I guess I’m in a spicy mood today to do a little revealing dive into the relationship that Savers has with charity. I will be un-partial in this article to whether or not I think Savers’ operation is good or bad and provide facts that are readily available to the public through various credible websites.
What we will cover includes if Savers is in fact a charity thrift chain, some relationships that they have been a part of and a general outlook on this type of business model.
Is Savers / Value Village a Charity Store?
The simple answer to this question is no. Savers is not a charity thrift store. In fact, they explain this in detail several times on their website. “We’ve chosen to keep our business model this way—to buy our supply from local nonprofits.” We pay our nonprofit partners for your stuff, helping them fund programs in your community.” “Shopping in our stores does not support any nonprofit.”
It sounds a little tricky, if Savers is a for-profit “charity” thrift store, what type of business model is this actually?
To be honest with you, the type of business model is actually genius from a capitalistic standpoint. Savers has a relationship with a charity organization within their stores and essentially pays the charity by-the-pound for your donations. Things they want and think they can sell; they pay a certain $ per pound (this information is unavailable to the public) and things that they don’t want and do not think fit their store standards they pay a less amount per pound and then “recycle.” Like I said, this amount is undisclosed to the public but certain partners have gone on record saying that Savers will pay $40,000 and then flip that donation for $1 million.
The recycling is where things can get a little tricky. If they take after the model of the textile recycling centers, what that usually means is that they would ship the unwanted clothing overseas to a buyer that will pay them more per pound than they purchased it for. I’m not saying that is exactly what they do at the Savers recycling warehouses, but it would be hard to convince me that they send clothing over-seas on their own dime.
Savers and Charity Relationships
Several of the nearly 100 charity organizations that have been associated with the Savers organization have severed ties. According to an NBC article, 3 of 6 have cited unfavorable terms and conditions. Director of the Boston area Big Brother Big Sister Foundation was cited saying the following: “If you’re making a million, and we’re making $40,000, how is that helping charities?” “It may be legal, but it’s not right.”
Other charities associated with the Savers organization have openly come out in the defense of the for-profit conglomerate stating that public funding for charities has dried-up and if it weren’t for Savers’ purchasing contributions, they may not make it.
It’s fair to say that the business model that Savers has developed has certainly benefited charities as well as itself. Although Savers does not report its financial performance to the public, their yearly revenue has estimated to reach $1.2 billion according to Moody’s Investor’s Service.
As a business owner myself, I find this business model to be fascinating. The problem I could see would be if the general public is deceived into thinking that their donations go directly to benefiting the charity associated with the business, when actually it does not. In the case of Savers and Value Village, the charity does receive compensation by-the-pound when Savers pays for the clothing. They then put the clothing into their stores and price them to make a profit. What is unwanted goes into their recycling center.
I know in recent times; Savers has created an announcement that plays over the telecom during business hours reinforcing the fact that they are a for-profit company. The next time you are in Savers, try to pay attention to the telecom to hear the message.
-Ian Drake, Diversity Consignment