World Vision’s Storehouses Sell and Give Excess Inventory to Other Charities and Schools

The Chicago Tribune reports that World Vision, a Christian poverty relief charity operating in nearly 100 countries, is operating stores located around the country that sell and give away donated classroom supplies, clothing, building materials, and other excess inventory to charities and schools.  If sold, the prices charged can be as much as 75 percent below the usual cost.  Among the beneficiaries have been the Chicago Public Schools, with 80 schools receiving free supplies.  These “Storehouses” also serve as convenient locations to collect donations that World Vision then distributes as part of its various relief efforts.  For example, last month World Vision announced it was sending relief supplies from its 43,000 square foot Mississippi Storehouse to help victims of tornadoes in the South.  The same announcement says that the Storehouses have in total received $32 million in donated goods.  Other Storehouses are located in Albany, Chicago, Dallas, Detroit, Los Angeles, Minneapolis, New York, Seattle, Washington DC, and West Virginia. 

The Chicago Tribune article cites a Chicago Public Schools official as stating that for-profit suppliers to city schools have not raised concerns because the amounts purchased at the Chicago Storehouse have been relatively low.  The article does not discuss the possible tax consequences to World Vision of operating the Storehouses, which World Vision began in 1995.  But Internal Revenue Code section 513(a)(3) excludes the selling of merchandise, substantially all of which has been received by a charity as gifts or contributions, from the definition of an unrelated trade or business, so the operation of the Storehouses probably does not result in any federal income tax liability.

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