CHARLOTTE, N.C. -- One of the Salvation Army’s longest running Charlotte programs – an addiction rehab center opened in 1950 – is facing an uncertain future due to the city’s increasingly competitive charity thrift store market.
The agency’s Adult Rehabilitation Center has been fighting to break even for more than a decade, due to its heavy reliance on fluctuating thrift store sales to cover costs. But finances worsened this winter, when a dip in sales created a $65,000 deficit over two months.
Salvation Army leaders blame growing competition for thrift store donations. The region’s thrift store market is more crowded than ever, with 35-plus thrift stores and a proliferation of donation bins in parking lots.
Goodwill Industries’ research shows those boxes have tripled from 100 in 2010 to more than 300 this year, with no end in sight.
Meanwhile, thrift store donations to Goodwill and Salvation Army have been stagnant.
The Salvation Army’s five area thrift stores have been hardest hit, with a 33 percent dip in donated goods over the winter. That amounts to about 2,700 fewer clothing items donated per day.
Annual profits for the stores have recently fallen $400,000 below the $4.4 million needed for the Adult Rehabilitation Center’s annual budget. The agency has already taken steps to cut expenses, including 13 layoffs in November when profits dropped by $40,000.
Continued deficits could lead to closing the facility, said Maj. Gerald Street of the Salvation Army. He says the drop in donations comes at a critical time for the rehabilitation center, which gets 100 percent of its budget from store sales.
“If we kept doing what we did in November, the rehab center would be in danger by late spring,” said Street, who is working to make the agency’s thrift stores more profitable.
“I did research on the financial records 15 years back and the center has been (financially) viable for only three of those 12 years. We need to get to a place where we can pay our own way.”
Growing donation boxes
Reselling donated goods to cover expenses is a key program for several of the community’s best known nonprofits, including Goodwill Industries, the Assistance League of Charlotte and Habitat for Humanity.
Goodwill has the region’s most aggressive thrift store model, with 600 employees and $36 million in sales last year. It has 22 stores, 11 attended donation centers operating out of tractor trailers and 22 donation boxes.
Money raised through the stores pays the bills for job readiness programs that last year helped 15,000 needy people get training in high-demand job fields.
Barbara Maida-Stolle, Goodwill’s vice president of retail services, predicts tough times ahead due to the growing number of donation boxes benefitting for-profit outfits like Second Life Recycling and Better World Recycling.
Such organizations sell donated clothing to salvagers, who then resell it at a profit to importers in developing countries. Companies like Better World Recycling say they’re helping the environment because Charlotte’s charities can’t handle the abundance of unused textiles. They say their work keep excess clothing out of landfills.
Salvation Army and Goodwill officials disagree with assertions that there’s a surplus of textiles and household goods in the market. “A lot of the boxes out there have an implied connection with nonprofits, but actually these boxes go to for-profit organizations,” Maida-Stolle said.
“The public may believe they are going for good, but it’s not staying in our community. These for-profit organizations are taking these donated goods and turning a profit on them.”
Charities are fighting the trend with new locations, store remodeling and pricing specials.
The Salvation Army remodeled stores, added donation boxes of its own in parking lots and opened a new location last year.
Goodwill added two stores in 2012 and recently unveiled a program called Goodwill Solutions, which will deliver a storage pod to homes where numerous items are being cleared out.
The Assistance League Thrift Shop on South Tryon Street has beefed up its sales by offering discounts to the military and Charlotte Mecklenburg Schools staff. The store also formed a partnership with La-Z-Boy Furniture to accept gently used furniture for resale. The $450,000 projected revenue will pay for programs to help at-risk kids.
Not all the new ideas are working, however.
The Salvation Army invested $370,000 to open a new store on Pineville Matthews Road and it has yet to meet expectations. Street noted it needs both donations and shoppers.
He remains optimistic things will improve, but admits the Salvation Army has closed rehab centers in other states after their thrift store programs failed to cover the bills.
The rehab center helps about 500 men a year recover from addictions. There are currently 110 men in the program, which costs the agency about $35 a day per man.
Its past money shortages have been eased with cash given by the Salvation Army’s Southern Territory Command in Atlanta, Street said.
“But they are not going to do that forever.”