A couple days after the papers reported that the Redwood Empire Food Bank is purchasing a larger warehouse for $5 million, I opened my email to find a subject line reading, "Extravagant Expansion." The message came from a generous donor who questioned how much of his donation is actually going to food bank programs for hungry people and how much is gong to buy a new building.
The simple answer is this. No donations in support of our programs to feed people are being used to purchase a new warehouse.
I have been anticipating this feedback for the four and a half years the REFB has been quietly raising money -- our Blueprint for Ending Hunger Capital Campaign -- to meet the growing need for food assistance in our community. I am acutely aware that a lot of people can be fed for the cost of purchasing a building. I replied immediately with a goal of sharing the sound decision process that went into this necessary and historic endeavor. I would like to share that with you.
The REFB long grew out of our Industrial Drive facility in Santa Rosa. We are now leasing three additional warehouse spaces, which cost us in excess of $100,000 a year. I would imagine that paying the rent isn't how any of our donors want their hunger relief dollars to be spent. We pride ourselves on being cost efficient, with $4 of food reaching people for every $1 spent. Every time we expand to have to lease additional warehouse space, that ratio goes down.
The funds used for our Blueprint to End Hunger capital campaign (beginning this month with the acquisition of the new facility on Brickway Boulevard at the Sonoma County Airport Industrial Park) do not come from any annual operating support for feeding today's hungry people. Instead, our capital support has come from individuals who are interested in supporting these types of projects now and into the future. In fact, many donors support both our current day-to-day programs to feed hungry people as well as the capital campaign.
There are many empty buildings in Sonoma County due to the economic downturn, but we found the only one that can serve as a hub for 149 non-profit or faith-based organizations that work with the Redwood Empire to collectively distribute 13 million pounds, at a cost of $20 million, of food annually, reaching 78,000 people every month.
The fact is we don't just need a warehouse. Helping so many people struggling to put food on their tables requires racking, coolers and freezers, loading docks, volunteer workspace, and the list goes on. Quite simply, it would be bad business to make such sizable financial improvements to someone else's space.
And, when it comes to leasing versus buying, we would have spent $18.6 million in 25 years for a similar leased space, earning zero equity for the same time period. Conservatively, we estimate that our Brickway Boulevard facility will be worth $8 million in the same 25 years.
We do not waste money. In fact, with an administrative overhead of just 3.4 percent there is no doubting that we take our stewardship of community support very seriously.
Finally, the real opportunity cost of not consolidating our operation and purchasing a larger facility would have been 41,000,000 missing meals over those 25 years. As the primary hunger relief organization in our community, that figure is unacceptable.