Why throw-out when you can donate?

August 2, 2007 1:34 PM

Why would a retail chain want its stores to discard unsold clearance items rather than donate them to a charity that can use them?

I work for a nonprofit that relies heavily on donated products from national shopping chains and other consumer product producers. Lately, when we ask our local stores for product donations we hear that is now corporate policy that all product that has been reduced for clearance, but still hasn't sold, must be discarded and cannot be donated to charity.

This is a recent policy change that has swept across the retail industry. Does anyone know why this is? Is it Sarbanes-Oxley? Or was there a tax code change?

As a bonus, do you have any strategies that might helps us convince executives at the corporate level to allow their local stores to donate to us?

posted by IndigoSkye to Work & Money (27 answers total)

Product liability? Just a guess.
posted by jtfowl0 at 1:36 PM on August 2, 2007

I'm guessing it has to do with perceived value of the goods. How exclusive is (f'r ex) a Prada bag if any schlub can buy one cheap at a charity store?
posted by dirtynumbangelboy at 1:36 PM on August 2, 2007

My dad used to work for Wal-Mart, and it used to break his heart do throw basketballs away that could have been given to youth centers. However, they eventually were able to change things so that the broken bags of dog food were given to an animal shelter and the basketballs had a big black X drawn on them so that no one could return them.

He told me that part of it was that people would get stuff for nothing and then return it without a receipt for cash.
posted by 4ster at 1:39 PM on August 2, 2007 [1 favorite]

I used to work for a clothing retailer. The local charities would often ask for coats and things for donations. They said no most times.

Their justification: what happens (especially with samples of next year's product) when a homeless person is walking down the street with it?
posted by k8t at 1:40 PM on August 2, 2007 [1 favorite]

I feel the pain - I worked at a large farmer's market-type store in Atlanta and used to grieve at the amount of food that was routinely discarded. Again, liability was the issue. They'd occasionally sell some of the damaged stuff to employees at a steep discount, though.
posted by jquinby at 1:46 PM on August 2, 2007

Perhaps they're leery that their donated clothes may end up being sold overseas?

Food, I can understand...even with the best intentions, if some person got sick from donated food, lawsuits would ensue.
posted by Oriole Adams at 1:52 PM on August 2, 2007

They might worry about expiration dates and such, or product recalls the charity doesn't know about. But I think it comes down to them thinking, "Well, if all the people working for the charity know we give clearance items to that charity, and our employees do, too, we will lose sales because they will just wait for us to donate it and then run over to the charity, or tell their friends to go there..." which has some validity, but at the point they become clearance items, it seems a little over the top to put that much thought into it, especially when you consider the tax write-off.

That tax break is probably, by the way, what I would really hit the companies with, when it came to persuading them. You could also offer to mark the items in some way to make them obvious as thrift sale items, thus rendering them less viable for possible resale, return, etc.
posted by misha at 1:58 PM on August 2, 2007

Response by poster: While the thrift store point is a valid one, we're not reselling the items. They're given either as gifts or food for consumption to our program participants.

I'm thinking that we should write up a clear statement that explains how the donated items will be used and some ways they won't be used (sold overseas, at thrift store, etc). That might help in our pitch.

Y'all have been a great help so far. Keep'em coming.
posted by IndigoSkye at 2:23 PM on August 2, 2007

Maybe this isn't a direction you don't want to go in, but I'd think that "Chain Store X" would not want the bad publicity if the local TV station/newspaper were told and willing to do a story on it. Not that you'd threaten anyone, but by publicizing this waste the companies might be "encouraged" to change policy.

This incident sounds like many of the lurid lead-ins on the local newscast to me.
posted by MasonDixon at 2:29 PM on August 2, 2007

I'm guessing it has to do with perceived value of the goods. How exclusive is (f'r ex) a Prada bag if any schlub can buy one cheap at a charity store?

One might guess further that the vendor may have written a stipulation right into a sales contract.
posted by gimonca at 2:32 PM on August 2, 2007

what happens (especially with samples of next year's product) when a homeless person is walking down the street with it?

That's sad, if they're not donating just because they're worried about their precious product's image.
posted by IndigoRain at 2:33 PM on August 2, 2007

Corporate greed. There's little point in trying to find rationality beyond that.
posted by zek at 2:57 PM on August 2, 2007 [1 favorite]

Is there actually a tax break for corporations? I assume they can write-off it off against their profits, but can't they do the same with unsold merchandise?
posted by smackfu at 2:59 PM on August 2, 2007

As mentioned above, liability issues and brand management might also be important.

When items are reduced for clearance, they may be trying to recover any money they may have invested in them. It might be simply a case of needing the benefit of cash inflows now, rather then waiting months to recognize the benefit as a charitable contribution deduction on a corporate tax return later. Consider focusing on companies within a couple months of ending their quarter or fiscal year.

Also, certain companies tend to focus their charitable donations in certain areas such as education, feeding the homeless, etc. Find which companies tend to focus more in what your organization does and try to network and build up a stronger relationship with them.

I think you're on the right track clearly stating what you plan to do with such donated items. I would consider bending over backwards by offering to restrict such donated items use (i.e. "we recognize your desire to protect your image here in X region, so we will only ship these products overseas).
posted by debit at 3:09 PM on August 2, 2007

Is there actually a tax break for corporations? I assume they can write-off it off against their profits, but can't they do the same with unsold merchandise?

I'm not sure, but donations might be deducted at retail value, were write offs can only be deducted at cost.
posted by Chuckles at 3:16 PM on August 2, 2007

4ster has it right. Stores would be more likely to give those items to a chariity if there was a 'foolproof' method to prevent anyone returning the item. Unfortunately, some people will do that just to get the cash. The public is not always honest and honorable. It is a shame.
posted by JayRwv at 3:30 PM on August 2, 2007

Stores would be more likely to give those items to a charity if there was a 'foolproof' method to prevent anyone returning the item. Unfortunately, some people will do that just to get the cash.

Isn't this where the concept of the receipt comes in? Is it normal in America to be able to return products with no actual proof of purchase?
posted by Lebannen at 3:47 PM on August 2, 2007

I know a few friends that worked at a grocery store and the store stopped letting employees have damaged items for free because a lot of the more desirable things started getting "dropped" pretty often. I'm sure between liability, perceived value of a product/brand and this, you have most of your answer covered.
posted by atomly at 3:53 PM on August 2, 2007

Is it normal in America to be able to return products with no actual proof of purchase?

Many large retail chains allow one to return merchandise without a receipt and then receive store credit. I've done it at Target and Home Depot a couple of times when I had lost my receipt.
posted by Robert Angelo at 3:59 PM on August 2, 2007

Target regularly donates a lot of stuff to the Goodwill in my area (South Austin). They generally mark out the tag or clip it in some way, just like they do when stuff goes to Marshalls or TJ Maxx or whatever.

Maybe you could suggest this? (The tag sewn into the clothes, but also, sometimes, the paper price tag too.)
posted by fiercecupcake at 4:16 PM on August 2, 2007

I don't think the local stores will have much flexibility to fill your requests if it's a new national policy, so you'll probably need to figure out who the national authority is and approach them. They may also be able to give you the rationale which would make it easier for you to propose a solution that works for everybody.
posted by willnot at 4:33 PM on August 2, 2007

Another factor is the hassle of coordination - items need to be collected from the retail location, inventoried, boxed, shipped to the charity, etc.

Generally, tax deductions are taken at fair market value. Fair market may actually be less than the cost if the item has been heavily discounted. (IANACPA) We need a tax professional to help us on this point.

I can say that as someone who's worked in fund development - corporations are well aware of the tax advantage of donations. That's not new information and it doesn't differentiate your charity from any other. Tax advantage shouldn't be the basis of your solicitation.
posted by 26.2 at 4:59 PM on August 2, 2007

Maybe you could offer to cut the tags off / remove all labels and other branding / obviously deface all items, so that they would be clearly both un-returnable, and wouldn't diminish the brand value?

But I also think that if this is "corporate policy," you're going to have to go higher in these companies' organizations, and perhaps apply some publicity pressure.
posted by Kadin2048 at 5:39 PM on August 2, 2007

Piggybacking on this...which charities make sure that what's donated goes back to the community rather than overseas for a profit?
posted by brujita at 8:55 PM on August 2, 2007

Check out what mechanism of "discarding" is required by this contract. If it must be given to a certain company, approach that company about it. If it's up to individual stores to organize the discards, approach them; zero is a good bid, and even if you won't be taking away all of the stuff, you might be able to significantly reduce their disposal costs.

So long as the manager of the store can tell the bloodsucking undead vampire leeches in corporate HQ "yes, we discarded the goods", they may well be happy to turn a blind eye to what actually happens to the goods.
posted by aeschenkarnos at 10:49 PM on August 2, 2007

My brother worked at a Super Wal-Mart, but quit after a month or so. One of his reasons was disgust at how much perfectly fine goods (groceries more than anything) were just thrown away rather than given to the needy.
posted by mrbill at 1:36 AM on August 3, 2007

Have you tried contacting corporate about it? There's the chance the individual store managers just don't want to bother. Also, with stores like Target and Walmart, it really isn't that easy to return things without a receipt anymore (the last I saw, Target wouldn't take a return worth more than $25 without a receipt). Xing out the UPC with a marker would be enough to prevent return fraud from most stores.
posted by drezdn at 7:08 AM on August 3, 2007