Monday, March 23, 2015

FOOD FOR ALL ERA 18: Our Last Hurrah!

"Where is Melrose?"

Those were the first words I remember coming out of the mouth of my new boss, Michael Donkis, the new CEO of FICAH/FOOD FOR ALL when he arrived at our humble headquarters in Redlands. Michael had been the paid executive of the Food Industry Crusade Against Hunger for the past few years. FICAH was headquartered in Washington D.C. with donated office space from the Food Marketing Institute (FMI), the lobbying arm of the supermarket industry.

It was sometime in early 1997, after our boards had concluded the legal paperwork that merged our two organizations. I suppose I could have fought a little harder. I might even have demanded that I be given the prominent staff position. Perhaps holding out that Michael and a couple of his staff would have to go. Our board had given me permission to abort the entire merger if I was not totally comfortable with how it was going. Hindsight is always better?!

We were beyond the point of no return. FOOD FOR ALL was already set to enter the Chicago market with Jewel-Osco stores. We had negotiated an entry into the Philadelphia metro area. It looked like we were truly ready for the expansion we had envisioned. I arranged for a trip to Chicago for Frank Knutson, who was on our merchandising team, and me, for the set up of FOOD FOR ALL displays throughout the Chicago and northern Illinois area. Linda was also set to make the trip to arrange for the organization of a local grant board and volunteer structure for this new area. To our pleasant surprise, everything went smoothly and within ten days all the stores were installed and a local grant board was organized, trained and ready to go to work.

Neill Richards, our east coast staff person, meanwhile was moving things along in the Philadelphia area in preparation for an expansion down the east coastline. We were anticipating that our newly merged organization would make for relatively easy sailing for our year round program. It might even be possible to convert some of the formerly Holiday only supermarket chains.

Two trends were going to raise obstacles for us, one external and one internal. The external was our old friend/enemy "mergers & acquisitions." Safeway was taking full control of Vons in Southern California and Safeway had never got on board with our idea. So almost as soon as we got our program going in the Vons Pavilions stores we were notified that they were not going ahead chain-wide. Ironically, due to our publishing a promotional article for Vons in our newsletter, we discovered that Ron Burke, new owner of Ralphs, had his corporate ego bruised and almost overnight ordered his hatchet man, Darius Anderson, to inform us that they were discontinuing the FOOD FOR ALL relationship. To add insult to injury, in the meeting I had with him and his assistant, Sharon Davis (yes, wife of Governor Grey Davis), that Ralphs would be setting up a "copycat" (my words) program of their own. No amount of reasoning was of any avail. And of course, the new Ralphs program lasted less than a year and in any case the company was sold to Fred Meyer within the next two years.

The internal situation had to do with conflicting cultures. I could try to blame it all on Michael Donkis, but that would hardly cover it. FICAH was made up of retired, and a few current food industry executives, who were used to operating in a traditional top-down style within an "old boys' network." We had spent more than ten years working to develop a grassroots, bottom-up and participatory organization, including our board of directors, many of whom were food industry executives who had to be "trained" in a new style of management. It gave me a little comfort when, in one of our combined board meetings as we were trying to bring the two organizations together, one of our food industry members said to the group: "You know, at FOOD FOR ALL we make decisions a little differently than you have been used to. We make decisions by consensus."

It was late spring of 1997. Michael showed up at our office in Redlands driving a shiny red convertible. He mentioned that he paid for the upgrade himself, letting us know that he wasn't living high off of hungry people, I suppose. He was on his way to Los Angeles to look for an apartment. Within a couple of weeks he had indeed moved into one and it was within a few blocks of, yes, Melrose Avenue. Our staff actually got to see it when Michael invited us for a "housewarming brunch."

Michael Donkis fit in well with the top-down culture we were trying to merge with. While giving us assurances that the FOOD FOR ALL way would not be lost, he was making it clear that he was going to be in charge. There would be a few minor skirmishes and negotiations over the remaining months of '97. You discover a lot about your own mind games when confronted with a sudden loss of control which you never really had but convinced yourself you did.

When I finally realized the direction the organization would very likely be moving, I made one last appeal to the officers of the new board. I should have known that Michael would be backed up. I had been in a similar position with a few employees I had conflicts with and our board always stuck with me. It was becoming clear that I was to have little or no part in the staffing decisions of the future organization. Things came to a head when, one day Michael took me aside and said: "I've decided we need to let Neill Richards and Bill Timrud go. Why don't you phone them?" Neill and Bill had both been key in holding down our entire operation in the eastern U.S., Neill with us almost from the beginning in several roles and Bill managing all of New England. When the shock wore off that I was going to have to tell them their services were no longer required, I informed Michael that I was not going to end their jobs with a phone call.

I got on a plane for what was to be my last trip to Newark and Hartford in service of FOOD FOR ALL. Neill picked me up at the Newark airport and we made the two hour trip to Hartford where, over dinner, I gave them the news and their termination notices. Bill was to make the arrangements to close the Hartford office. Neill worked out of his home in Ridgewood, New Jersey. I also let them know that when I returned to California, I was turning in my own resignation. Before I left for home, I phoned Linda, who already had sensed what our decision was. We were both sad but resigned that we had given 13 years of our lives to putting something into history that made a difference.

So what do you do after an amazing 13 years? You take your final vacation time over Christmas and New Year. And you go to India. No, not to find a guru or live in an ashram. You go with some friends and visit some of the village projects that FOOD FOR ALL had given grants to.

Then you come back for your going away party.

Wednesday, March 18, 2015

FOOD FOR ALL ERA 17: Mergers & Acquisitions

I once thought I knew a lot about the food industry. Especially the retail supermarket end of it. I studied it. I researched the 50 major markets in the U.S. I had them all plotted on a big map in the FOOD FOR ALL “war room” in our national headquarters at 112 ½ East Olive in Redlands. I knew who all the major players were in each of those fifty. I had actually lived in several of them: Los Angeles, Boston, San Francisco, St. Louis, and Minneapolis. We had managed somehow to have a presence in eight of them and were positioned to add three or four more in the next couple of years. It is the fall of 1996.

FFA 87 to 97 (2)

As I mentioned in the previous episode, FOOD FOR ALL was at a turning point. We had determined policies from the conception of our project that would require us to attract the participation of supermarket operators in a year-round effort, and that would make it imperative to attract support from food manufacturers and suppliers to sustain this program aimed at nothing less than reducing and ultimately eliminating hunger. The policies were simple. Ninety per cent of every dollar contributed at a supermarket checkout would go directly to those nonprofits working in the anti-hunger field, three-fourths to the local area where they originated, and one-fourth to international projects that were aimed at self-sufficiency.

FOOD FOR ALL Dollar card  FOOD FOR ALL bar-coded card

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I had also done the math. We needed to have FOOD FOR ALL displays in about four thousand supermarkets to make our program sustainable. We were currently in a little over thirteen hundred.

So what was making this such a difficult idea to sell? We could say the business environment. We might assign it to corporate greed. Competitiveness for the consumer dollar. I am continually haunted by the conversation I had with a food industry lobbyist at a Food Marketing Institute convention a few years back: “I applaud you for your efforts. But I must tell you that you have no idea of the forces that are marshalled against everything you stand for.” I took that into my subconscious but it did not immediately register. What were these “forces” he referred to? I have now reflected on this and have decided that I have not a clue. But I have named these forces “mergers & acquisitions.”

When we first introduced the idea of a “supermarket checkout bar-coded contribution to help end hunger,” we had no idea of the environment we were entering. We lived in Redlands, California, a small community in the Inland Empire, an hour from downtown Los Angeles. We lived two houses down from Gerrard’s Cypress Center. We shopped there. We also shopped at the Lucky Store on Cypress and Redlands Blvd. There was a Vons Supermarket in the Redlands Mall. Stater Bros. had one store just off the 10 freeway on the north side of Redlands. That was the extent of our knowledge of the food distribution system. It wasn’t long before the Vons store closed and moved out to a location where the Big Lots store is now and then closed.

This is the environment we entered with FOOD FOR ALL in 1986. On the occasion of our first test in two supermarkets we received a check for $250 from Stater Bros. supermarkets, with a letter that endorsed our program but essentially bowed out of the initial test. This was after a meeting with Jack Brown, then CEO of Stater Bros. in which we were given the clear message that “this is a great idea and I am sure it will be successful. Stater Bros. will probably be one of the last companies to participate.”

What was not clear at the time of our meeting was that Stater Bros was in the midst of a fight for control of the company. Jack had been hired as CEO in 1981. Shortly after that he engineered a buyout of the company with his La Cadena Investments Group, and then tried to take the company public in 1985 (the year FOOD FOR ALL was incorporated). In 1986, Ron Burkle and his Yucaipa Companies attempted a coup which was unsuccessful. Jack Brown was elected chairman and by 1987 Stater Bros. became a private company again. It was not the last company to join FOOD FOR ALL. Neither was it the first, as Jack has been quoted saying. He may be referring to that first check. I have my story and Jack has his, but as our congenial Vice President, Joe Biden, says: “They have a right to their own opinions, but not their own facts.”

The environment Lucky Stores, our actual first major chain participant, was operating in was just as volatile. This was the time of mergers and acquisitions, leveraged buyouts, boardroom battles and stockholder proxy fights. Lucky was being acquired by American Stores, a large holding company that owned Alpha Beta Markets, Jewel-Osco stores in Chicago, and several others around the country. Eventually, Albertson’s would acquire American Stores and the Lucky brand would disappear and become known as Albertson’s. Back room deals were being made.

Offers tendered and rejected and re-offered. Supermarkets were being sold to competitors and many closed to complete the deals. We were at the mercy of forces way beyond our control and my pay grade. My friend and FOOD FOR ALL board chairman John Benner once said to me when we were trying to figure out our next move: “One thing I’ve learned is that when the elephants are dancing, it’s best to stay off the floor.” These forces I mention both helped and hindered us. FOOD FOR ALL displays did make it into a number of Albertson’s divisions and Jewel-Osco in Chicago.

Vons had a similar exposure during the FOOD FOR ALL era. A leveraged buyout meant a change in management just at the time we were approaching them. Then Safeway Stores, which was just leaving the Southern California market as we arrived, managed a partial purchase of Vons and will take total ownership in 1997.

Ralphs, one of our strongest supporters and participants, was acquired in 1994 by Yucaipa Companies, headed by Ron Burkle, who had made the attempt to acquire control of Stater Bros. when FOOD FOR ALL began. He sold the company after only three years to Fred Meyer, another big operator in the northwest, which was in turn bought by Kroger, a Midwest giant.

I give you all of this as background to the mergers and acquisitions theme as it played out in the life of two nonprofit organizations, FOOD FOR ALL, Inc. and Food Industry Crusade Against Hunger (FICAH). I had attended one of the very first meetings of the FICAH board in 1985 in Washington, D.C. to enlist their support of our idea. At the time I was assured that there was no conflict between us and we should continue to cooperate where possible. But they were not ready to adopt us. FICAH ran a holiday fundraiser using coin canisters at supermarket check stands. FOOD FOR ALL displays were year round. Both organizations depended on the supermarket companies for display space and promotional support. At some point, after FICAH hired an executive who was a marketing professional, bar-coded tickets began to replace FICAH’s traditional coin boxes. Although it was still a Holiday appeal, retail supermarket executives began to see the two approaches as duplication of effort. Especially since we were both approaching their suppliers for financial support. Most of them did not really understand the differences and never quite got what a strong connection FOOD FOR ALL made possible with their customers, many of their employees, and the local nonprofit agencies we were supporting.

During our fiscal year 1996-97 we were approached by Michael Donkis, staff executive of FICAH about joining our efforts and eventually merging our organizations. It sounded like a good idea. We began with a meeting between John Benner and me and three board members of FICAH. Things moved quickly after a joint committee was appointed. Our attorneys drew up a plan for dissolving FOOD FOR ALL as a corporation and merging it into FICAH. So we would become a wholly owned division. I later learned that the FICAH board viewed our merger as an acquisition. Since I was approaching my 60th birthday and Michael Donkis was much younger, we decided that he would be the new President/CEO and that FOOD FOR ALL would be the name of the point of sale programs. Further decisions about staffing would be made after the experience of merging our two boards and staffs, their four persons based in Washington and our thirteen plus in Redlands, Newark and Hartford.

Catalyst Fall 96 1  Catalyst Fall 96 2 1

FOOD FOR ALL’s Newly Named Newsletter Fall 1996 Edition

The merger was completed in January 1997. Linda and I were now officially reporting to Michael Donkis and so began a swift transformation of a grassroots, bottom up, participatory organization into what it would inevitably become. I will leave this chapter of the story of FOOD FOR ALL with these words:

“May the forces be with you!” They most assuredly will.

Monday, March 9, 2015

FOOD FOR ALL ERA 16: The Price of Success

My grandfather used to warn me with these words of wisdom, when he thought I might be stepping outside the bounds of appropriate humility: “You’re getting a little too big for your britches there, young fella’.”

As I read back over the FOOD FOR ALL annual report for our fiscal year from July 1995 to June of 1996, it appears that this was our most successful year in our eleven year history. $150,000 more raised from supermarket customers than the previous year. Additions of 75 Food 4 Less stores of the Ralphs chain in southern California; Ninety-one Waldbaum’s supermarkets in New York; Shaw’s in the Boston area; Edwards Super Foods in New Jersey.

FFA 95-96 Annl Report 1FFA 95-96 Annl Report 6

FOOD FOR ALL received a record $1,298,380 from customers of 1371 participating supermarkets and was able to make grants of $1,216,875 to 226 U.S. and 25 overseas anti-hunger projects. Food industry support was continuing to grow with 53 companies giving $187,000 in support of our expansion (Vic Lund, then chairman of American Stores leading the campaign).

FFA 95-96 Annl Report 4FFA 95-96 Annl Report 5

FOOD FOR ALL volunteers, numbering more than 650, helped maintain store displays, educate customers and employees, review grant applications, and conduct site visits to anti-hunger agencies.

FFA 95-96 Annl Report 2

Things are not always as they appear. I might say that things are never as they appear but that is another discussion.

I had mentioned in a previous episode of the story of FOOD FOR ALL that I had allowed to be hired three staff members whose job it was to enlarge food industry support, expand financial capacity for expansion, and increase public awareness of the need for resources to fight hunger. Instead, these three staff members decided their most important tasks were searching for a new location for our offices and getting rid of our founder. As I was busy attempting to sell our program to the food industry, my attention was taken away from what was happening within our growing organization. Linda, on the other hand, was having to deal with the day-to-day internal workings of FOOD FOR ALL. One day she finally got my attention and sat me down for a “reality check.” She had done her homework: a detailed cash-flow projection that clearly showed me that our organization was heading down a financial rat-hole. We could not afford to keep the staff level we had. And worse, the three we had hired were not doing the jobs they were hired to do.

Now what? It was clear we had an unsustainable situation. It was also clear to me that there were people who were not performing. Worse, who were undermining the organization. How do you get rid of an infection? Quickly! I called a meeting of the three staff members affected, along with Linda, the fourth staff member affected. I announced that their positions were to be eliminated, effective immediately, and that Linda would be shifted to a volunteer status, without pay. This was not well-received.

Our thirteen member board met on February 22, 1996. I presented the situation. Our December 1995 and January 1996 revenues had not met expectations. A detailed cash flow projection (the one done by Linda) revealed that we were running at a deficit and that we needed to eliminate $200,000 in expenses, which would require the elimination of four staff positions and Linda going on “unpaid volunteer status” for the remainder of the fiscal year. Attorneys had to be consulted due to three of those let go threatening a law suit.

The thirteen member FOOD FOR ALL board met again on April 25, 1996. Projections of customer contributions from stores were again under expectations due to an over-estimate (probably mine) of chains that did not come into the program. Discussions were beginning with Food Industry Crusade Against Hunger (FICAH) toward resolving duplication of efforts and the fact that retailers were becoming restless at having to support two fundraising organizations in their stores. A meeting was set for FOOD FOR ALL chairman and president with Michael Donkis, staff executive and Karl Schaffer, chairman of FICAH, at the upcoming Food Marketing Institute trade show to set guidelines for a dialogue. A FOOD FOR ALL committee was appointed to conduct the dialogue.

While all this drama was going on, FOOD FOR ALL staff and boards dealing with our grant-making were continuing to work hard training our volunteer Local Grant Advisory Boards who were charged with making recommendations for grants that would address root causes of hunger. The food security movement, which involved such projects as community gardening and community supported agricultural, and micro-loan programs focusing on women’s advancement, were being explored as significant directions for the future. FOOD FOR ALL was one of the very first supporters of food security initiatives, which has today grown into a huge movement.

Some examples of FOOD FOR ALL grants made during our fiscal year:

A $25,000 grant was given to California Healthy Cities for their work to put food security in the forefront of municipal decision-makers. The grant was to be given to a community with a specific plan for increasing access, availability, and use of affordable nutritious food in low-income neighborhoods. A three organization collaborative in the City of Berkeley received the grant.

$25,000 to ACCION International to develop a small loan program for low-income people in San Diego to start their own businesses.

$20,000 to Nueva Esperanza in Holyoke, Massachusetts, to initiate a fish farming project for new sources of food and new jobs.

$10,000 to the Watts Foundation Community Trust for the Jordan Downs Urban Garden Project to provide fresh produce, jobs, nutrition education, and business opportunities to residents of a public housing project.

FFA 95-96 Annl Report 3

FOOD FOR ALL was making a significant contribution in the movement to eliminate the scourge of persistent hunger. We were also forming new alliances within the anti-hunger movement. Forces beyond our control were beginning to take their toll. But we were not finished yet. We were not going to go down without a fight. At least I wasn’t. But don’t forget Grandpa’s words.