News and analysis
November 25, 2014

Minn. Attorney General Questions Company’s Solicitation of Noncash Gifts for Charities

A for-profit thrift store chain that works with charities to collect used items for resale regularly fails to disclose to donors how much of their gift goes to charitable causes and how much of it is retained as profit, the Minnesota attorney general charged in a report released Monday.

Savers LLC, founded in 1954 and based in suburban Seattle, earns more than $1-billion annually from sales at its 330 stores in the United States, Canada, and Australia. It solicits donations of clothing and household goods on its own and through several charities, including some in Minnesota, like Disabled American Veterans, the Epilepsy Foundation of Minnesota, the Lupus Foundation of Minnesota, and Vietnam Veterans of America. It collects, sorts, and makes items available for sale to the public.

When people donate their goods to the company in the name of charity, Savers sends them a receipt they can use to document a tax deduction.

But many of the items donated by an individual are mixed in with those of other donors, making it difficult to account for the value of each gift, a practice cited by as problematic by Minnesota Attorney General Lori Swanson in her office’s report.

"What you have are donors who are told that if they give clothes or goods to a charity, then their charity will benefit. But there’s no way to tell how much of the money ends up with a particular charity," says Ben Wogsland, a spokesman for the Minnesota attorney general’s office.

The company has also been unclear about how much of the money from sales of items originally donated to charities actually ends up in organizations’ coffers as profit, Ms. Swanson alleges in the compliance report.

Her office began investigating Savers after complaints from donors who said they were confused about the origin of telemarketing calls asking for donations, according to Mr. Wogsland. .

Minnesota law stipulates that professional fundraisers who make a profit from soliciting announce upfront that they are doing so. Savers fundraisers often do not disclose that information, the report alleges, leaving some prospective donors with the idea that they are being called directly by a charity.

The compliance report gives Savers 45 days to develop a plan to change the way it accounts for donations. If it fails to comply, the state can move forward with legal action.

"For us, everything is on the table, including a full-fledged lawsuit," says Mr. Wogsland.

"Savers remains dedicated to working openly, honestly, and transparently with all of our nonprofit partners," says Sara Gaugl, a spokeswoman for the company, in an email response to The Chronicle. "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."