RENEE MONTAGNE, HOST:
And one of the largest charities in the country is called Feeding America. That group distributes millions of pounds of food to food banks around the country. A while back, they had a problem - their system for getting all that food to all those food banks was a mess. Jacob Goldstein from our Planet Money podcast reports on how they fixed it.
JACOB GOLDSTEIN, BYLINE: Here's the way it used to work at Feeding America. They'd get a big donation from, say, a pickle company, call up some local food bank and say, how about a truckload of five-gallon buckets of pickles? This exact thing happened to Susannah Morgan a little more than 10 years ago. She was running a food bank in Alaska, and Susannah did not need pickles.
SUSANNAH MORGAN: You're kidding me? You're offering me pickles? (Laughter).
GOLDSTEIN: Susannah needed produce, but she wasn't getting it. Other food banks were getting too much produce. Feeding America knew this was a problem. They had all this food to send out, but it was really hard to figure out who should get what.
MORGAN: It is a problem for someone else to make decisions for you when they don't know what's in your inventory at the moment. They don't know what your local donation supply is.
GOLDSTEIN: So they got together, had some meetings, and they invited a few economists to sit in. The economists told the food bankers, what you guys have is a centrally-planned economy. A few people in the center - in this case at Feeding America headquarters - are making decisions for everybody. What you need to do, the economists said, is flip the whole thing around - create a market economy. Canice Prendergast from the University of Chicago was one of those economists. And he says at first, this did not go over well.
CANICE PRENDERGAST: One of the food bankers came up to me and said, look, I'm a socialist, I have no interest in this; I'll listen to you, but I don't have any interest in this.
GOLDSTEIN: Canice and the other economists say, here us out - Feeding America could have auctions. It would be like eBay, but for truckloads of yogurt or canned tomatoes. If a food bank wanted something, they could bid on it. Now, this was donated food. It wasn't going to work if the food banks had to bid real money. So the economists said, okay, create fake money. Give it to all the food banks, and they can use that to buy the donated food. Susannah Morgan says when the food bankers heard the whole plan - the fake money, the auctions...
MORGAN: ...The clouds opened, and the angels sang.
GOLDSTEIN: (Laughter) No, that never happens.
MORGAN: (Laughter) OK, maybe it wasn't quite that biblical. But there was literally this moment in which we just went, we've had a breakthrough.
GOLDSTEIN: Today, every food bank in the network gets a certain amount of fake money every day. The food banks that serve the most hungry people get the most fake money. And there are these eBay-style auctions where food banks can bid on food. With this system, Susannah Morgan was able to get more produce up in Alaska. Even the food banker who was a socialist came around in the end, Canice Prendergast says.
PRENDERGAST: What he realized was, the market allows me to get a lot of pounds of food in a way that I did not get before.
GOLDSTEIN: Now, to be clear, it's not like the food bankers turned into free-market zealots. Part of the system those economists designed lets food banks sell food to each other for fake money. But when food banks have extra food, they still often just give it away to other food banks. Susannah Morgan is at the Oregon Food Bank now, and she says there's a reason this part of the system never took off.
MORGAN: This is a network built on relationships. You're going to rely on those people for stealing their good fundraising practices. You're going to rely on those people for advertising the positions that you have open. And you can use food as one of the ways you nurture those relationships.
GOLDSTEIN: They've managed to keep this gift economy going, even as they're bidding against each other. Jacob Goldstein, NPR News.