In 1902, Methodist minister Edgar J. Helms faced formidable problems. His inner city Boston church building was so unsafe it was about to be condemned. He needed to raise $50,000 for a new facility, but the nation was in a depression, and donations were hard to come by.
Then a member of Helms’s staff had an idea. The church regularly received donations of old clothes. Why not repair and sell them?
Helms approved the proposal and put his parishioners to work. At first the congregation crowded around the refurbished clothes, desperate for something decent to wear. The first distribution of clothes, recalled Helms’s grandson Charles, “was like a feeding frenzy.”
Soon the enterprise of cleaning and repairing old clothes became more organized. Helms realized that Bostonians who couldn’t afford to give his church money could donate old clothes. He also learned there was a market for those clothes if they were cleaned and repaired.
In 1905, Helms incorporated his new enterprise as Morgan Memorial Co-operative Industries and Stores, creating the first branch of the movement now known as Goodwill Industries. From that beginning Goodwill Industries has become one of America’s biggest charities, with 179 affiliated agencies in the United States and Canada selling $941 million of goods through their stores. Add the income from other Goodwill contracts, and you have an organization that collectively generated $1.85 billion in revenue in 2000.
Goodwill is best known for its stores, but the Goodwills across America have scores of smaller contracts, which means you may be using Goodwill products without realizing it. Are you a bureaucrat? Your notepads may have been made by Goodwill under contract. Stayed in a hotel in the Midwest? Goodwill workers cleaned 13 million pounds of dirty laundry last year in hotels, prisons, and hospitals throughout Wisconsin and Illinois. Drive an American car? Most of the license plate brackets for cars from the Big Three automakers were assembled by Goodwill contractors.
Most importantly, Goodwill puts the poor and disabled to work. In 2000, Goodwill job trainers placed 77,895 people in jobs with local employers and hired 66,895 more for its stores and other contracts—taking more than 100,000 Americans off the welfare rolls.
As Goodwill begins its second century, how well is it doing? To answer the question, we first need to learn more about the founder of Goodwill and his ideas for fighting poverty.
Chances, Not Charity
Edgar J. Helms came out of Iowa filled with a desire to help the poor. He wanted to do missionary work in India after getting his divinity degree in 1893. “But due to the hard times of the early nineties the missionary funds ran out,” Helms told journalist William C. Stidger in a 1940 interview, “and I started to work in my little mission on the South Side of Boston. I did this because I was stranded in Boston, following my graduation, with a young wife at my side.”
He ended up at a ramshackle building called the “Morgan Chapel,” founded by independent Methodist minister Henry Morgan, a crusading 19th century poverty-fighter. The church’s location in the impoverished South End of Boston exposed Helms to grinding urban poverty, and he looked for innovative ways to combat it. Other inner city Boston churches, as a 1953 article in the Saturday Evening Post observed, sought to win souls by rounding up drunks on Saturday night, tossing them in their churches, locking the doors, and refusing to let them leave until they sat through a sermon.
Helms would have none of that. He tried to find out what poor people needed. Noticing that the husbandless women in his congregation would lock their children in their tenements while they went to work, Helms opened a “day nursery” in the Morgan Chapel—early day care.
Theologically, Helms was a liberal who thought the poor could take care of many of their own needs. Many poverty-fighters of Edgar Helms’s generation would conclude that battling the causes of poverty (bad housing, poor medical care, low wages) was more important than improving the lives of the poor. These thinkers ultimately devised the intellectual rationale for the welfare state.
But Helms never crossed this particular frontier. He insisted that the best way to help the poor was to employ them productively. In 1899-1900, he won a Boston University fellowship to study in Europe, where he met with leaders of the German co-operative movement. He also spent some time at Britain’s Toynbee Hall, the first of the “settlement houses” where poor people could study, join clubs, and pursue other useful activities.
In a 1924 interview with journalist Earl Christmas, Helms explained that many charities spent much of their time exhaustively investigating cases to determine who deserved aid. But Goodwill, Helms said, believed that what the poor needed was an opportunity to work. So the group offered the unemployed “a chance but not charity.”
“You can’t help a man by doubting him,” Helms said. “When he tells us he wants work, we assume that he does. When you give a man a job, you are not dealing with a pauper. He is not an applicant for charity. He wants to give something for what he receives, so we do not need to make ‘investigation’ the first item of our program.”
A National Movement
Morgan Memorial continued to grow, and Helms’s successes were noted in other cities. In 1915, the Reverends Henry Park Schauffler and Edward P. Sanderson of the House of Goodwill Mission in Brooklyn came to Boston to organize what became the second Goodwill agency. Another minister, Carlton Park, combined the names of the Boston and Brooklyn organizations into Goodwill Industries. “The title was accepted quite quickly by institutions doing similar mission and industrial work,” notes Goodwill historian Robert Rollin Huddleston.
In 1919, the Methodist Church decided to make Goodwill a national enterprise and gave Helms seed money to travel across America and Canada and overseas. By 1935, Goodwill Industries had 95 agencies in America and 17 in other nations, including ones in Tokyo, Shanghai, Calcutta, and five agencies in Australia. Goodwill became a nationally recognized charitable brand.
Some donations were legendary. In his memoirs, John P. Hantla Jr. of the Iowa City, Iowa, Goodwill recounted some of them: artificial legs, marriage certificates, and a collection of preserved appendixes (which the Goodwill in Wilmington, Delaware, allegedly sold as fish bait).
But the most memorable Depression-era Goodwill donation came to Morgan Memorial in the mid-1930s. One day an old painting showed up in the donation bin, and an artist working for Goodwill recognized the work as one by the Renaissance master Gentile Bellini. After experts verified the painting as authentic, Morgan Memorial offered the painting to Boston’s Museum of Fine Arts for $20,000, on the condition that Goodwill could buy back the painting if the owner reclaimed it.
After the donation was reported in the Boston newspapers, the owner showed up at Morgan Memorial. But after taking a tour, the woman was so impressed with Goodwill’s activities that she let Goodwill keep the $20,000.
When the Great Depression hit, Goodwill donations fell by 20 percent. But because donors primarily contributed goods rather than cash, the group was able to survive while other nonprofits failed or were taken over by the welfare state.
Indeed, by 1934, Goodwill was so strong that it proposed one of the more intriguing counterfactuals of welfare history. According to Goodwill Industries historian John Fulton Lewis, top Goodwill executives (led by Helms) made an offer to Harry Hopkins, a key advisor to President Roosevelt: If the federal government would make a $5 million grant to Goodwill, Goodwill would put every unemployed American to work.
Hopkins was impressed, and FDR may have been as well, wrote Lewis, “but in the final analysis the proposal was rejected by the New Deal bureaucracy.”
When Edgar Helms died in December 1942, he left Goodwill several legacies. His son, the Reverend Henry Helms, headed Morgan Memorial until about 1980. Morgan Memorial’s current CEO, Joanne Hilferty, recalls that, until his death in October 2000 at age 85, Henry Helms would make an annual visit to a summer camp that Morgan Memorial runs for inner city kids. “He’d show up wearing three shirts with different Goodwill logos and take them off one at a time,” Hilferty says. “It was his way of telling the Goodwill story.”
Another important legacy Edgar Helms left Goodwill is the organization’s structure. Helms believed in local autonomy; he was happy to give local Goodwills advice, but he insisted that each agency be free to set policies and raise funds.
Thus Goodwill Industries is not a large, centralized nonprofit like the American Red Cross or Catholic Charities. Instead, the local affiliates are independent of Goodwill Industries International, or GII. Collectively, Goodwill staffers refer to themselves as “the Goodwill movement.”
Goodwill Industries International’s offices, located in a renovated mansion just north of the National Institutes of Health in Bethesda, Maryland, is as close as the movement comes to having a national center. But Chief _Executive Officer George Kessinger insists, “I am not the CEO of Goodwill, and this building is not the corporate headquarters.” In fact, GII’s $22 million budget is less than half that of the agencies in New York City and Portland, Oregon, and far smaller than the Milwaukee agency’s annual budget of $178 million.
Goodwill Industries International acts as a go-between for various local agencies, making connections (but not issuing demands) for members seeking specialized expertise. And if a donor wants to make a donation to “the national Goodwill,” GII is happy to accept it and pass it on to local agencies. For example, Microsoft recently donated $2.6 million in software to GII, which it then redistributed to local agencies. But more often than not, local agencies tap each other for expertise rather than going through GII.
The More Things Change.. . .
Nearly 60 years after Edgar Helms’s death, Goodwill remains an organization that he would recognize. But it has changed in four significant ways.
First, Goodwill is no longer a faith-based charity. In Helms’s day, Goodwill was a division of the Methodist Church. In a 1935 training manual, the Reverend R. E. Scully, head of Goodwill’s Department of Religious and Cultural Work, stated that “the ideals of the Goodwill Industries are distinctly religious.. . . [W]e seek to save the man, his self-respect, his morale, and his soul.” But Scully added that, although Goodwills affiliated with churches could legitimately evangelize, those that were “a recognized social agency, supported by the public through the Community Chest,” should provide chapel services limited to “spiritual encouragement, moral uplift, and Christian fellowship rather than evangelistic effort.”
By 1970, Goodwill had become a secular organization, probably as a result of government training contracts that required grantees to neuter or eliminate their religious content, says GII spokesperson Christine Nyirjesy Bragale. CEO Kessinger, an ordained (but non-practicing) Methodist minister, stresses that Goodwill still has a spiritual component to its mission, but it’s a muted one. “Goodwill is an employer with a big heart,” he says, “but our ‘heart’ is based on our desire to serve others.”
A second substantial change is that the customers Goodwill serves have changed. In the 1950s and ’60s, Goodwill largely served those with physical disabilities. But in the 1980s and ’90s, Goodwill’s emphasis swung back to lending a hand to anyone who needed help, thus returning to Helms’s original vision. Joe Evans has been with Goodwill Industries of Greater Detroit since 1982, and he thinks the change is due to Goodwill’s steady expansion. “The number of people we serve with disabilities hasn’t decreased,” he says.
Other changes have taken place with Goodwill stores. Between 1980 and 1985, Goodwill stores largely stopped making repairs to donated products, besides checking appliances to see if they still work. Stores have also changed to reflect the increasing segmentation of the marketplace. Most cities have regular Goodwills that reach out to the sort of customer who would shop at Wal-Mart or Target. But others have more diverse markets. Washington has its Best Kept Secrets stores, filled with the kinds of clothes and accessories that appeal to women who would normally shop at Saks or Bloomingdale’s. And in the Phoenix suburb of Peoria, Goodwill Industries of Central Arizona opened North America’s biggest Goodwill retail store this past May, a 92,000-square-foot emporium that features a snack bar and a coffee shop.
Goodwill has also moved into cyberspace to compete against eBay and other on-line auctioneers of high-priced collectibles. Shopgoodwill.com, created in 1999 by Goodwill Industries of Orange County, offers collectors a wide variety of choice items, including a 1982 proclamation signed by President Reagan and a 1974 Chevrolet Impala (“a must have for any car collector”). Last year, shopgoodwill.com raised $2 million for the local agencies that contributed items.
Recovering From Scandal
The move into cyberspace points to the decreasing importance of Goodwill stores, which now account for only half of Goodwill revenues. A few agencies, most notably Detroit, have eliminated stores entirely. And in one case, faulty supervision of Goodwill stores led to a major scandal.
In 1998, prosecutors arrested seven people associated with Goodwill Industries of Santa Clara County, California, and charged them with bilking the agency of up to $15 million. The elaborate scheme, involving Linda Faye Marcil, her three sisters, her brother-in-law, and a nephew, was uncovered when Marcil’s ex-husband Jeff revealed details to the authorities during a nasty divorce case. Another alleged conspirator, Santa Clara Goodwill stores director Carol Marrs, committed suicide after the plot was discovered. Prosecutors discovered $1 million in Marrs’s bank accounts.
According to prosecutors, the Marcil ring routinely raided store cash registers and diverted high-quality items, which they sold to dealers or exported to Mexico. Prosecutors said that the conspirators spent up to $30,000 a week to buy co-workers’ silence. According to an investigation by Dateline NBC, the gang used the funds to buy gambling trips, limousines, and a doll collection so extensive that “ceramic figurines and porcelain dolls literally filled entire rooms of their homes.” Investigators also found $400,000 in cash, much of it still in Goodwill wrappers.
In 1998, Linda Faye Marcil, her three sisters, and her brother-in-law were sentenced to between 16 months and four years for their theft, which authorities estimated could have been in the tens of millions of dollars over a 20-year period. Two years later, Jeff Marcil was fined $1,000 because of his cooperation.
Goodwill Industries International CEO Kessinger says that the Santa Clara episode was an isolated incident. “When we found out what happened in Santa Clara, we stopped it,” he says, adding that Goodwill stores now have anti-theft devices comparable to those found in for-profit stores.
For these and other reasons, contracts have become increasingly important to Goodwill. Some of these contracts (the precise percentage has never been calculated) come from U.S. Department of Labor programs designed to aid the disabled, but Goodwill also has extensive contracts with private employers. In Detroit, they work with the auto industry; in Boston, their largest contract is with TJX, parent corporation of the Marshall’s and T. J. Maxx clothing chains.
Most of the time, Goodwill wins contracts against other competitors, including for-profit enterprises. But occasionally rivals throw roadblocks in Goodwill’s way. In 2000, Goodwill gave up a janitorial contract at Miami International Airport, claiming that the local Teamsters union had threatened to retaliate by protesting to the local United Way, launching a national Goodwill boycott, and challenging every hiring decision made under the contract with federal labor officials. “The Teamsters made it quite clear that even if we were successful in winning this labor contract, we would lose,” Goodwill attorney Susan Potter Norton told the Miami Herald. (Teamsters officials denied everything, and the contract was ultimately awarded to a minority contractor.)
As part of their contracting business, Goodwill has been extensively involved in welfare reform. In Washington, D.C., for example, Davis Memorial Goodwill Industries doesn’t just contract with the city’s welfare agency; it is the welfare department.
In 1999, Davis Memorial and nine other local nonprofits contracted to run the city’s welfare program. Government officials still approve applicants and determine the size of the welfare payments, but Goodwill workers do everything else, including formulating a 16-page Individual Responsibility Plan where welfare recipients “acknowledge that I must participate in job search or job readiness activities as a condition of eligibility” for welfare payments. Goodwill also runs life skills and job training classes.
How will Goodwill enter its second century? Goodwill Industries International calculates that, in Goodwill’s first 100 years, about five million people went to Goodwill for help. GII’s goal is to increase the number to 20 million by 2020.
So the dream of a struggling inner city minister has become one of the nation’s largest—and most productive—groups of charities. And while his more statist competitors created a system that ensures dependency and defeat for the poor, Edgar Helms’s work-oriented philosophy has freed millions of Americans from the dole.
Martin Morse Wooster is a contributing editor of Philanthropy and author of The Foundation Builders.