The Textile Recycling Association (TRA) has called for complete transparency over how much of the money raised from clothing collections linked to a charity actually goes to the charity involved.
The TRA call comes following claims by the British Heart Foundation (BHF) that householders are confused over the percentage of profits from the sale of clothing that goes to a charity when a commercial company is employed to run the collection on its behalf.
The BHF claims that, because it runs its clothing collections itself, 100% of the profits from them go to its charitable work. It yesterday (August 31) contrasted this with charities working with commercial companies, stating: The reality is that in some cases as little as 5% is paid to a charity who is working with a commercial company.
However, textile recyclers have expressed surprise over the BHFs statement, and in particular the figures used to justify its claims about commercial recyclers. This is because the 5% figure referred to by the BHF is a proportion of the total value of the clothing when it is sold before any overheads such as collection costs are taken into account. On the other hand, the profit is the smaller figure left when all these costs have been discounted.
According to the TRA, once overheads and running costs are taken into account, a charity running its own collections will only end up with around 15% of the total value of the clothing as profit.
The TRA said in a statement yesterday: One of the largest national charity shop operators put out publicity which states that for their collections 100% goes to charity or that they receive 100% of the proceeds.
However they have failed to be transparent and to declare that about 85% of all their income from their retail activities is ploughed back into running costs.
Commenting on this claim, Laura Preece, a spokeswoman for the BHF, acknowledged that the use of the 100% profit figures in this way could be misleading. She said: I completely understand the 100% profit might be quite misleading.
But, she claimed that, compared to the money a charity would make from working with a commercial collector, the share of the overall income from BHF-run clothing collections that was then spent on its charitable work was significantly larger.
Last year, we had 125 million income and 26 million profit, so thats still 20% which is going to the BHFs work, whereas the maximum going through a commercial company is around 5%,said Ms Preece, adding: I think because a charity is paying a company their overheads are far higher than ours.
She added: By donating with the BHF theres definitely more profit to the charity.
The BHFs accounts for 2010/11 reveal that its retail activities actually yielded 133 million, while its retail costs were 108 million yielding a profit of 25 million, or 18.8% of total income.
Collection bags
Ms Preece stressed that the BHFs key issue with commercial collectors was the information they use on their collection bags to tell householders how much money from clothing is eventually donated to charity.
They use information like for each tonne of clothing, 40 goes to charity, when it sells for 1,500 overseas, she said.
Wed like to see how much profit the named charity will actually make from a commercial collection on their bags. If this is a high percentage, which they are saying it is, why isnt it all over their bags?
Transparency
The need for transparency in costs was also highlighted by the TRA, but it stressed this should include charities carrying out collections themselves being clear about their overheads.
We agree that there should be complete transparency when it comes to declaring how much money is raised for charity, the TRA said.
Doorstep collections have significant collection costs and these have to be met by the charity if they undertake the collection themselves. If the collections are undertaken by a commercial company the amount actually going to the charity is immediately visible to the public.
It added: We would like to see all charities that hide their costs, brought into line with the rest of the industry by declaring their costs, so that the public are able to make a fair and informed choice about which charity collections they wish to support.
The TRA called on all collectors, including charities, to sign up to the Fundraising Standards Boards revised Code of Practice for Door to Door Collections. This was published in March 2011, with the aim of increasing door-to-door clothing collections standards as a way to target bogus collectors (see letsrecycle.com story).
And, it said: We should also not lose sight of the fact that charities and commercial companies collecting clothing are raising many millions of pounds every year, providing much needed employment and reducing landfill.
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