Minnesota Attorney General Lori Swanson accused the for-profit thrift store chain Savers of misleading the public about how it manages donations for Minnesota nonprofit groups.
Swanson issued the critical report Monday after a year-long investigation of the relationship between Savers and local charities such as Vietnam Veterans of America, Courage Kenny Foundation and the Lupus Foundation.
Savers and a subsidiary called Apogee Retail offer a “turn key” fundraising operation in which Savers—using the name of the charity—solicits donations of clothing and household goods, picks up and sorts the donations, and brings them to Savers retail stores where they are sold to the public. The retailer then returns a portion of the proceeds to the particular charity.
Swanson alleges Savers returns to the charities only pennies on the dollar for the value of donated clothing, and returns nothing at all for donations that are not clothing.
For example, a donor who gives one of the charities a bag of used clothing can claim a tax deduction for what they estimate is the fair market value of the items. But Savers may pay the charity 40 cents per cubic foot of clothing, which would be only a few pennies per item, and keeps the rest.
She alleges Savers is deceiving customers and donors by not disclosing how much of a donation goes to the charity and what share it keeps for itself.
Another key concern is that donations to the various charities are commingled, or mixed together, by Savers, so an individual who donates items for one charity has no assurance that the items will actually benefit that charity.
A Savers spokeswoman responded to the report in an email to the St. Paul Pioneer Press.
"We provide our nonprofit partners in Minnesota a reliable and essential source of funds for the vital work they do in the community," Savers spokeswoman Sara Gaugl wrote. "With a proven track record of helping those in need, we remain committed to working with our valued partners to help make a positive impact across the state."
Swanson is also critical of the nonprofits who contract with Savers, saying those charities didn't deceive the public but allowed Savers to do so on their behalf, according to the Pioneer Press.
"They are not overseeing the relationship. They are renting out their names," Swanson told the paper.
The nonprofits in question are Courage Kenny Foundation, Vietnam Veterans of America, the Lupus Foundation of Minnesota, and True Friends. Savers also solicits and accepts donated goods on behalf of Disabled American Veterans Department of Minnesota, Inc. and Epilepsy Foundation in Minnesota.
Swanson is giving them 45 days to report to her office on how they will correct the problems identified in the report. She said she has not ruled out legal action, and is forwarding her report to the U.S. Internal Revenue Service.
Savers is a privately-held national chain based in the Seattle area. It has more than $1 billion in annual sales and operates 15 stores in Minnesota under the names Savers, Unique Thrift and Value Thrift.