A 501(c)(3) nonprofit has run a popular thrift store in our town for decades and used the proceeds and other donations to help locals in need. The new board has recently fired long-term employees without explanation and closed the store indefinitely. They also threw away most of the merchandise because of “rodent exposure.” They have generated a lot of unrest in the community, especially among former workers, volunteers, and those whose donations were thrown in the trash. Can you tell me if any law has been violated, or suggest a course of action to restrain the board? —From the Website.
They probably haven’t violated any laws. In general, donors who make a contribution of stuff to a charity retain no rights in the property unless they do so by special agreement, and that is not likely in a thrift store environment. In addition, no matter how valuable the donors may think their property is, the business inherently involves trashing a lot of items that are not marketable even in a thrift store.
But the situation does show why Congress has distinguished between private foundations in one group, that are supported by a very small group of donors, are not responsive to the public, and are subject to a variety of more restrictive legal requirements, and public charities in another group, that are supported by a wide range of public contributions and purchases and have much more flexibility in their activities. You and your dissatisfied neighbors can talk to this board and tell them you are not likely to support them if you don’t get satisfactory answers to your questions. Since they need your support to survive economically (and to avoid becoming a private foundation themselves), it is not in their interest to antagonize you.
At the same time, you don’t really want to kill the thrift store. The proceeds are used to help “locals in need” and its existence provides a socially beneficial outlet for neighbors cleaning out some of their accumulated junk. The legal requirements of a public charity create an avenue for the thrift store and the community to talk to each other to try to get the best outcome for all involved.
I operated a nonprofit in a popular downtown area serving youth in the arts. One building we were in was ten years and was demolished to make way for a new district. We raised $2.4 million and the city gave us $1 million and built a new facility, We operated out of the new building for 11 years. We lost so much in assets. We also had a new board that did much damage to the org when I left. Similar story to this one. Long story short, the mayor kicked us out as he wanted to sell the building. It has been empty for 6.5 years. Now, the city wants to put in city offices in this custom made arts facility. What a shame. I feel for all our donors that it is now being repurposed for a city deal versus a cultural arts situation there.