The Case Against Donating to Goodwill

Chris Janota, Garage Sale Rover

After observing the donation landscape around me I find it’s becoming increasingly common to donate your stuff to thrift stores rather than hold your own garage sale.  Rather than taking up a Saturday and dealing with city regulations on garage sales, it’s convenient to just load up your unwanted stuff in the car and run it over to the new local Goodwill store in town.

It’s easy to donate to Goodwill stores.  Their drop off locations are conveniently located.  You receive a tax donation receipt  when you make your donation.  Federal law permits Goodwill donors to claim tax deductions for many financial contributions and for donated clothing and household items in good, used condition or better.

You can feel good that your donation to Goodwill is helping a worthy cause. Or should you?  What does your donation support? 

I wonder if people would donate as much to Goodwill if it was understood donations were not being sold to benefit the local community.  The last ten years the prices are being set to maximize profits and no longer to benefit people  the local community.  If fact, Goodwill now sells two thirds of its books, movies and music online. Precious Moments Figurines, for example, were selling for $16 on  About 50% of donated clothing is shredded for filler material or sold over seas commonly in Africa.

Prices are optimized to yield the highest price possible but where is the money going?  Goodwill’s Easter Seals program that fosters job preparation and skills training.  But the last 10 years 85 to 95% of the profit have been funneled into new store openings and their online and mobile presence.  Goodwill is a business. It has been opening new stores at a rate any for-profit business would envy.   Its corporate salaries are cushy.  In 1999 then Goodwill CEO David M. Cooney made $209,153: not bad. This, however, was about the time that Goodwill began implementing its growth plan. It was at this time that George W. Kessinger took over as CEO of Goodwill Industries International, in 2001, after 24 years as Orange County Goodwill president.  As CEO he now earns over 1 million per year.

Should Goodwill’s tax status be any different from any rapidly growing for profit retailer?  Why couldn’t Target accept free donations and get tax exempt status if they agreed to reinvest their shareholder dividend back into more stores?  Target has been giving back to charity about 2% of profits for years.  Any company operating at a loss surely would be agreeable to those terms as well.

The tax status that Goodwill receives is no different from the Salvation Army, St Vincent de Paul or any other mega non-profit thrift store.  But their rate of growth and pricing strategy is what makes them stand out from the pack.  I do not make any claim that Goodwill’s tax status is being abused in any way but they truth lies in the corporate fat, the cushy overhead and perks and operational inefficiencies that are fostered in any government entity without accountability.  I just argue for transparency and a public openness what donations are feeding into.  The irony lies in their name, “Goodwill.”  If they live by that name and use the tax exempt status we have given them to societies benefit perhaps they can help develop widespread adoption of reuse which puts less strain on the earth’s ability to provide scarce resources for manufacturing.

Chris Janota is the developer of Garage Sale Rover, a free mobile app for finding garage sales and estate sales available on the iPhone App Store and Google Play.