Amazon has largely taken commercial retailing out of the malls and brought it to people’s computer screens. Online banking has done the same for the banking industry. The reality is that the brick-and-mortar business model is going out of style, a trend readily applicable to the changing capacities of not-for-profit organizations. With the recent closures and financial distress of Goodwill, forcing the shutdown of 16 store, 10 donation centres, and two offices within Ontario, one must question how Goodwill can tailor its corporate planning to the 21st century. And furthermore, what does the future hold for not-for-profit organizations that rely on the funding of external partners to keep their doors open?
What is happening to Goodwill? An organization like this is unable to control the changing trends of thrift shopping, making it challenging to compete with the new forms of second-hand retail in the clothing sector. High-end thrift shops have become a growing trend in fashion and have resulted in an increase of boutiques opening throughout the country. Goodwill faces more competition and, as a donation-based organization, is forced to fight for business.
Nicer clothing brands and styles are more likely to appear in these upscale second-hand clothing stores, leaving a place like Goodwill with slim pickings. The for-profit stores (including Value Village and Talize) and other not for profit organization (such as Salvation Army and the Society of St. Vincent de Paul) are Goodwill’s prime competitors. Many pay for donated clothing, providing incentive to get money for the best-quality clothing. There is also a growing presence of second-hand goods on sites like Kijiji, which has slowed the flow of donations to Goodwill. Not only this, but there are many new not-for-profit organizations that are specifically mandated to help a particular group of people rather than the masses. For example, we have seen an influx of donations specifically geared to support Syrian refugees.
But the Goodwill story does not end there: the majority of its board members have resigned from the company as the news of the closures came out. A mixture of poor management and questionable financial decisions over the course of this past decade are credited with having prompted the closures. A mixture of poor management and questionable financial decisions over the course of this past decade are credited with having prompted the closures.Going back a decade, in 2006, the charity’s private institutional lender cancelled its line of credit because of financial concerns. Clearly, it has been a long-term struggle to come up with funds. Wages are the main annual expense for Goodwill, which has been difficult due to the pressure of a rising minimum wage and the fact that the employees of Goodwill are unionized, which requires a fair amount of negotiating.
The hit of the 2008 financial crisis and the high rental costs of places in the city caused little hope of Goodwill maintaining financial stability in the years following. Despite being behind financially, the company has not officially closed its doors, nor has it declared bankruptcy. However, it is leaving 430—many of whom are disabled or have criminal records—unemployed and questioning whether or not they were lawfully fired.
From a macro perspective, Goodwill’s closures call into question the sustainability of these large organizations when there are a growing number of new, non-traditional ways to be involved in the community Many organizations have evolved to incorporate technology-enabled charitable giving, such as Kickstarter and micro-loans. Not only this, but the problem resulting from the mass exodus of board members only makes it harder to entice smart and savvy leaders to work for organizations like Goodwill, when they are left with a financial mess to clean up.
Goodwill’s situation is one facing many non-profit organizations: scarce funding, growing competition in the market, and even growing competition in the not-for-profit sector. With increasing federal deficits and the problems facing federalism, it is to no surprise that non-profits receiving governmental funding are suffering as well. In the National Survey of Non-profit and Voluntary Organizations by Imagine Canada, findings show that the percentage of charities under high stress believing that their organizational existence is under threat is 47 per cent. Not only are organizations facing this issue, but the closing of Goodwill locations leaves many individuals who rely on this organization to assist them in a precarious situation.
In light of the growing change, many retail stores have moved to online shopping with incentives to use free shipping. New innovation is the trend in business, requiring modifications that have been invented or reinvented. The well-being and sustainability for an increasing number of not-for-profit organizations, such as Goodwill, face the pressure of society’s evolving trends, economic models, and growth in the non-profit sector.
Can non-profit organizations evolve to the changing realities they face? An organization like United Way Toronto & York Region has been able to maintain significant funding in light of these major changes, being able to invest $85.1 million into the region. This acts as an important reminder of the impact that non-profit organizations hold in the City of Toronto and beyond. The reality of Goodwill’s closures in Toronto will be a lesson for surrounding organizations, especially non-profit organizations facing increased competition and problems of funding. However, new innovation does exist, and it is important for organizations to be able to compete in this economy. By staying in step with new technology and up to date in funding techniques, they have a fighting chance against the doom of closing doors.
Shannon Brooks is a current MPP candidate at the University of Toronto, Class of 2017. Some of her policy interests consist of immigration and refugee policy, social policy, housing, and environmental policy. She graduated with a Bachelor of Arts Honours from Carleton University with a double major in Law and Human Rights. She is passionate about social justice, and aspires to work within the international community.