Open Arms, recovered from financial trauma, grows as meal provider

Open Arms, the Minneapolis nonprofit business that prepares thousands of meals weekly for the elderly and people with chronic diseases, has recovered from a six-figure financial fraud perpetrated by a former kitchen manager five years ago.

"It was a raw wound around here," said Executive Director Leah Hebert Welles, who was hired in 2013 to succeed an interim CEO. "The employees, volunteers and supporters felt betrayed. We lost some donors and supporters."

Back in 2012, the organization, which was then delivering 2,000 meals a day, discovered that the former kitchen manager was sending up to 225 meals to a suburban senior-feeding program without documentation, and collecting the money for himself. He subsequently was sentenced to prison for two years and ordered to pay $153,000 in restitution to Open Arms.

Open Arms had to shift from growth to survival at just the wrong time.

In 2010, Open Arms had opened a $6 million kitchen, community spaces and offices at 2500 Bloomington Av. S., replacing a bar that had been notorious for police calls and trouble. The new building and ample parking helped move Open Arms from nearby cramped quarters to what is now an American Indian art gallery and coffee shop on Franklin Avenue E.

The good news: commerce continues to trump crime at the bustling, growing Open Arms campus. For the first time in five years, Open Arms expects positive cash flow on a record $3 million in revenue this year. It won't need short-term debt, thanks to business growth.

The staff of 40 full- and part-time employees and 6,300 volunteers this year will prepare, serve and deliver up to 12 meals weekly to 1,100 clients, an endeavor that keeps the place humming from 6 a.m. to 8 p.m. six days a week. That's about 12,000 meals a week that each cost $4 to $5 to produce.

Welles in 2013 turned to the Nonprofit Assistance Fund, counselor and creditor to struggling nonprofits, for a five-year plan that's working.

"We worked with Open Arms to refinance their new building, giving Open Arms some stability in terms of their mortgage," said Phil Hatlie, the senior loan officer at NAF. "Like many nonprofits, their income ebbs and flows over the year, and we have been able to provide them with working capital to cover those times when cash flow was a concern. This gave them freedom to focus on their mission.

"Our goal and their goal was to make sure Leah and the staff and board at Open Arms had the financial knowledge, expertise, confidence, and tools to deliver their services today and into the future. Open Arms provides a remarkable service for the community with an amazing mission, and NAF is proud to partner with them."

The meals help clients — who cope with cancer, HIV-AIDS or who are just too old and frail to cook — to remain living independently, often with the help of a family member or other caregiver.

"Nutritious food is part of the health care solution," Welles said. "Healthy food helps people stay at home and take their medications and function.

For example, Open Arms is providing an additional 500 meals daily, on top of last year's 2,200, to Metro Meals on Wheels by staffing a vacant kitchen owned by a nearby nonprofit, Urban Ventures. Urban Ventures gets rent from Meals on Wheels. Open Arms gets paid per meal.

Moreover, Open Arms has grown to about $500,000 a year generated from events at its facility; receptions, corporate meetings and fundraisers by other nonprofits.

And it uses corporate partners to leverage its resources. For example, transportation-logistics firm, C.H. Robinson, a longtime financial contributor, also provides on-site volunteers who help package meals or drive. One day a week, Open Arms delivers frozen meals to Robinson's offices in Eden Prairie. Employees deliver them outside the Interstate 494 beltway.

"Most people know someone with a life-threatening illness or an elderly person who needs a good meal," said Mary Hamel, a 10-year Open Arms business volunteer.

Open Arms raises more than $300,000 every spring through its "Moveable Feast" fundraiser in partnership with Twin Cities restaurants.