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Foodbank South Africa: some insight for the discerning social investor

It’s always exciting to see new social ventures being launched. The energy, drive, passion and sheer persistence needed can make a social enterprise start-up a harder exercise than most entrepreneurs could ever imagine. This is largely due to a lack of capital (both human and hard cold cash), collaboration and even understanding by potential stakeholders and investors as to a social entrepreneur’s motivation.

If I look at general foodbanks in South Africa, be they soup kitchens or say Woolies (gotta love Woolies) – they report huge chunks of CSI spend in Rands and cents, most of which is spoiling food, which I would love financial analysts to judge the true value of) or Pick ‘n Pay distribution points – the procurement and distribution of food at a grass roots level always does seem a challenge, not to mention the pain of perishables which are on their last legs anyway (especially if procured from a supermarket).

Thus Foodbank South Africa’s (http://www.foodbank.org.za/) inclusion as a network of foodbanks which operate as a collective to the NGO sector seems, at first glance, pretty inviting. But read between the lines and you will find (much like a stripper whispering ‘i love yous’ as she nicks your credit card), a gapingly obvious business model flaw which will leave investors gasping for air after 5 years (especially if Foodbank achieves its vision of ‘halving hunger within half a decade’.)

This statement out of the SAGoodNews article (http://www.sagoodnews.co.za/general/banking_on_food_security_for_sa_s_hungry.html) got me thinking:

‘Food is mainly acquired through donations from major retailers and manufacturers as well as government agencies, private organisations and individuals. The food is then stored safely and sorted into nutritional packages before being made available or delivered to relevant agencies.’

1. Are you kidding me? Where is the cash going to come from to fund the operating costs of this ‘beast ‘over the medium to long term? If they get free products, free warehousing and decreased distribution costs, this business will be an animal to fund, especially if they intend on ‘removing hunger altogether’.

2. Like most feeding schemes, the risks are enormous. If a big donor pulls out, people reliant on the handouts will starve.

3. There is no sustainable solution to this model, it ONLY provides a massive financial liability. One also has to remember that monetary resources are limited, especially in the corporate donor market and therefore what one is investing into a Foodbank is being taken from somewhere else.

Okay, so lets not harp on the problems but rather look at what solutions are out there in the market which address food security, create productive capacity and wealth and is ultimately sustainable. ( nuff said but please, if you are a social investor, please be ‘penny-wise’ in the choices you make and place your ‘business cap’ on before your conscience runs away with you as you think about the starving African masses)

So here are a couple of examples…

Please Note: No 2 and 3 below are projects of Heart (our social enterprise incubator)