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Comment by rgbrenner | Hacker News Reader

1. If you spend $5 on food, and the foodbank could have bought $25 with that same money, but would instead buy $15 worth of food and $10 spent on salary for the person buying food, management, etc... it was still more efficient to give the $5.

2. Margins on food are VERY thin. The local supermarket makes a few percent in profits. Unless you're buying directly from the farmers (most arent), that money isnt staying in your community. It's going to go thousands of miles away where it's being grown.. and then the remainder is going to go to Kroger/Walmart/etc corporate bank account so that they can pay their managers that 100k+/year that you so oppose charity workers making.

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While I see your point your math does not add up. You can’t take $5, then transform it to $25 worth of food and then again to $25 in cash so you can give a $10 salary. Unless of course you would resell the food you buy at a massive margin.

Perhaps 2$ of the 5$ goes towards buying 10$ worth of food, and then 3$ of the 5$ goes to administrators, thus leading to two seemingly contradictory truths: most of the money you gave went towards paying administrators, and the charity used your 5$ towards your desired goal more effectively than you could have yourself.

If the charity can take a $5 cash donation, turn it into $15 of food and $10 cash, then instead of paying the $10 cash to management, why not split it into two more instances of $5 cash and repeat the process?

Because this isn't a magic fantasy world where you're literally turning cash into bigger cash. When someone says "$5 cash becomes $15 worth of food", they mean "I can spend the $5 to get what would cost you $15 to spend". And when it's broken down into "of the $5, $3 goes to paying for food, and $2 goes to paying people", that $2 pays the people who can use the $3 as effectively as the original person could use $15. If you decide to get rid of those people, and just spend the $2 directly on food, you can no longer use it effectively.

I understand that $5 at wholesale prices could be three times as much food than at retail prices. But the example literally says that $5 of cash turns into $15 of food plus $10 of cash.

That's why nobody likes recursion

> If you spend $5 on food, and the foodbank could have bought $25 with that same money, but would instead buy $15 worth of food and $10 spent on salary for the person buying food, management, etc... it was still more efficient to give the $5.

Ok, but what if they spend $4 on food, and $21 on "costs"? You can't just make up numbers.

A few percent would be the final profit margin after all the costs of operating the store are taken out. The typical gross margin (price they sell for minus price they buy for) is about 20%[1].

[1] https://csimarket.com/Industry/industry_Profitability_Ratios...

Margins on dry goods, canned goods, and other processed foods are the highest margins in a supermarket. It's the produce that is razor thin.

I believe canned good margins vary around 50 to 100% markup.

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