The Savers thrift-store chain has agreed to improve transparency and will not solicit non-clothing donations without compensating charities, as part of a settlement with Minnesota Attorney General Lori Swanson.
The Bellevue-based owner of Value Village thrift stores has agreed to overhaul its donation and disclosure practices and pay $1.8 million to a half-dozen nonprofits to settle a lawsuit filed last month by the Minnesota attorney general accusing the company of violating the state’s charities law.
Savers, as the privately held company is called, agreed to disclose that it is a for-profit company and to compensate charities for non-clothing items.
If Savers accepts non-clothing donations such as books or electronics, it must pay the charity directly for each and every such donation, according to the agreement.
It will also pay $300,000 each to six of its partner charities in Minnesota, including True Friends, a charity that cut ties with Savers in November after allowing it to collect donations of clothes and household items in its name for six years.
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The agreement, approved Thursday in Hennepin County District Court, requires “enhanced transparency” about Savers’ role and the amount it pays to charities, said Minnesota Attorney General Lori Swanson.
“Donors need transparency to decide whether and how to donate,” she said in a statement.
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 worldwide. In the U.S., stores are under the names of Value Village, Savers, Unique and Valu Thrift; in Canada, it’s known as Value Village and Village des Valeurs.
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.
However, in the lawsuit, Swanson raised questions about the way Savers operates.
She accused the company of misleading people about how much of their donations actually go to charities and said that it doesn’t pay charities anything for donations of household goods and other non-clothing items (such as books, toys and electronics) collected in their name.
Swanson also said Savers concealed 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.
As part of the agreement, Savers will: disclose that it is a for-profit fundraising company; label, track and segregate donations so it can accurately compensate the charity to which the donor intended to donate the goods; if Savers accepts non-clothing donations, it must pay the charity, and Savers will prominently display and disclose the actual amounts it pays charities for donations.
According to the company, Savers operates 14 stores under the names Savers and Unique Thrift in Minnesota, and last year it paid its Minnesota charitable partners more than $7.5 million.
Savers CEO Ken Alterman said Thursday he is pleased the company reached an agreement with the attorney general, although he disagrees with the attorney general’s allegations.
“We are satisfied that the attorney general has resolved her differences with us,” Alterman said in a statement. “We will return to devoting our full energy to serving the best interests of the charities and donors of this state as we have proudly done for the last 25 years.”
In Washington, Savers operates 24 Value Village stores. The Washington Attorney General’s Office is aware of the action taken in Minnesota, but spokesman Peter Lavallee would not comment on whether it is investigating.
Asked whether Savers is in conversations with any other attorney general offices around the country or whether it is worried that other states may investigate, spokeswoman Sara Gaugl said only that “as a normal course of business, we are routinely in discussions with our regulators.”