Fare & Square, the first nonprofit grocery store in the United States

The first acknowledgment of the existence of "food deserts" was in a British study in the mid-1990s[1]. These are defined by the USDA as areas without access to fresh fruit, vegetables and other healthful whole foods, largely due to a lack of grocery stores, farmers' markets and healthy food providers[2]. These vacuums of access to healthy food exist all over the United States, particular in low-income communities, which are already under the burden of a multitude of other social challenges[3].

NFF has worked with several food banks and healthy food organizations that are striving to change this social dynamic. One particular client whose story we wanted to share is that of Philabundance, the Delaware Valley's largest hunger relief organization. Although they began as a simple food pantry, the organization has evolved over 30 years and grown to serve nearly 1 million people each year, motivated by the simple belief that no man, woman or child should go hungry[4]. In addition to wanting to impact the community on a greater scale, they also sought to develop a market-based approach that would invest in the community and generate value in a more sustainable way than a charitable food pantry. They embarked on a new challenge: to create the first nonprofit grocery store in the United States, located in one of the many food deserts in the Delaware Valley: Chester, Pennsylvania. Residents of Chester had experienced life in a "food desert" for years, having lived without a grocery store or food retail provision since 2001. Not only food insecurity, but unemployment and poverty were alarmingly high.

In the summer of 2012 Philabundance received a $4 million New Markets Tax Credit (NMTC) allocation from Nonprofit Finance Fund (NFF) and $3 million in allocation from The Reinvestment Fund (TRF) as well as bridge financing that included a $1 million loan from NFF to finance the rehab of a 22,000 ft2vacant building and turn it into a working grocery store in the heart of the city. The NMTC program, administered by the CDFI Fund of the US Treasury Department, provides tax credits as an incentive to attract private investors to finance projects in low-income communities.

Called Fare & Square, Philabundance's grocery store officially opened to the public in September 2013. The Fare & Square (F&S) team focused on providing access to fresh and affordable food, including nutritious produce, meats, dairy and deli, for a community plagued with food insecurity. However, F&S was far more than a simple grocery store serving a city. Whenever possible, F&S hires directly from the community, helping to make an impact on the high unemployment rate in the region. They are a community space for wellness, screening and nutrition classes.

Beyond the Facts: People, Driven By Social Good

In May 2014, a group of NFF colleagues had the privilege of experiencing a site visit to Fare & Square. We loaded into a van ready for the half hour drive not quite sure what to expect. Two hours later, after walking out of the store, we were full of gratitude, renewed determination, and overflowing inspiration. F&S staff treat every customer with immense respect and dignity; an attribute absolutely foundational to their success in the neighborhood. The aisles are bright and clean, and each department's staff serve the community with a deep sense of purpose. The F&S team led us on a thorough tour throughout each department, introducing us to inventory managers, department managers and newly-hired trainees. The incredible amount of humility and the generosity from all staff with their time, their stories and their lessons-learned was cherished by all of us who were there. Their pride was remarkable.

During the visit a number of key staff, including Bill Clark, the Executive Director of Philabundance at the time, and Paul Messina, the Store Director, provided a background narrative of the store's history. They spoke genuinely and honestly of their successes, challenges and lessons learned along the way, teaching us much about the level of financial rigor needed to make their project successful.

Below, we want to share 4 lessons F&S shared with us on the challenges of creating the country's first nonprofit grocery store:

Constantly evaluate whether your services are achieving your mission: The F&S team doesn't settle and is always striving to improve, grow and serve to a more full degree. Philabundance branched out from their core work as a food pantry to pursue an innovative new project to create the grocery store, in order to better realize their mission and goals.
Balance between caution and risk-taking: They are realistic, willing to accept mistakes, learn from them and take action to improve. For example, when inventory turnover wasn't as high as was hoped after opening, they accepted the need for change and started from scratch, going through the product inventory, one-by-one, to recreate and rejuvenate the buying process.
Commit to using data to shape practices: Philabundance uses data on customer behavior to generate more impact moving forward by targeting sales and promotions to customers.
Never compromise on the NFF Triangle, fully covering program, capacity, and infrastructure costs: Executive Director Bill Clark cautioned other nonprofits about the dangers of neglecting non-programmatic needs. Setting yourself up with a solid foundation is critical to maintaining impact.

Bill's comments resonated deeply with us, reinforcing our commitment and reminding us about the importance of financial sustainability in helping organizations innovate over time. We are thankful for the Fare & Square team's generosity with their time to remind us why we do what we do at NFF.

[1] Cummins S, Macintyre S (1999). "The location of food stores in urban areas: a case study in Glasgow". British Food Journal 101 (7): 545–53. doi:10.1108/00070709910279027
[2] http://americannutritionassociation.org/newsletter/usda-defines-food-deserts
[3] http://www.foodispower.org/food-deserts/
[4] http://www.philabundance.org/about-us/mission-history/