Minnesota’s Attorney General has filed a lawsuit against the Bellevue-based owner of Value Village thrift stores, accusing the company of violations of the state’s charities law.
Minnesota’s attorney general has filed a lawsuit against the Bellevue-based owner of Value Village thrift stores, accusing the company of violations of the state’s charities law that include misleading people about how much of their donations actually go to charities and concealing its role as a for-profit company.
The lawsuit, announced Thursday, comes six months after the attorney general unveiled a report highly critical of Savers, as the privately held company is called.
Savers contracts with charities to use their names, handling solicitations and collection of clothing donations and other items. It often pays the charities by weight, and sells the goods in its 330 stores.
The arrangement is convenient for donors, who get a tax deduction, as well as for the charities, which get a source of revenue without having to run costly fundraising operations themselves.
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But Minnesota has raised questions about the way Savers operates. In the lawsuit, filed in Hennepin County District Court, the attorney general alleges Savers tells the public it pays charities for each donation, and it gives donors receipts encouraging them to take a tax deduction. But actually Savers doesn’t pay the charities for household goods and other nonclothing items collected in their name, which is misleading, according to the AG.
Moreover, the attorney general says Savers solicits donations to benefit a specific charity, but then may steer those proceeds to other charities. The AG says that violates donor intent, a core principle of charitable-solicitation law.
The AG also alleges Savers did not comply with state registration and financial-reporting requirements, thereby concealing from the public both its role as a for-profit company and how little of the value of the donors’ items ends up helping charities.
Savers CEO Ken Alterman said Thursday the company is “disappointed” by the Minnesota official’s decision to sue, and that Saver made “multiple attempts” to find a solution that “benefits everyone involved.” The company “has worked diligently to answer every question that was raised,” he said in a statement.
Alterman said Savers had begun implementing changes to address the concerns.
“Rather than allow these changes to take place and then evaluate their effect, the AG’s office has decided to file this lawsuit and put more than 25 years of positive community impact and millions of dollars in annual charitable funding at risk,” Alterman’s statement said.
“We now have no choice but to vigorously defend our business and we are confident that we will prevail,” Alterman said.
Savers operates U.S. stores under the names of Value Village, Savers, Unique and Valu Thrift; in Canada it’s known as Value Village and Village des Valeurs. It has more than 20,000 employees in the United States, Australia and Canada.