Sunday, December 11, 2011

How Our Good Will turned "That" Goodwill into a "Nonprofit" Billionaire

Goodwill is generally regarded as the epitome of brotherly love and generosity.

       (12/11/2014) If you feel a warm-and-fuzzy good will toward Goodwill, it's probably because you don't know the facts. Until recently, when I was investigating Savers Thrift Stores' fraudulent modus operandi (,  I thought of Goodwill as being an honorable, charitable shopping venue where I could have a blast, buying great stuff for great prices, which I've been doing since the late 1970s. Its own website characterizes it as one of the nation’s top five most valuable and recognized nonprofit brands.  In 2012 and 2013, Forbes named it as one of America’s Top 25 Most Inspiring Companies.
    In 2012, Goodwill Industries International, Inc., the national parent corporation for all of the nation's secondhand clothing franchises, paid its president and CEO James Gibbons $729,000.  Dozens of state and local chapters copied the national headquarters' executive extravagance. IRS form 990s indicate their salaries were hundreds of thousands of dollars each (17 of them exceeded a million dollars), essentially for being store managers. It is they, not the umbrella organization headquarters, who determine their pay.
    That's where the profit from your donations goes. The government pays the disabled employees, costing taxpayers about $90 million a year..This is yet another "beloved" charity, such as the Red Cross and United Way, that has shown itself to be fundamentally corrupt and contemptuous of its good-hearted donors. 

The current President and CEO of Goodwill is Jim Gibbons, who in 2011 received a total reported compensation of $725,000.
he current President and CEO of Goodwill is Jim Gibbons, who in 2011 received a total reported compensation of $725,000.

    Goodwill Industries International functions as a member association, representing the network of independent, community-based agencies and providing products, services and expertise that support the local organizations. Each local member is an autonomous affiliate that pays its top executives more than a quarter million dollars per year in total compensation, while simultaneously paying some of its employees less than the federal minimum wage (Some employees earn just 22 cents per hour.)
    In 2012, the "nonprofit," which has become synonymous with used-clothing donations, generated $4.89 billion in total annual revenue.  The bulk of the company’s revenue, $3.53 billion, came from sales at its 2,700 secondhand shops.
    "Goodwill Industries is one of the most well-known charitable organizations in the United States, but most members of the general public are unaware that Goodwill exploits people with disabilities," said Dr. Marc Maurer, President of the National Federation of the Blind, which has organized a nationwide protest of offending Goodwill organizations. "We are conducting informational protests to make the public aware of this practice that, although sadly still legal, is unfair, discriminatory, and immoral." 

    Goodwill has repeatedly said, "Without the law, many people with disabilities could lose their jobs." The nonprofit emphasizes that these are "employees whose disability significantly impairs their productivity." Why are the disabled singled out with the most rigid productivity assessments? After all, the federal minimum wage protections that you and I receive aren't tied to our productivity.   
    "Subminimum wage, as enforced by Section 14(c) of the Fair Labor Standards Act of 1938, is wrong because it creates a double standard for how employees, particularly employees with disabilities, should be paid, by offering 'special wage certificates,'" points out Andy Voss, president of the Autistic Self Advocacy Network of Sacramento, which organized a protest outside of a Sacramento Goodwill store in August (pictured below). "It is appalling that organizations that purport to assist workers with disabilities in job training, would hold them back by circumventing the standard of living that minimum wage provides other American workers."
    If people with disabilities are well-qualified and productive employees, why continue the policy?
    Short answer: Corporate greed. 
    Last year, a former Goodwill executive was sentenced to 70 months in prison for embezzling $1million from MERS/Missouri Goodwill Industries Inc., according to the St. Louis Post-Dispatch. In California, smaller charities, such as D.A.R.E. America, say that Goodwill has acted like a nonprofit bully and is currently using powerful lobbyists to shut down their clothing donation programs.
    Last year, a former Goodwill executive was sentenced to 70 months in prison for embezzling $1million from MERS/Missouri Goodwill Industries Inc., according to the St. Louis Post-Dispatch. In California, smaller charities, such as D.A.R.E. America, say that Goodwill has acted like a nonprofit bully and is currently using powerful lobbyists to shut down their clothing donation programs.
Goodwill CEO James Gibbons pays himself close to a million dollars.

    In 38 states, spanning from Hawaii to Florida, a majority of Goodwill organizations pay workers with disabilities less than the federal minimum wage, while simultaneously spending tens of millions of dollars in executive compensation and travel-related expenses, a Watchdog investigation has found.
Goodwill’s top executives received more than $53.7 million in total compensation in 2012.
  • Goodwill of Southern California paid more than $1.1 million in total compensation to its then-CEO, making him the highest paid Goodwill executive in the country.
  • The highest-paid employees of 101 Goodwill organizations received, on average, a total compensation package worth nearly a quarter-million dollars per year, or $24.7 million in total compensation.
  • Seventeen Goodwill entities reported executive compensation in excess of $1 million per year with 30 CEOs receiving more than $293,000 per year in total compensation.
  • A husband-wife Goodwill executive team in North Carolina collected a combined $795,372 in total compensation.
  • Goodwill entities spent more than $39.1 million in travel-related expenses, of which 14 entities spent more than $1 million in travel-related expenses.
  • Thirteen organizations spent more than $100,000 in annual conference expenses.
Bargain-hunting is fun, but it's Goodwill executives who get the greatest deals.
 All of Goodwill’s actions are not only legal. , but, in some cases, being funded by your tax dollars.
    Goodwill Industries of Eastern North Carolina Inc. President and CEO Dennis McLain received $430,239 in total compensation, while his wife, Linda, received another $365,133 in pay and benefits. The group’s 2011 tax return notes that the couple was also entitled to first-class travel and access to a private club, paid for, in part, with revenue generated from the efforts of disabled workers who were paid less than minimum wage under the special wage certificate program.
    “A 2012 audit report shows Goodwill also approved a tax-free retirement housing allowance for the president, $2,500 a month from his retirement until his death, and a retirement medical plan paying up to $9,000 a year,” reported the News Observer’s Josh Shaffer in February.
    The News Observer also raised questions about more than a million dollars in charitable funds that the group allegedly spent in sub-Saharan Africa.
    In 2011, the highest-paid Goodwill executive in the country was Douglas Barr, then-CEO of Goodwill of Southern California. Barr, who retired in July 2012, received a total compensation package worth $1,188,733, including a base salary of $350,200, bonuses worth $87,550, retirement benefits of $71,050, and $637,864 in other reportable compensation.
   Eight years after the Oregon Department of Justice called his salary “unreasonable,” Goodwill says Michael Miller earned another hefty paycheck.     
    An 2012 annual report filed with the state shows Miller earned $856,043.
     The same year, the organization spent $3.76 million in total compensation for top personnel, $2.5 million in ravel-related expenses and $424,997 on conferences, conventions and meetings. 
    Goodwill Industries of Greater New York and Northern New Jersey provides no audited financials or whistleblower protections, but in 2012, it received Contributions, Gifts & Grants worth $31,702,006; Government Grants $31,971,331; Excess (or Deficit) for the year $1,972,805; Net Assets $38,582,640
    " Goodwill® is more than a household name with a vast retail footprint. We’re a $5 billion enterprise built on helping people achieve their potential through the power of work, and we’re growing every day," the "charity's" website says.     
    It also lures profit making firms to"Build your brand by partnering with us".
   "When you become a sponsor, you secure exclusive, cost-effective access to Goodwill decision makers in order to build relationship and market your organization. We can help you:
  • Personally introduce your organization to Goodwill staff.
  • Build upon existing relationships in our network and grow new ones.
  • Increase exposure to local Goodwill agencies and maximize your profits.

    Sponsorship Levels

    Annual Sponsorship – The annual sponsorship program exists at four levels and is designed for organizations interested in attending four or five events. Each level includes benefits such as event print, web and digital exposure as well as other high visibility opportunities.
  • Platinum Sponsorship: $50,000
  • Gold Sponsorship: $30,000
  • Silver Sponsorship: $20,000
  • Bronze Sponsorship: $10,000
"our current five-year plan calls for unprecedented expansion," the 2012 annual report states.
    Our Salt Lake City store, located in Millcreek, began amassing a positive net income within three months of opening in 2012,  and continues to improve every month. 
    The most compelling complaint against Goodwill, other than its executive compensation and lavish perks is the way it pays its workers. Acccording to its website, "When you donate your stuff to Goodwill®, you create opportunities for individuals in your community looking to find a job and build skills, including the disabled, veterans and military families, single mothers, and many others. Thanks to the programs made possible by your donations, more than 261,000 people earned jobs in 2012 – that’s one person finding a job every 27 seconds of every business day."   
    In fact, According to data obtained from the U.S. Department of Labor’s Wage and Hour Division, 109 of 165 Goodwill entities in North America employ workers through the Special Wage Certificate program, which grants the nonprofits the right to pay subminimum wages to people with disabilities.
    Of course, people with disabilities aren’t inherently less productive employees.Samuel R. Bagenstos, a professor of law at the University of Michigan Law Schooland a former deputy attorney general for civil rights, has written “The Case Against the Section 14(c) Subminimum Wage Program.” He cites examples of how workshop employers automatically assigned jobs “without any connection to the abilities and background of the individuals.” One college-educated woman with cerebral palsy was paid $3 per week to assemble rubber mats, according to a former federal rehabilitation commissioner cited by Bagenstos.
    According to a 2013 Forbes article, "For Sheila Leigland, a blind Goodwill employee in Great Falls, Montana, earning $3.99 an hour was already tough. But when the Rockville, Md.-based nonprofit wanted to cut her salary to $2.75, she decided it was time to quit. 'I want to be paid a living wage for meaningful work,' she says. Blind since birth, Leigland, 58, survives on disability payments.
    The plight of the Leiglands and of other low-paid Goodwill workers has gotten some attention lately, which has resulted in a petition on that has pulled in hundreds of thousands of signatures since late June of last year. The petition calls on Goodwill to pay all its workers at least the minimum wage. “If you can afford multimillion dollar executive compensation packages,” says the petition, “You can afford to do right by your workers.”
     According to Labor Department documents dug up by NBC, Goodwill has paid workers in Pennsylvania as little as 22 cents, 38 cents and 41 cents an hour.
    At Goodwill, explains Leigland, disabled employees take a timed test to see how quickly they can sort and hang a rack of clothes. The garments must be facing to the left and the top buttons fastened and separated into men’s, women’s and children’s sections. Goodwill wants workers to be able to hang 100 garments with no errors in 32 minutes. “We can’t do it that quickly because we can’t look at a garment and see the size,” she says about her experience and her husband’s. Depending on how slow the employee works, Goodwill lowers the hourly wage.  
    Goodwill characterizes itself as the nation’s largest private provider of training and employment services for people with special needs and disabilities.   “It is the company of second chances,” said an ex-convict who couldn't find a job anywhere else. The problem is, it trains people primarily for minimum wage jobs.
    In Jacksonville, Fla., Goodwill’s Job Junctions — six full-service career centers through Jacksonville — provide skills training, career counseling, job leads and on-site interviews with employers. Also, jobs are generated by Goodwill stores and donation centers and by self-supporting laundry, landscaping and holiday decoration services and four federal military contracts.   
    Goodwill Industries of Hawaii is looking to collect 100,000 boxes of donations this month to support its job training and placement programs, according to Pacific Business News. It's the organization's first-ever push to reach the 100K mark in one month.
    "We've come close [to 100,000 donations] before, we just need to get the word out," said Katy Chen, Goodwill's chief administrative officer. "We have a new Kailua store and we feel that we can reach that goal. It's just as important to have the opportunity to share that goal with the community to reach something we've never done before."
    Each holiday season, Goodwill conducts a donation drive. The greatest number of donations are received between Christmas day and New Year's, Chen says.
     Goodwill helps more than 13,000 people a year with job counseling, placement and training, focusing on individuals who have struggled to find a job because of a disability, previous incarceration, or a drug or alcohol addiction. 
     Goodwill Industries of Kansas Inc., with its $14 million operating budget, has just added Angela Bascue as its vice president of retail operations. Bascue spent the past 17 years with Claire's Accessories overseeing 155 retail stores in eight states. With Goodwill, Bascue will oversee the organization's retail arm, which includes 18 locations across Kansas and an online store.
    Three months after retiring from the Appleton Police Department, former Chief Pete Helein has accepted a job with Goodwill Industries of North Central Wisconsin.
Helein will oversee the organization's Circles of Care program and Goodwill University program. His position doesn't have a title, since it combines work with the new Goodwill University program and part-time work overseeing Circles of Care, said Goodwill spokesman Dan Flannery.    
    Goodwill Industries is opening an adults-only charter high school in South Bend to help adults earn their high school diplomas.
    The Excel Center, which will be located at the Bendix plant, 401 N. Bendix Dr., will start classes in July with a class of 350 students, according to a report from WSBT. It will be the only high school in the area geared toward adults, The South Bend Tribune reported.
Throughout the state, The Excel Center’s schools like the one opening in South Bend help students balance work and school, provide childcare assistance and even offer free transportation assistance, the center’s website says.
    The school will be partnered with Ivy Tech, allowing students to earn dual credits. Students will also be paired with life coaches to help them achieve their goals. 
    There's no doubt that Goodwill does some good, just as most charities with bloated bureaucracies and unconscionable executive pay do. But that doesn't let the "nonprofit" off the hook for the bona fide profits it pays its top people, while exploiting minimum- and sub-mininum-wage workers.