Minnesota Attorney General Lori Swanson sued the Epilepsy Foundation of Minnesota Monday as she cracks down on the business practices of billion-dollar thrift store retailer Savers.
Swanson accused the foundation of violating the state’s charities laws through its partnership with Savers, saying it is misleading the public about the extent to which the used goods they donate actually benefit the charity.
The lawsuit, filed in Hennepin County District Court, also accuses the Epilepsy Foundation of filing inaccurate reports with the state because it does not identify Savers as a professional fundraiser.
Last month, Swanson sued Savers over its marketing and handling of donations, issues that she first raised last fall in a harshly critical compliance report. Allegations that the public was being duped shocked donors as well as thrift store shoppers who have flocked to secondhand stores since the recession. Financial analysts have downgraded the company’s ratings, citing concerns about Savers losing more charity clients.
Swanson said she found it “confounding” that the Epilepsy Foundation would not sign a compliance agreement with her office.
“The charity is responsible for the conduct of its for-profit vendors,” she said. “So it’s surprising that the charity was not willing to resolve its situation.”
Vicki Kopplin, executive director of the Epilepsy Foundation of Minnesota, said her organization is reviewing the lawsuit and would not comment further Monday.
More than $400,000 of the foundation’s nearly $1.7 million in revenue in 2013 came from Savers campaigns, according to the attorney general.
The foundation is one of six tax-exempt Minnesota charities that contract with Savers, a for-profit company based in Bellevue, Wash., to help raise money for them through its thrift stores.
A company spokeswoman issued a statement Monday saying it will vigorously defend its business and has “proudly operated” in Minnesota for more than 25 years.
The global company, owned by private equity groups and company executives, had sales of $1.2 billion last year, according to financial analysts, and operates more than 300 stores under a range of names. The company’s core business strategy is contracting with charities. It operates 15 stores in Minnesota under the names Savers, Unique Thrift and Valu Thrift.
Savers also operates under the name Value Village, but not in Minnesota. Arc’s Value Village Thrift Store & Donation Center in Minnesota, with sites owned and operated by the Arc Greater Twin Cities, has no connection to Savers.
Three local charities cut ties with Savers after Swanson issued her compliance report last fall.
A fourth, Disabled American Veterans, Department of Minnesota, said it will keep working with Savers and considers Savers to be a valuable and reliable source of revenue. However, the organization signed a compliance agreement last week with the attorney general to address the state’s concerns.
Swanson said she’s still talking with the sixth charity, the Vietnam Veterans of America.