Food Banks in a Pinch : Donations Dropping as Post-Merger Regimes Cautiously Feel Way

Merger mania, which has led to belt-tightening throughout the food industry, may be having an unexpected side effect: Food banks for the hungry are reporting an unusual drop in corporate donations.

“I hate to be the only guy on the block crying wolf, but it has hurt us and it’s going to continue to hurt us,” said Philip R. Warth Jr., president of Second Harvest, the nation’s largest charitable food organization.

Since last year, the disruptive takeover craze has removed key food contributors, such as Safeway, from the scene in Southern California and made some managers more timid about supporting charitable efforts, according to hunger relief specialists.

One example: Donations from local grocery chains to the Los Angeles Regional Foodbank fell to 659,000 pounds in 1988 from 710,000 the year before, according to the Southern California Grocers Assn.

“Because of the mergers and consolidations, you have a lot of stores with debts to service--and every penny counts,” said Steven Koff, president of the association.

Pinpointing the exact role of corporate restructuring in the decline is not easy. Other important factors hindered efforts to provide food to the hungry last year, including a major drought in the Midwest and a sharp cut in donations of surplus commodities from the U.S. government.

Moreover, contributions travel a twisted route from the surplus stocks of industry to the dinner plates of the poor.

Nonprofit Second Harvest, based in Chicago, gets corporate contributions of food and money nationally and then distributes food throughout the country. At the same time, local businesses--including outlets of national companies that donate to Second Harvest--may have their own policies for giving food.

Despite these crosscurrents, some people involved in hunger relief efforts point to signs that merger mania has taken a toll. Takeovers, for example, have caused the demise of certain companies that once took a leading role in efforts to fight hunger.

Primerica, a financial services firm in Greenwich, Conn., donated $724,000 to hunger and nutrition projects in the past two years through its charitable foundation. But when the company was taken over by Commercial Credit Group in December, the new owner immediately moved to shut down the foundation.

“The new rules are: ‘We took you over, and we don’t have to spend a penny on anything we don’t want to spend it on,’ ” complained one Primerica source.

This may help illustrate why Second Harvest--a past beneficiary of Primerica’s largess--suffered a decline in contributions during late 1988, despite earlier growth rates of as high as 30%.

“It’s certainly not an isolated case,” said Warth, whose organization last year distributed 400 million pounds of groceries to food banks in Los Angeles, Long Beach and many other cities. (Food banks then parcel out the food to soup kitchens, shelters, churches and other agencies.) In Southern California, Vons’ purchase of 162 Safeway stores last year eliminated a leading food contributor.

“Safeway was our biggest donator of all,” said Chris Renner, associate director of Food Partnership, which arranges shipments of donated food to food banks, including fruit, vegetables and other goods.

Grocery stores sometimes donate products that come in dented cans or are otherwise considered unsellable but safe to eat. Early last year, Renner was arranging several pickups a month from Southern California grocers; Safeway stores typically accounted for more than one of the truckloads.

But since last summer, Renner has needed to arrange only about one truckload a month of groceries provided by all local markets. “It definitely has had an effect, direct or indirect,” he said of merger mania.

At the Los Angeles Regional Foodbank, non-government contributions last year fell to 11.8 million pounds from 13.7 million pounds. The food came from private sources: food manufacturers, individuals and independent stores, as well as the big grocery chains.

“We’ve seen a decrease in donations. It’s there in our reports, there in our computer system,” said Doris Bloch, executive director of the food bank.

The Food Distribution Center in Orange County received 6.6 million pounds of food in 1988, compared to 6.9 million pounds the year before and 7.1 million pounds in 1986. Donations of leftover groceries from local supermarkets also fell sharply last year.

Management Changes

“These mergers and acquisitions have kept us at the same level for the last three years, when we should be expanding,” said Daniel J. Harney, executive director of the organization that supplies food to 222 charitable agencies in the Orange County area.

A possible explanation for the decrease is that mergers and buyouts throw relationships between companies and relief groups into disarray, at least temporarily.

“A lot of people in the management structure don’t know where they’re going to be tomorrow,” Harney said. “That’s what’s hurting us.”

As a result, local hunger-relief groups are seeking to strengthen their ties with Vons, a company not previously considered a pace-setter in food donations.

In addition, the long-term relationship with Lucky, traditionally a big contributor, is also considered uncertain. Lucky was bought last year by American Stores, an Irvine-based corporation that also owns Alpha Beta supermarkets and Sav-on drug stores.

“We’re very hopeful that the food industry will say: ‘Yes. We want to continue our donations,’ ” said Bloch of the Los Angeles Regional Foodbank, noting the dependence of charitable groups on private-sector giving.

Sensitive About Image

Food donations, of course, are just one type of corporate philanthropy. Overall, however, corporate donations to social causes have stagnated in the past couple of years, after a period of steady growth earlier in the decade.

Anne Klepper, who follows company contributions for the Conference Board, a private nonprofit business research organization, said that because of takeover threats and other restructuring issues, executives have less time to think about altruism.

“Corporate contributions are heavily dependent on the leadership and involvement of the corporate chiefs. And many leaders are distracted today,” she wrote in a recent article for the New York research organization.

Still, most companies are sensitive about their image as citizens of the community. Despite the recent declines, food firms contacted for this article all said their commitment remains firm.

“Obviously the whole company is being reviewed, but as far as the food bank program is concerned, we assume things will go on as usual,” said Caroline Fee, a spokeswoman for Nabisco Brands, which last year was caught up in the biggest buyout in history.

Similarly, Kraft, which was purchased by Philip Morris Cos., said its food contributions remain on track: “We have absolutely no reason to suggest that our continued support of the food bank program will change,” said Ronald J. Coman, director of community affairs for Kraft.

Retail-Level Pressures

In some cases, pressures may be greater at the retail level, where supermarkets face hair-thin profit margins and furious competition.

Because of such pressures, retailers are sending flawed items back to the producer more readily than they used to, rather than giving them away. And advances in inventory and ordering systems--and even more effective refrigeration--may be reducing the quantity of leftovers.

A spokeswoman for Vons suggested that the company had a somewhat different approach to donating food from Safeway, although she also said the firm--which donated 8,500 tons of food in 1988--was committed to a large effort.

Vons, for instance, is less inclined to leave donation practices up to individual store managers than Safeway was, she said. “As large as we are, we need to have some kind of central knowledge of what’s going on out there,” spokeswoman Vickie Sanders said.

Also, Vons might be more reluctant than Safeway to donate food that is near its expiration date, she added. “We’re a little more cautious, simply because we want to know that what we’re giving people is quality.” (Established relief groups have strict health standards for food they will accept.)

Vons estimated that its food donations to food banks, churches and other recipients throughout Southern California rose from about 8,300 tons in 1987 to the 8,500 tons in 1988.

At Lucky--which by some accounts has offered a shrinking portion of leftovers in recent months--the “donation level in California is the same as it has been for the last few years,” said Judith Decker, a company spokeswoman.

She acknowledged, however, that Lucky’s volume of national contributions would be expected to fall in light of its recent sale of 95 stores in Florida and 38 stores in Arizona.

Albertson’s also appears to have cut its Southern California contributions lately, but Gary Michael, a corporate vice chairman, said this merely reflects an ebb and flow in products available to give out.

“The circumstances change from time to time,” Michael said. “Sometimes you’re generating product (to donate) and sometimes you’re not.” Increasingly, charitable groups worry that circumstances will cause more and more times of scarcity.

“The reality is that the future may not provide as much as we’ve seen in the past from the food industry,” said the grocers association’s Koff. “We’ll do our share, but others in the community can’t expect the food industry to shoulder the entire responsibility anymore.”