access to that food and then make sure that it’s processed and packaged in a way that it could simply be bagged. But when you’re talking about protein and dairy, it’s probably requires some amount of processing and packaging in a way that it can be consumed by an individual or family.
And we are thinking about how the model evolve and our belief that there’s still some opportunity in retail manufacturing, but the bigger opportunity may be on the Agra sourcing side. We continue to think about not only access to the food but, meeting the capability of our light processing and packaging. Is that something we do? Is that something that we partner with on? There are a number of pilots that are going on across the food bank network focused on that. Really understanding what it would take to put a clean room in a food bank to handle protein, to process the protein and package the protein. What does that look like? Is that sustainable economically? Et cetera. And so that’s those are the types of things that we are looking at as it relates to sourcing of food. Knowing that not only is it a source of supply, but it’s also a nutritious source of supply. That’s an important driver of us leading into sort of produce protein in the area.
Andrew:
The individual who’s uneducated about Feeding America’s processes and about the food bank processes would think that this is as simple as making phone calls and sourcing donations of food, but what you just described is a very sophisticated, very involved process. And it sounds like you’re focused not only on sourcing, but sustainability of those food products as well.
Paul:
Correct.
Andrew:
Wow. That’s tremendous. Let’s talk about global economy, US economy. From your view Paul, you see different aspects of business, you see different aspects of many things, what do you see as the near term and long term effects of the pandemic and the business shutdown on the US and global economies?
Paul:
That’s a good question. I would say, first at the beginning of our conversation, I talked about the disparities that exist across certain communities. And unfortunately what we’re saying is that those disparities are widening. And that is an unfortunate outcome of the pandemic. If an individual or family is already struggling with access to resources, this is only making it harder. And in the short term and the long term, the concern we have is that those gaps get wider. Yeah. I would say second area, bit of a shift. So from a technology perspective, how many decades, whether it’s in the US or globally, people have talked about technology changing processes and industries, and it was already an accelerator. I think over the last several months it’s been demonstrated as a key tool and an enabler for change, and that is going to increase and it’s going to impact, I think a number of different markets.
And so example being, we continue to work from home as an organization, we still have office space. And so whether it’s us or any other company or organization is probably scratching their head and asking themselves how much office space do I really need? And so that’s sort of one example of how technology will impact the broader economy. And I think the third thing I would focus on is at least as it relates to the terrible food system, the operating model. So I think and it’s a conversation that the network of food banks has been having for some time around ways to ensure that the operating model is as efficient as possible, but it may have to evolve and it will vary by community, but I use the example of a the part that waits for us to more directly get food to individuals and families while also making it cost-effective. I think that’s always the challenge. They costs of the operating model and the pandemic certainly highlighted our need to think through how we do that in a different way.
Andrew:
Paul, are there any particular economic indicators that you’re looking at that’ll a signal for you that the economy is bouncing back?
Paul:
The primary one we’ve been looking at has been employment. The unemployment statistics right now as our indicator. We’ve been using that to translate that into how that’s going to impact poverty down the road and how that we believe it’s going to impact food insecurity down the road.
Andrew:
Well, Paul you mentioned before about technology and we’ve all heard for a long time through the pandemic, the fact that healthcare workers, first responders, delivery folks, and others who supported all of us during the pandemic and continue to do so. Were the heroes in this time. And I think that’s true, but I also think from a business perspective, not to diminish the human part of what many folks are experiencing, but from a business perspective, I think you’re right. Technology is what saved the day. And I do believe that the IT Executives are really, the unsung business heroes throughout this entire mess. When you agree.
Paul:
I’m laughing because our Chief Information Officer would probably knock her head, that’s right.
Andrew:
Well, I promise, I don’t know her, and she did not give me $20 for [inaudible 00:46:17].
Paul:
As it relates to ensuring that our organization can continue to be effective, they certainly had been instrumental in doing so. It’s still tough for me to discount the folks who’ve been on the ground. Loading trucks, putting food in cars. Listening to the stories, without them in addition to our technology team we wouldn’t be able to do what we’re doing. In addition to our donors as well. Our model is different than the for profit model. We rely on the generosity of corporations and individuals and foundations who believe in the importance of addressing hunger. We rely on them and without them, it’d be difficult for us to do what we do.
Andrew:
Well, Paul what you’re doing is incredibly important, more power to you. Feeding America has been around, you said for about 41 years. And the entire hunger relief food bank, kitchen pantry industry is essential. It’s a damn shame as to how many people need help, but thank God for an organization like yours. That you’re around and that the mission is so clear. And there’s so many people within your organization and supporting your organization who recognize that and who are pitching in. I want to thank you very much for participating with us today Paul. This was great. You’ve been very transparent with us and shared some good insights.
I also like to thank our guests for joining us. So we have some questions that I’m going to pose to you in a few moments Paul, but I want to remind our guests that we’ve got some other exciting events coming up over the next few weeks. So those events are all posted at cfostudio.com, visit us and come join us for those events as well. Now we’ve got a couple of questions. We have one from a friend of ours, Michael Manley, who’s the CFO. Michael, nice of you to join us. You’re interested in understanding how Feeding America, their re-handling capabilities. Specifically issues concerning repackaged goods in tote bins and so on. Any particular comments in that regard, Paul?
Paul:
I would say that as it relates to shelf stable items or pre packaged items, that is a core to what every single food bank does. So there could be two to three bank coming from a grocery retailer and either a food bank staff or volunteers source that product and re-put it in different boxes that happens every single day. I think per my earlier comments around taking more and I used the phrase raw material, but product that has not been yet processed.
So it could be product straight from the field, or it could be protein that come from a slaughterhouse as an example, or dairy that comes from a farm, that’s new to us. We have pirates in place in a number of food banks, testing the effectiveness to do that. And then we need to think through how we could do that at scale, that’s a new capability for us, and we’re doing that while also thinking through whether there are, I mean, there are companies that do that already. And so we are also asking ourselves, how is there a way for us to partner and find excess capacity to help us do that in a more effective way?
Andrew:
Understood. So we have a very interesting guest, someone you and I both know Bob Barry is online with us. Bob it’s nice to know you’re with us today. Thanks for joining us. For our guests, Bob Barry is from New Jersey and he was a former CFO of the community food bank of New Jersey. So he knows a little bit about this industry. Bob is asking, are you seeing the cost to acquire food increasing now more than prior to the pandemic?
Paul:
In the short term, the cost per pound to purchase food did go up now. We suspected in conversations that we’ve had with our donor partners, as well as other food industry experts. We expect that to normalize, but it in the short term cost to acquire the food has gone up.
Andrew:
Yeah, I can imagine. And have peripheral costs gone up as well? Handling and shipping and so on?
Paul:
Yes. Now I’m going to go back to my comment about volunteers. And so in the model pre-COVID, a food bank could have volunteers work in the warehouse or volunteers drive food to food pantries. Post-COVID or in the pandemic, those are expenses that now show up. And so from that perspective, those are new costs that are appearing that food bank leaders have to manage.
Andrew:
And then I would imagine like every industry add to those costs, the additional cost now of deep cleaning and constantly sanitizing facilities just… Yeah. Wow. Well, we’ve got one more question from the audience from our good friend, SAS Mukherjee, CFO of York Risk and Cedric. SAS always nice to have you here with us. SAS writes, while the government continues to pump money into rising stock market, creating wealth for a small fraction of the population. What do you think we’re getting wrong? Or what is deteriorating with respect to social and economic construct of our country? And what’s the solution from your perspective? Wow, that’s a good one question.
Paul:
That’s a simple question.
Andrew:
He never asks uncomplicated questions and they’re always great question.
Paul:
I think there is an opportunity for us to spend more time understanding the broader financial benefits and I’m going to use federal nutrition programs as an example where there are some who have argued that federal nutrition programs are an expense that are not needed and yet if you look at some of the data, it’ll show that not only are you supporting individuals and families who need it you’re also reducing certain costs. So if someone has food and nutritious food, their downstream health expenses are gonna go down, which will then reduce exposure that hospitals or communities where the government will have in the longterm.
If we are providing resources whether it’d be in the form of food or snack benefits to individuals and families, those dollars are flowing through retailers or small grocery stores or convenience stores. So the money is flowing into the economy, I think we need to have better conversations around the economic value of certain programs versus trying to politicize them. Now I get, I say that and I may sound a bit naïve, but I think that’s a big opportunity for us to make sure that we are clearly articulating what we think the true benefit evidence.
Andrew:
Well, nothing naive about wanting to do the right thing and keep politics out it. So one follow up question, any comment on the increase in the number of employed people who are utilizing food banks?
Paul:
And so this is something that we saw in the 2008, 2009 timeframe. So the economic class, you have unemployment going up, but you also have underemployment going tremendously. So you’ve got individuals who have multiple jobs, but still don’t have enough resources available to them to withstand one blip. One blip could be, got in a car accident, not my fault, but I still am out of pocket. I don’t have enough for my deductible. I still have $300. That’s a material blip for a number of people and so it’s something that we have been very well aware of and that we’ve experienced. And again, as I mentioned, there’s a spotlight audit during the initial 2008, 2009 economic crisis but now during the pandemic, it’s something that’s very real and it’s a reminder to us that a lot of our friends and neighbors need some help.
Andrew:
Yep. Paul, this has been tremendous. As I said, Feeding America is doing wonderful work, more power to you guys. I hope that at least CFO Studio we’ll have contributed a little bit of energy to the tremendous effort that Feeding America and all the food bank systems are putting forth to keep people fed in this country. Wishing your strength, wishing you good luck and an easy road in accomplishing the mission. And I want to thank you for sharing your thoughts with us on CFO Studio.
Paul:
Thank you, Andrew. I really appreciate the time and the opportunity to have this conversation. I appreciate it.
Andrew:
Anything we can do to support Feeding America. I hope you’ll call on us. Next time I’m in Chicago I hope I have an opportunity to say hello to you. It’s been a pleasure. Stay healthy, stay safe. To our guests, thank you for joining us today. Come see us again and to everyone, God bless you.