Savers is a large for-profit thrift store chain that operates under the name Value Village in the United States. The company has over 300 locations across the U.S., Canada, and Australia. Savers’ business model is to collect donated items, resell them in its retail stores, and then donate a portion of the proceeds to nonprofit organizations. This has led to controversy and accusations that the company misleads consumers by presenting itself as a charity when it is a for-profit business.
Despite Savers referring to itself as a “nonprofit fundraiser”, the company is not registered as a 501(c)(3) nonprofit organization. Lawsuits allege Savers misrepresents its charitable giving and that it keeps the majority of profits while only donating a small fraction. There are also concerns around executive compensation and whether Savers operates the same as other for-profit thrift chains while benefiting from a charity image. Savers maintains its model allows it to maximize donations through efficiently run operations.
History and Mission of Savers
Savers was founded in 1954 in San Francisco by William Yellen and his wife along with a charity organization called Easterseals with the mission to fund job programs for people with disabilities. Thrift Stores Have Options for Everyone | by Cathy Coombs
Savers was started as a charity thrift store by Yellen as a way to offer affordable shopping options for the local community while also raising money for services that helped employ people with disabilities. According to savers thrift stores – ¡Descubre, Conecta, Triunfa!, Yellen partnered with Easterseals, a nonprofit organization that provides services for individuals with disabilities, to fulfill this mission of creating jobs and opportunities through the revenue from the Savers thrift stores.
Business Model and Operations
Savers operates a massive network of over 300 thrift stores across the United States, Canada, and Australia. The stores are supplied by donated used goods such as clothing, accessories, furniture, and housewares. Savers then sells these donated items for a profit in their retail thrift stores.
As a for-profit company, Savers is focused on generating revenue by reselling donated merchandise. The goods are purchased very cheaply or for free from donation centers. Savers then prices and sells the used goods at their thrift stores to turn a profit. The large volume of goods flowing through their many thrift stores allows Savers to run this resale business profitably.
Financials and Executive Pay
Savers, which operates under the Value Village brand, reported $1.8 billion in total company revenue in 2018 according to their annual report. The company brings in revenue through the sale of donated goods across over 300 thrift stores located primarily in the United States and Canada.
Despite their non-profit status, Savers executives are compensated with seven-figure salaries. According to Comparably, the average executive at Savers makes $235,641 per year. The CEO of Savers is one of the highest paid, with total compensation of $4.2 million per year including a base salary of $921,807 according to Simply Wall Street.
Charitable Giving and Programs
Savers states that the purpose of its business model is to fund the non-profit Epic Opportunities Foundation which provides employment for people with disabilities and other barriers to traditional employment. According to their website, Savers has provided over $1.2 billion in funding for Epic’s charitable community programs over the years.
Epic runs job training programs for people with disabilities, injuries, or other employment barriers to help them gain skills and work experience. These vocational training programs aim to empower individuals and provide a bridge to meaningful employment. Savers indicates that “100% of net profits” from their stores goes toward supporting Epic’s programs and services.
While Savers operates as a for-profit used goods retailer, they highlight that partnering with Epic allows them to give back to the community. The company cites their unique business model as the engine behind Epic’s wide range of services for disadvantaged groups and those facing employment challenges. According to Savers, this symbiotic relationship creates social value beyond typical corporate charity programs.
Sources:
https://www.savers.com/partners
https://www.savers.com/about
Criticisms and Controversies
Savers has faced criticism and controversies over the years related to executive compensation, charitable giving, and legal disputes over its nonprofit status.
One of the most prominent issues has been the high pay of Savers executives. In 2021, CEO Thomas Ellison received compensation of $1.2 million, one of the highest of any charity executive in Washington state according to an AP News report. High executive compensation has led to questions over whether Savers is operating more like a for-profit business.
Another concern has been Savers’ limited charitable activities compared to other thrift store chains. Only about 3% of Savers’ revenue goes towards charitable giving, lower than competitors like Goodwill per the Seattle Times. Critics argue Savers does not provide enough community programs and services to justify its nonprofit status.
In 2019, Washington’s attorney general sued Savers alleging it misled consumers by marketing itself as a charity despite limited giving. However, in 2023 the state Supreme Court rejected the charges against Savers in a unanimous decision. The legal fight called into question Savers’ charitable activities and status.
Responses and Defenses
In response to criticisms, Savers has defended its charitable status and programs. The company claims that its status as a non-profit helps bring savings to customers through sales tax exemptions in some areas (Source). Savers also touts its job training programs as a community service. The company hires people with barriers to employment and provides them with on-the-job training and support (Source). While critics argue Savers acts more like a for-profit business, the company defends its programs as benefiting the community.
Tax Incentives and Oversight
As a nonprofit organization, Savers receives tax exemptions at the federal, state, and local levels. This means Savers does not pay income tax or property tax on the items it receives as donations and sells in its stores (Retirement Savings Contributions Savers Credit). These tax exemptions allow Savers to operate thrift stores as a profitable business model while maintaining nonprofit status.
However, some critics argue there is a lack of oversight for Savers’ nonprofit activities (Saver’s Credit: What It Is & How It Works in 2023-2024). As a nonprofit, Savers files Form 990 financial reports with the IRS detailing its revenue, expenses, executive compensation, and charitable activities. But there are questions around how much of Savers’ profits truly go toward charitable programs compared to executive salaries and business expansion.
Some argue more scrutiny is needed to ensure Savers prioritizes its nonprofit mission over business motives. There have been calls for greater transparency into how donations are valued and priced in stores. Without sufficient oversight, critics say tax exemptions may not be justified given the small fraction of profits allocated to community programs.
Comparisons to Other Charities
Many critics argue that Savers operates more like a for-profit business than a nonprofit charity. Unlike other thrift store chains such as Goodwill and The Salvation Army, Savers spends a relatively small percentage of its revenue on charitable programs and services. For example, The Salvation Army dedicates 82% of its revenue to charitable services according to third-party watchdog Charity Navigator, whereas Savers gives only about 10% of its revenue to charity [1].
Savers also pays its executives much higher salaries compared to other nonprofits. In 2017, Savers CEO Sara Gaugl paid herself over $930,000 in compensation [2]. Meanwhile, the highest paid executive at Goodwill made $400,000 in 2017. This has led many to question whether Savers prioritizes profit over its nonprofit mission.
Overall, the amount Savers spends on charitable works versus executive pay and growth is more in line with a for-profit business model than a charity. Unlike Goodwill and The Salvation Army, Savers operates its retail stores primarily as a revenue-generating business rather than as a community service.
Conclusion
In summary, Savers operates as a for-profit thrift store chain while also running charitable programs through its nonprofit arm. On one hand, it uses profits from its retail stores to fund community initiatives and provide philanthropic support. However, concerns have arisen over its high executive compensation, limited charitable spending, and ability to pay little tax due to its hybrid business model. While some defend Savers as an ethical company creating social value, others argue it abuses nonprofit status for competitive gain. There is an ongoing debate around whether Savers should be considered a charity or a for-profit business. Its long history and social mission indicate a charitable orientation, but its size and executive salaries appear more corporate than philanthropic. Ultimately, Savers seems to exist in a grey area between nonprofit and for-profit worlds. Reasonable people can disagree on whether its business practices fully align with charitable ideals. However, the company does seem to provide at least some meaningful community benefit through its foundation’s programs and grants.
