What's the Difference Between Nonprofit and For-Profit Thrift Stores?

     The traditional business model for most thrift stores follow the same outline. They receive donations in the forms of clothing, footwear, accessories and etc. Then they sell these items so they can generate revenue.

     Now what each thrift store does with their revenue will determine what kind of organization they are: nonprofit or for-profit. These two classifications might alter the thrift stores you decide to support, depending on your shopping habits. This blog post will detail the differences between the two as well as provide some examples of each. 

Nonprofit Thrift Store

     Like any nonprofit organization, a nonprofit thrift store will not use its profits to benefit a shareholder or individual. The goal of a nonprofit is to use the net revenue to benefit the community or donate to a charitable cause. These goals go hand in hand with each other, many nonprofit thrift stores are vocal about their causes, so be sure to pay attention to their mission statements. 

     These companies are also exempt from taxes under federal law. Donations to these organizations may also be tax deductible depending on each company's policies. Be sure to check online for each company's policies in regards to donating items.

     To help you better understand the concept of a nonprofit thrift store, we can take the Cure Thrift Shop as an example. The Cure Thrift Shop is a nonprofit thrift store that donates its proceeds towards Type 1 Diabetes research and advocacy. This is a charitable cause that the founder has used to fuel the company's business. 

     Here is short list of some nonprofit thrift stores that you can support:

• Goodwill 

  

  Source: Goodwill Virginia

• Cure Thrift Shop 

  

  Source: Fleamapket

• Salvation Army 

  

  Source: Salvation Army

For-Profit Thrift Store

     A for-profit thrift store is exactly what it sounds like. These businesses are not required to donate their profits, they are able to allocate their net revenue in any manner that they want. The issue is that some for-profit thrift stores tout charitable causes, but have been caught doing the opposite. 

     For example, Savers and Value Village are two for-profit thrift stores that are ran by the same parent company. Savers says on their website that they have nonprofit partners that they actually buy donations of clothing and other items from. However, the net revenue from these companies does not necessarily need to be donated to charitable causes since they already use a portion of their assets to purchase their inventory in a charitable way.

Source: Bloomberg

Source: Financial Post