Why Fake Money Is Better than Real Money at Feeding the Hungry
An esoteric market idea revolutionized food banks. What else could it do?
Why Fake Money Is Better than Real Money at Feeding the HungryPaper The Allocation of Food to Food Banks
Food banks throughout the U.S. provide nutrition to the needy. Much of the food that is distributed through food banks often originates with donors - large manufacturers or distributors - far from those needy clients. How that food is distributed by Feeding America, a large not-for-profit, is the subject of this essay. In 2005, Feeding America transitioned from the centralized allocation process, where they would make decisions based on their perception of food bank need, to one where local affiliates would bid for food items through an online auction mechanism. To do so, Feeding America constructed a specialized constructed currency called “shares” that are used to bid on loads of donated food. The process by which this change came about, its necessary idiosyncrasies, and its outcomes are described. By most objective measures, the change has been a huge success: the wide variation of food bank’s demand for food is now represented in their allocations, and there was a large and immediate increase in supply of 100 million pounds of food.
- Authored by
- 2016
- Nonprofit
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