To help the most people, give cash instead of cans

By John Arnold and Katherina M. Rosqueta

The holiday season is here. And in the spirit of the season, millions of people will donate to food drives. And well-intentioned food donations will needlessly leave millions of people hungry. Here's why:

In the traditional food drive, donors are asked to contribute store-bought food. It's then dropped into a collection barrel, piled around a Christmas tree, placed on a church altar, or the like.

For every $10 spent that way, $10 worth of food goes into the charity food distribution system. But if the receiving charity packs and gives out the food to families in standardized boxes, research has shown that as much as half of it isn't used. This is not because the receiving family isn't needy, but because they can't use or don't know how to use some of the food they get.

So that $10 gift may end up providing only $5 worth of actual relief. What's more, because donations to food drives are nearly impossible to document for tax deductions, the donor bears the full cost of the $10 donation even if only $5 worth of food is used.

By contrast, suppose the donor gives money instead of food to a charity serving the hungry. Three things can happen. First, instead of going to the store to buy food, the charity takes the donated funds to an area food bank. There, for every dollar a donor would have spent, the charity can get about $20 worth of food. That's because food banks serve as nonprofit, wholesale-like clearinghouses for the food industry's surplus, charging only a nominal handling fee. So a $10 donation ends up leveraging as much as $200 worth of food for a charity.

Second, instead of packing the food into standardized boxes, the charity can display it in a store-like fashion and permit needy families to choose what they want. That ensures families aren't given food they cannot use.

Finally, if donors claim a tax deduction, their after-tax cost of giving $10 could drop to as little as $7.50. Communities can drop the cost of addressing an area's hunger by 25 percent simply by taking maximum advantage of available tax benefits.

The bottom line is that for the money they would spend on food, donors can feed 20 times more families by providing cash, not cans.