There’s free merchandise down in Galesburg, millions of dollars worth that can be hauled away by the truckload.
As much as you can carry.
So what’s the catch? Only Santa Claus is so generous, and the red-suited dude doesn’t live in this Western Illinois town. Besides, Christmas is over.
Well, it’s not over for the National Association for the Exchange of Industrial Resources, which acts as though every day is Christmas.
The exchange association gives away new merchandise donated by industry, and it’s looking for more takers.
The first reaction for most people is suspicion.
“People think it’s too good to be true,” said Jerry Ulm, the association’s vice president. “That is our biggest block to people joining.”
There is a catch, of course. Only not-for-profit schools, charities, religion groups, government agencies or civic organizations qualify.
And fees for membership, handling, catalogs, shipping and special events known as “grab bags” can add up to thousands of dollars a year. But members love the goodies they’ve taken back to their schools and churches.
Founded in Lemont in 1977, the association has given more than $900 million worth of merchandise to schools and other non-profit groups. The association also is non-profit, and calls itself the first national organization of its kind.
Its founder, Norbert C. Smith, now retired, once worked as a corporate gifts consultant and noticed that millions of dollars of excess inventory was sent to garbage dumps or to liquidators.
A 1976 tax code amendment allowed corporations to donate excess inventory to non-profit organizations, and Smith started a new business to distribute the goods.
Last year, a record $126 million worth of goods was donated to the association by industries that wanted to clear their warehouses or get rid of new but discontinued items, while earning a federal tax deduction.
The association operates on a $12 million annual budget.
It’s a boon, if you know how to play the game.
“Non-profit organizations get along on a shoestring,” said Connie Elliott, assistant to the executive director of the Methodist Youth Services in Chicago. “It’s like an extra boost to get office and cleaning supplies, clothing and paper products.”
For its membership fee of $250 for each of seven divisions, or $1,750 annually, the organization got an estimated $35,000 worth of free merchandise last year.
Here’s how it works: The association publishes six catalogs each year, charging its 6,200 members an extra $595 for all six catalogs. But they can pay as little as $255 for two catalogs.
Each catalog contains about $30 million worth of products, said Ulm.
“The only reason we exist as a non-profit organization is to give products away in a fair and equitable manner as the tax code demands,” he explained.
The goods must be used for the care of the ill, needy or minors. They cannot be resold.
Each day, 8 to 10 truckloads of merchandise arrive at the association’s 10-acre warehouse, a structure the size of nine football fields. The association moved to Galesburg in 1985 when Outboard Marine Corp. donated the building, which can hold 2,000 truckloads of merchandise.
Boxes of merchandise piled nearly to the ceiling stretch for acres, and the variety of goods is astounding.
The association’s goal is to move merchandise out the back door as fast as it comes in the front door.
Members order items, designating those that are preferred.
“It’s not first-come, first-served,” explained Jack Zavada, a company spokesman. Orders are run through a computer that allocates available goods to as many members as possible.
“All of our members have an equal chance at the merchandise,” he added.
Office supplies ranked at the top in popularity, followed by maintenance and cleaning, tools, health-care supplies, toys, clothing, costume jewelry, holiday decorations and computer software.
Daily grab bags and twice-yearly super grab bags are staged to allow members to haul away merchandise that is not moving rapidly.
“Members get in such a frenzy,” said Ulm, that the number of members invited to grab bags is limited to avoid brawls over the free goods.
For daily grab bags, the goods are piled in a section of the sprawling warehouse and about 30 members are invited to take as much as they can carry on a warehouse cart. On super grab bag days, the goods are stacked in the parking lot and 500 members over two days can take as much as they want in trucks or vans.
Some members are thrilled with the windfall; others are not.
“You get all fired up when you see the catalog,” said Eugene Buldak, director of the Kane County Jail in Geneva. “You get gigantic boxes of stuff, but it’s not always what you want most.” He did appreciate the free Christmas cards the 440 inmates could send to their families.
The Internal Revenue Service allows companies that donate items to deduct up to twice the cost of merchandise as a tax write-off.
The association has had about 5,000 donor companies over the years, some of them repeat donors.
The exchange association “makes sure that the products are distributed across the country, and there is not a glut of products showing up in a particular market” and competing for a donor’s customers, said Stuart Alexander, spokesman for Current Inc. in St. Paul, Minn., which produces greeting cards and novelty items.
“It makes a lot of sense,” said Mary Auvin, spokeswoman for St. Paul’s Minnesota Mining and Manufacturing Co., which donates about $30 million in products a year to various causes. “It reduces our inventory costs and there is a little tax write-off.”
For Rand McNally & Co. in Skokie, it is a way to exercise philanthropy.
Once merchandise is selected by catalog and boxed, members pay $99 in handling fees for each allotment. They can come to Galesburg and pick up their shipment, or pay to have it shipped UPS or as freight.
Experienced non-profit groups have learned over the years how to cut costs in reaping this harvest of so-called “free” goods.
“How you play the game is a big factor,” said a staff member in the central office of Chicago Public Schools , who has been mining the association for 18 years.
Because funds for the association memberships have dried up in many public school systems, this staffer and a teacher pay $1,000 a year in the association fees out of their own pockets so they can distribute the goods to schools of their choice, science fairs and the Girl Scouts.
“This is my personal philanthropy,” she said, preferring to remain anonymous. “If I get exposed, people will ask me for stuff.”
As for the association windfall, she said: “If you don’t take advantage of super grab bag, you’re wasting your money. You can really clean up.
“You’ve got to take advantage of the special deals. It’s a hit-or-miss kind of thing. You never know what will be in the warehouse.”
But, above all, avoid shipping costs which “will break the bank.” She and her teacher friend rent a truck to collect their loot.
“The agency that has its own truck or trailer and has the time to go out and pick this stuff up is the agency that will make out like a bandit,” she said.
