Minnesota AG Criticizes Savers Thrift Store Chain
ST. PAUL, Minn. (WCCO/AP) — A yearlong investigation into the value of donated clothing and household items to some popular charities is raising serious questions.
The Minnesota Attorney General's Office launched the probe into the Saver's Thrift Store chain, which sells the items and gives a portion of the proceeds to charity.
However, according to Attorney General Lori Swanson, that portion is often just cents on the dollar. In addition, the AG's compliance review has revealed other ways the company is allegedly skirting Minnesota law.
Minnesotans rank among the nation's top when it comes to charitable giving. The slamming door of a donation bin is a sound that warms the hearts of many charitable Minnesotans.
"It just gives me personally a good feeling because it reassures me my things are going to a person who needs it. It's a good feeling," Jessica Kuennen said.
But charities like Vietnam Veterans of America, Disabled American Veterans, Lupus Foundation, even Courage Kenney Foundation, may be getting the short end of the charitable stick.
Each of the charities contracts with Savers or its subsidiary to collect used goods and then sell them in a Savers retail story. The nature of those specific contracts is the focus of Swanson's investigation.
"The charities are often getting just pennies on the dollar," Swanson said.
Swanson says the charity's contract with either Savers or Apogee, LLC to collect the donations and then pay them a specific rate for used clothing, often times as little as 40 cents per cubic foot -- roughly the equivalent of six dresses. But in turn, Savers will sell each dress at its retail stores for $6.99 each, keeping about 98 percent of the charitable value.
"Here, the vast majority of the money is not going to the charity, it's going to a for-profit outfit. It's important there be transparency in that relationship," Swanson said.
One of the biggest surprises in the probe involves donated household furnishings, which are strongly encouraged.
According to Swanson, charities are reimbursed only for clothing under their specific contracts. Because of that, all the money generated from the retail sale of furnishings or other household items goes to Savers.
"Yet at the same time, they're handing out tax receipts to people encouraging donors to donate on their taxes, donations of non-clothing items. Essentially writing them off their tax returns as a charitable donation when the charity is not benefitting," Swanson said.
While a lawsuit hasn't yet been filed against the company or any of the charities, Swanson says everything's on the table.
Savers and the specific charities will have 45 days to respond to the AG's findings. Each will have to outline specific steps being taken to correct any alleged deficiencies.
On Monday, Savers issued a statement saying, "we will continue to work closely with the Attorney General's Office along with our partners to address any concerns quickly and constructively so that we can focus our efforts on helping communities connect through a shared commitment to the common good."
The compliance review is being shared with the Internal Revenue Service. It will be up to the IRS to determine if Savers and the Charities are violating tax code for giving out deductible donations that may or may not benefit charitable organizations.
(TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved.This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
