Charity shops are a type of social enterprise. They usually sell mainly second-hand goods donated by members of the public, and are often staffed by volunteers. Because the items for sale were obtained for free, and business costs are low, the items can be sold at very low prices. After costs are paid, all remaining income from the sales is used in accord with the organization's stated charitable purpose. Costs include purchase and/or depreciation of fixtures (clothing racks, bookshelves, counters, etc.), operating costs (maintenance, municipal service fees, electricity, telephone, limited advertising) and the building lease or mortgage.
Charity shops are often popular with people who are frugal, people who live on a limited or fixed income, collectors, and people with unusual tastes. This last group includes members of various subcultures. For example, clothing from charity stores was often modified by early punk rockers. In the United States shopping at a thrift store has become popular enough to earn a slang term, thrifting.
Environmentalists may prefer buying second hand goods as this uses fewer resources and may do less damage to the environment than by buying new goods. In addition, reusing second hand items is another form of recycling, and thus reduces the amount of waste going to landfill sites.
Also, people who oppose sweat shops often purchase second hand clothing as an alternative to supporting clothing companies which have dubious ethical practices.
Thrift stores are also popular with eBay sellers who buy collectible items and hope to resell them for a profit.
Some charity shops also sell a limited range of new goods which may be branded to the charity, or have some connection with the cause the charity supports. Oxfam stores, for example, sell fair trade food and crafts. Other stores may sell new Halloween supplies and decorations where old vintage clothes are popular for use as costumes. Some stores specialise in selling books, music, or bridalwear. Charity shops may receive overstock or obsolete goods from local for-profit businesses; the for-profit businesses benefit by taking a tax write-off and clearing unwanted goods from their store instead of throwing the goods out, which is costly.
However, predating this, one of the first Red Cross shops was opened at 17 Old Bond Street, London, as early as 1941. In total over two hundred “permanent” (for the duration of the war) Red Cross gift shops and about 150 temporary Red Cross shops were opened during the war years. A condition of the shop licence issued by the Board of Trade was that all goods offered for sale were gifts. Purchase for re-sale was forbidden. The entire proceeds from sales had to be passed to the Duke of Gloucester’s Red Cross and St John Fund. Most premises were lent free of rent and in some cases owners also met the costs of heating and lighting.
During World War I similar fundraising activities occurred such as a bazaar in Shepherd’s Market, London which made £50,000 for the Red Cross.
Other charities with a strong presence on high streets in the UK include British Heart Foundation, Cancer Research UK, Age Concern, Help the Aged, Save the Children, Scope and Sue Ryder Care. Many local hospices also operate charity shops to raise funds.
Gift Aid is a UK tax incentive for individual donors where, subject to a signed declaration being held by the charity, income tax paid on donations can be reclaimed by the charity. Although initially intended only for cash donations, the scheme now (since 2006) allows tax on the income earned by charity shops acting as agent for the donor to be reclaimed.
Charity shops in the UK get 80% relief on business rates on their premises, and can apply for discretionary relief on the remaining 20%, which is an occasional source of criticism from retailers which have to pay in full.