June 6, 2018; News & Observer
One of Carrboro, North Carolina’s most beloved nonprofits, the 66-year old PTA Thrift Store, is under fire from a key stakeholder, the Chapel Hill Carrboro City Schools PTA Council (PTA Council), for not distributing enough of its income back to the 19 parent-teacher associations in the school district.
In 2010, the PTA Thrift Store donated $221,488 to the PTAs; in 2016, the distribution was down to $13,100. In response, the PTA Council, in a June 4, 2018 letter to the PTA Thrift Store board that began, “It is with heavy hearts that we write this letter,” demanded that the store stop using the name of “PTA” in all of its operations by July 15, 2018.
The letter explained that the PTA Thrift Shop’s mission and focus had changed and that funding the PTAs “in any substantial way” is no longer the organization’s primary goal. Furthermore, the letter continued, the continuing use of “PTA” confused many in the community who continued to donate valuable items to the thrift store believing that such donations would ultimately benefit the PTAs and their schools. Finally, the letter said, “PTA” is a trademark whose use requires following many rules and regulations set out by the National PTA. The Thrift Store board responded with their own letter, arguing that their use of “PTA” for over 45 years provided them with a common law trademark but that the board will continue to discuss the name change demand at their next meeting.
What lies behind this feud between two nonprofit organizations that presumably have the same community interests at heart? Declining organizational income does not explain the precipitous drop in contributions to the school PTAs—the thrift store’s net income actually increased in this period, growing from approximately $1.4 million in 2010 to $1.67 million in 2016. The key explanation lies with the thrift store board’s decision in 2011 to go into significant debt in order to build a new facility on their existing property in an effort to broaden their impact and ensure financial sustainability. At that point, the thrift store’s leaders believed that revenues (temporarily disrupted by the construction) would recover in at least a year and that five years out, revenues would increase by 21 percent and disbursements to the PTAs by 44 percent. These projections, clearly, have not yet materialized—partly due to construction delays that hurt store revenues for longer than anticipated and the decision to rent out the new non-thrift store space at below market rates to mission-compatible nonprofits.
Carrboro is not a typical Southern town. Located directly west of Chapel Hill, home of the University of North Carolina’s flagship campus, Carrboro is viewed as one of the most progressive municipalities in the South—the first to elect an openly gay mayor in 1995 and one of the first in the region to adopt resolutions against the Iraq War. Carrboro and Chapel Hill are relatively wealthy communities and highly educated, with a median household income of $112,977 compared to the nation’s $65,443. And though the Chapel Hill Carrboro school system of approximately 12,000 students is consistently ranked among the best in the state, it also has the dubious honor of having the second-largest achievement gap—41 percent—between black and white students in the nation. The achievement gap between Hispanic and white students is the country’s fifth largest.
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Though the PTA Thrift Store’s latest IRS 990 report continues to support the PTA Council’s contention that the non-profit’s “mission or most significant activities” is “to raise funds, through operations which include, but are not limited to resale, retail and the renting of space to other enterprises, for PTAs in the Chapel Hill Carrboro City Schools to use in supporting educational activities,” the organization has clearly changed its thinking about focus and impact. In the same Form 990 cited above, the board-approved mission statement is reported as “To raise funds, through operations.” According to its website, the mission of the PTA Thrift Shop is now, “Enriching lives by building collaborative partnerships and transforming charitable donations into educational and community investments.”
How is this expressed in the nonprofit’s investments and activities? In addition to borrowing $4 million in 2012 to rebuild the Carrboro store, the thrift store took out two additional loans in 2016 and 2017 totaling $750,000 to pay for the YouthWorx on Main building project, a co-working collaborative space for nonprofits “to more efficiently and profoundly impact the lives of our community’s youth”. Its tenants provide art therapy, transformational experiences and education on healthy lifestyles for girls, free music lessons using college student volunteers, community support for refugees, reintegration help for young substance abusers, extracurricular activities through a pay-it-forward community service model, and opportunities for outdoor transformative experiences (cycling, hiking and camping). According to the Thrift Shop’s executive director, Barbara Jessie-Black, this collective impact model will enable these collaborating nonprofits to compete for bigger grants and funnel more funds back into the thrift shop’s operations, thus generating increased revenues. This will mean bigger impact and bigger dollars for the Thrift Store’s mission.
The PTA Thrift Store also differs from the traditional nonprofit resale operation by its commitment, since 2000, to pay its employees (now about 40) a living wage and most of their health insurance costs. It no longer relies on a volunteer and/or minimum wage staffing model.
No one can dispute the need impelling the PTA Council’s cry for guaranteed and unrestricted funds from the PTA Thrift Store’s revenues that flow to each of the 19 schools in the district. Schools in NC are desperate for money following successive waves of funding cuts by the Republican legislature. (Last month, 30,000 teachers rallied at the state capital for better pay and more funding.) In addition, Orange County, where the Carrboro Chapel Hill district is located, was further hit last year when the legislature repealed a 1987 decision to allow the county to collect impact fees to help pay for school construction, fees that typically brought in about $2 million annually for the school system.
But, contrariwise, neither could one dispute the Thrift Store’s decision to chart a course that could mean greater impact for underserved kids in a school district with some of the greatest racial/ethnic achievement disparities in the country and perhaps, greater financial sustainability for the organization in the long term. Time will tell whether this decision was the right one.—Deborah Warren