How to Open a Thrift Store Under an Existing 501C3 Nonprofit

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A thrift store is generally a retail establishment operated by a charitable organization for the purpose of fundraising. Thrift shops primarily sell secondhand items donated by the public. They can sell at low prices because they are often staffed by volunteers, the items sold are obtained without cost, and the shops operate at low expense. Remaining income after expenses is used to further the sponsoring organization's charitable purpose.

  • State the reasons for starting the thrift store and disseminate them in order to make people connected with your organization and the general public aware of the charitable purpose you serve. Running any retail establishment takes time and effort. You may not want to undertake this effort unless you believe your thrift store’s operation will make a substantial contribution of funds and community goodwill to your nonprofit organization.

  • Start by writing a business plan that states your mission and costs of running the business. A business plan template is available online at the U.S. Small Business Administration website. Obtain a business license for operating in the state from the county or city government office and apply for a tax identification number from the Internal Revenue Service. Depending on the state, you also may need to register the trade name of the corporation with the Secretary of State or apply for a fictitious name, if the business's name is not your own name, at the county clerk's office. If the business is a nonprofit, a board of directors will need to be selected, a mission statement and bylaws will need to be drafted, and you will need to file articles of incorporation with the Secretary of State, as well as submit forms to the IRS to get 501(c)(3) status.

  • Form several subcommittees that can collect the information you need to make informed choices. One subcommittee can thoroughly research the potential ways in which you might operate the store. Use its data to decide if your organization should plan and implement the store’s operation or if it would be better to hire a company to run the store for you. Another subcommittee can explore potential facilities and sites that may be available along with any costs, licenses and permits connected with each. A third subcommittee can look into how other thrift stores prepare the donated items for sale, how they display them and the prices they charge. A fourth subcommittee needs to work on startup funding. It can explore community businesses, such as banks, supermarkets, large corporate enterprises and local outlets of regional or national chain stores to determine who is willing to donate startup funds. This committee should determine how the money from sales will be handled and how the accounting system will be set up.

  • Prepare the two areas every thrift store must have. In order to avoid confusion, divide your space into an area for collecting, storing and processing donated items and an area for displaying them. Because you are a tax-exempt organization with an Internal Revenue Service 501(c)3 status, people making donations can claim a deduction on their tax returns. They expect you to provide evidence of their contribution. You also need volunteers or employees to repair some items, which also requires space.

    The space set aside for selling requires display cases, clothing racks and a cash register. An attractive space that is clean, neat and thoughtfully arranged usually results in more sales and a larger contribution to the organization’s charitable activity.

  • Form a steering committee to oversee the operation. If you plan to use volunteers, they will require training. The committee members, or some people selected for the task, need to provide the community with information about why they should shop in the thrift store and donate articles for sale to it. As with any businesses, the committee members must work to achieve an effective, efficient and profitable operation.

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  • Photo Credit Stockbroker/Valueline/Getty Images
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