Savers under the scrutiny of Attorney General

Storefront of the E. Lake St. Savers, one of 330 stores owned by conglomerate Savers LLC. Their operations in Minnesota are under scrutiny by the Minnesota Attorney General. (Photo by Margie O'Loughlin)[/caption] By MARGIE O’LOUGHLIN On Nov. 24, Minnesota Attorney General Lori Swanson issued a compliance report questioning the relationship between Savers retail stores and the local non-profits they partner with. These include Vietnam Veterans of America, Disabled Veterans of America, Epilepsy Foundation of Minnesota, Lupus Foundation of Minnesota, Courage Kenney Foundation and True Friends. The allegations are that the Seattle-based thrift store conglomerate Savers LLC, with 330 stores world-wide and annual revenues in excess of 1 billion dollars, improperly manages and accounts for the donations it solicits. The for-profit company operates 15 stores in Minnesota under the various names of Savers, Unique Thrift and Value Thrift. According to a statement released by Savers, they employ more than 650 people state-wide and 19,000 people in the United States, Canada and Australia. The Attorney General alleges that “Savers mixes its identity with those of its non-profit partners and fails to disclose the amount of donations that actually go to charity, versus the amount Savers keeps. A donor can claim a tax deduction for the full price of a donated clothing item, presumably what the item would sell for at Savers, but the charity receives only a small portion of that.” Swanson’s office further states that, “Savers gives tax receipts for household goods such as furniture and electronics but pays the charities nothing for these items, misrepresenting Minnesota tax laws in the process.” If you live in Longfellow or Nokomis area, chances are good you’ve either made a donation to or shopped at Savers, located at 2124 E. Lake St. Their sprawling sales floor is full of donated items that have either been brought in to the store by individuals, or picked up curbside on behalf of one of the charities listed above. The Savers website states, “Our nonprofit alliances contact people in the community to ask for donations of reusable clothing and household items. We pay our nonprofit alliances based on the number of boxes and bags they collect from you and deliver to us. We also pay our nonprofit alliances every time you donate gently-used goods to our stores. Your donation becomes funding for a local non-profit. Feels good, right? We know!” It remains to be seen, just how much Savers knows. “The problem is,” Attorney General Swanson says, “that the charities are often getting only pennies on the dollar. Payment is made at a specific rate for used clothing, sometimes as little as 40 cents per cubic foot, a space that roughly would contain four dresses. On average, Savers would sell each dress for $6.99, keeping about 98% of the profit.” ”Three bedrock principles of charities law are to respect the intent of the donor, to protect charitable assets and to be transparent. This compliance report identifies deficiencies in all three areas,” says Attorney General Swanson. Not surprisingly, Savers claims to be very disappointed in the Attorney General’s recent report. On Nov. 26, they issued a press release stating that, “We believe the report’s findings are based on incorrect assumptions and a misunderstanding of our working relationship with our non-profit partners. As a result, the findings inaccurately depict the valuable work that Savers and our non-profit partners perform throughout the state of Minnesota.” Savers and its non-profit partners are mid-way thru a 45 day period of formulating a response to the Attorney General. At the end of that time, each will have to detail specific steps they are taking to address the alleged deficiencies. For the non-profits, this would include developing a plan to monitor Savers as a professional fundraiser acting on their behalf. The compliance report is being shared with the Internal Revenue Service and with other Attorney General offices in the states where Savers operates its stores. The IRS will decide if Savers and its non-profit partners are violating tax code by encouraging donors to take deductions that may not be legitimate. While a lawsuit has not been filed against any of the parties, Swanson says, “Everything is on the table.” Editor’s Note: This article contains information and quotes used with permission by John Howe, Office of the MN Attorney General.