Minnesota Says Savers Profits Off Charity

     MINNEAPOLIS (CN) – Though it charges a “hefty mark-up” when it resells donated clothing, a billion-dollar retailer pays charities pennies on the dollar, Minnesota claims in court.
     Though it tells the public that it pays the charities “every time you donate,” the for-profit conglomerate known as Savers and its subsidiary Apogee Retail actually “paid nothing to the charities directly for” various nonclothing donations it solicited from the public, according to the 47-page complaint filed Thursday.
     Nonclothing items include furniture, toys, books and appliances, Minnesota attorney general Lori Swanson says.
     She notes that the charities often get just 40 cents for each pound of donated clothing that Savers collects.
     “Over a period of many years, Savers acted as a professional fund-raiser in Minnesota without properly registering as a fund-raiser and without filing accurate financial reports regarding its fundraising activities,” the complaint in Hennepin County District Court alleges.
     Swanson says she brought Savers’ activities to light with a November 2014 compliance report, yet only three of the six charities with which Savers had contracted managed to terminate or not renew their contracts in the last six months.
     The Epilepsy Foundation of Minnesota, Disabled American Veterans and Vietnam Veterans of America have allegedly continued their relationships with Savers.
     None of these entities is a party to Swanson’s action, which names as defendants only Apogee and TVI Inc., the Washington state company behind Savers.
     After it pays the charities 40 cents for each pound of donated clothing, Savers retains “all the revenue from the ultimate sale of those goods to the public” for itself, the complaint states.
     Swanson quotes testimonials in support of claims that Savers uses “a veneer of benevolence” to have Minnesotans believe it is a nonprofit organization or that it donates directly to a specific charity.
     One person donated items of sentimental value because she was led to believe they were going to directly benefit the Epilepsy Foundation, according to the complaint. This woman allegedly said she would not otherwise have donated them.
     Another testimonial describes how a woman upgraded her electric wheelchair, worth thousands of dollars, before turning it over at a Savers “community donation center,” believing the item would go directly to a Vietnam veteran.
     Swanson says each Savers location fails to track the destination of donations, with some advertising several beneficiaries but donating to only one. Donors have no assurance that the charity they intend to benefit will receive all, or any, of the proceeds from their donation, the complaint states.
     “Savers solicited some donations using a particular charity’s name and likeness, even though donations did not benefit that charity,” the complaint states. “In other cases, the company failed to ascertain or honor the wishes of the donor.
     “Both practices violated a bedrock principle of charitable solicitation law: that the intent of donors be followed,” it continues.
     Swanson’s “regulatory compliance action” says Savers belongs to a class of professional fund-raisers that must register with the state.
     The eight counts against the conglomerate include five state filing violations, acting as an unregistered fundraiser and misleading solicitation of donations, in addition to failing to provide proper disclosure to donors.
     Assistant Attorney General Elizabeth Kremenak signed the complaint.
     Two private-equity firms, TPG Capital and Leonard Green & Partners, together own about 40 percent of Savers, and Savers chairman Thomas Ellison owns 40 percent as well, the complaint states.
     Other Savers officials control the company’s remaining shares, Swanson says.

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