A Minnesota nonprofit is severing ties with the international Savers thrift store company following the state’s accusations that Savers has deceived the public about how it uses proceeds from clothing and household goods donations it collects on behalf of certain charities.
True Friends President and CEO Ed Stracke said late Wednesday that the recent compliance report by Minnesota Attorney General Lori Swanson “revealed practices that are not aligned with our values” and that the board of directors is dropping Savers as a fundraising partner.
The report “created a watershed moment,” Stracke said in a brief statement.
True Friends is based in Annandale and runs Camp Courage, Camp Friendship and other camps for people with disabilities. It’s one of several nonprofit groups operating in Minnesota that have partnered with the Savers thrift store conglomerate, or its fundraising subsidiary Apogee Retail, to raise money through donations of used clothing and household items that Savers resells to the public.
Other nonprofits partnering with Savers include the Vietnam Veterans of America, the Lupus Foundation of Minnesota, Courage Kenny Foundation, Disabled American Veterans Department of Minnesota and the Epilepsy Foundation in Minnesota.
A True Friends spokeswoman did not respond to several requests Wednesday to discuss the decision.
True Friends said it first contracted with Apogee Retail, and later Savers, nearly six years ago. Savers acquired Apogee, which was based in Minnesota, in March 2011.
The attorney general’s report, released Monday and based on a yearlong investigation, accused Savers and Apogee of commingling donations and creating an impression that the charities get a lot from the sale of the used items, when they don’t.
Savers disputes the report’s findings, and said it is “based on incorrect assumptions and a misunderstanding of our working relationships with our nonprofit partners.”
On Wednesday, Savers spokeswoman Sara Gaugl issued a statement saying it was honored to work with True Friends.
“Unfortunately, we recognize the last few days have been a distraction from this meaningful work,” Gaugl said. “While we regret their decision to not extend our partnership, we wish them continued success in the future.”
Savers, a privately held company based in Bellevue, Wash., bills itself as the country’s largest for-profit thrift store chain. The fast-growing company is partly owned by two private equity groups and operates more than 300 stores in the U.S., Canada and Australia. In Minnesota it operates 15 stores under the names Savers, Unique Thrift and Valu Thrift.
The Savers business model is for it and Apogee to partner with nonprofits, using the names of charities and their tax-exempt status to solicit donations of clothes and used household goods such as furniture. The Savers chain sells the goods and pays a portion of the proceeds to the charities, while donors get to deduct the donations from their taxes.
The attorney general’s report, however, concluded that Savers pockets much — and sometimes all — of the money it makes selling the used goods in its stores. The charities actually receive very little from clothing sales, and nothing from the sale of non-clothing goods, it said. In 2013 the nonpayment for household goods resulted in Minnesota charities being shorted $1.16 million, it said.
The report also concluded that Savers and Apogee commingled donations and failed to keep accurate accounts.
Swanson said she is considering legal action and is forwarding the report to the offices of other state attorneys general and to the Internal Revenue Service. She gave the charities 45 days to report back on how they will step up their monitoring of donor campaigns.
The report also said that Savers must register with the attorney general’s office as a professional fundraiser since it’s very involved in the used-goods donation campaigns and benefits from them. As a professional fundraiser, Savers would have to file a financial report with the attorney general’s office showing gross revenue received from and expenses incurred with each fundraising campaign.