Clothes Sense

January 1, 2009       Michele Donohue      

Clothing donations help the American Red Cross (ARC) St. Louis Area chapter. But, donors might find their old jeans and worn sweaters in thrift shops instead of on people ARC assists during a disaster. "It’s the philosophy that if we take everyone’s clothes, we might have 80 pairs of size 8 shoes but our clients all wear a 6 or 7," according to Corinne Story, major gifts manager at the chapter.

The chapter works with a for-profit company instead of doing the collecting and sorting. "It’s not a good use of our resources and there are people who are in the clothing business who do this for a reason, because they can do it efficiently," said Story. "If you talk to anyone in the clothing pick up donation business, most of the time they will tell you it’s all about a matter of convenience. Most people really want to just get rid of their clothing."

If someone doesn’t end up wearing the clothing, it could end as something else. Clothing that is in no condition to be worn can be broken down into fibers for reuse in insulation or other materials. The fiber breakdown process can be used with most materials, such as nylon, cotton or combination fabrics. The only unrecoverable material is elastic.

Nearly 61 percent of recyclers export their products, and the reported export sales from recycled clothing generated more than $336 million in 2007, according to the U.S. Census Bureau. Clothing shipped outside of the United States usually heads to warmer climates, such as Africa, Latin America and Asia, where it can be sold cheaply. Even though "they don’t need many pea coats in Chad," said Peter Mayberry, executive director of the Secondary Materials And Recycled Textiles (SMART) Association, based in Falls Church, Va.

He explained that nonprofits should never discourage donations of winter weather wear. Most clothing will get worn, torn into rags, or go through fiber recovery, which is much better than ending up in a landfill.

The textile recycling industry is able to recover nearly 93 percent of the textile waste it receives — keeping more than 2.5 billion pounds of consumer textile waste out of landfills every year, according to SMART. "We encourage people to recycle because if it doesn’t end up being worn by somebody, it will end up somewhere else," said Jessica E. Franken, SMART director of governmental affairs.

The St. Louis Area chapter teamed up with a for-profit company, Merchandise Pick-up Service (MPS), to place seven drop-off boxes. The St. Louis ARC didn’t have to pick up the costs, or the clothes, associated with the boxes. Instead, MPS makes a quarterly donation to ARC based on the volume of collected clothing. MPS keeps all the clothing in the United States and donates $65 per 120 cubic feet of clothing to the nonprofits with which it works. "You do find people who ship outside the United States, but most of them don’t make a charitable contribution. And if they do make a charitable contribution, it’s really insignificant, like it will be a penny a pound," said Anita Walker at MPS. "You cannot ship outside the United States and pay a charity as much as we do because you can’t sell it for that. It’s the economics of it. It doesn’t work."

The company works with more than 450 organizations and operates more than 650 boxes, donating around $40,000 a month just from the boxes. The seven boxes generated more than $2,100 in one quarter for St. Louis ARC, with the organization adding three more boxes and a donation storefront location within a retail complex, according to Story.

"Even if the clothes aren’t coming in at the level that we had hoped for, they will guarantee us a check every month," said Story. The boxes and the donation location tout the ARC brand, but make the distinction that the clothing is going to a for-profit company to keep up with donor transparency — an issue that some state lawmakers are taking up.

New Jersey and California, for example, are considering laws that would require more information about clothing donation boxes. A bill in the California state assembly Committee on Judiciary would even require companies and charities to apply for collection box permits and have a physical office within the county where the drop-box is located.

While donors are more reluctant to reach for their wallets in tight economic times, some nonprofits are hoping they clean some closets. But making a profit from torn jeans and outdated heels is harder than some nonprofits realize, with almost endless options to explore. From domestic sales or overseas shipping to clothing drop boxes or collection routes; nonprofits looking for additional revenue streams, while cash donations drip in, should realize the work doesn’t end with the clothing drop.

"Nonprofits had a much bigger presence in the collection box area. But they started to realize they didn’t need to operate these collection boxes on their own," said Mayberry. Even with the downturn, "There is so much being donated currently that the not-for-profits that are collecting this stuff, they couldn’t sell it all in stores. There is just too much."

Charities working with a for-profit company should err on the side of transparency and tell donors what will happen with the items. "I think donors need to understand what is being done with the gifts that they make, whether they be cash or in-kind," said Michael Farley, chief operating officer at Washington, D.C.-based Lupus Foundation of America. Lupus sells donated clothing to for-profit companies on an annual bid and makes sure to tell donors in its mailings. "We say right up front what goes on with the program so people understand that they are giving a direct benefit to us. It’s really an added value. You have communication and benefit and how the resource will be used and give them and opportunity to go to us for more information. I think it’s a plus," said Farley.

Lupus started collecting clothing in a few of its key markets (Maryland, New Jersey and Virginia) around 2004. Instead of setting up drop boxes, the organization sends out an estimated 16 million mail pieces with a bag for donors to fill with clothing or other items, such as toys or cosmetics.

"When you have a drop box, you really don’t have an opportunity to communicate much to whomever uses it and you don’t really have an opportunity, for the donor, to take a tax deduction," said Farley.

Donors to the Lupus Foundation can call to schedule a pick-up at their homes. The organization leaves for the donor assessments for tax purposes and organizational information.

Vietnam Veterans of America (VVA), based in Silver Spring, Md., also benefits from clothing donation pickups by a for-profit vendor at nearly 250,000 houses every month, which helps the organization create a revenue stream without expending resources.

"If we can’t identify the veteran to actually get good use of those things, we would end up warehousing them. For it to just sit there, with no use to anyone, I think is a waste," said Quentin Butcher, business manager at VVA. Donations are sold to thrift stores for program revenue. Veterans who need clothing or other materials still benefit from those donations by receiving vouchers from service offices for various partnership thrift stores. "It works better for us that [veterans] get this voucher and [veterans] could go in and get exactly what they need and we keep the donations moving. So even though we don’t find someone who gets a coat or a hat, we do get the benefit of the sale of those items," said Butch.

The Salvation Army’s clothing donations don’t just stock shelves — 100 percent of the proceeds go to operating Adult Rehabilitation Centers, which provide in-residence rehabilitation with no cost to the rehabilitation participant. "So when we lose inventory, it impacts sales and the lack of revenue, with overhead operating costs, obviously creates a real problem in our ability to serve people," said Maj. George Hood, national community relations secretary for the Alexandria, Va.-based organization. Instead of paying for rehabilitation, many participants in the centers work in The Salvation Army’s stores as a part of work therapy.

With the economy slowing down, clothing donations are following. Donors are holding on to clothes longer, especially if they can’t afford to spend money on a new wardrobe. Maj. Hood said the organization was seeing declines as early as Spring 2008 – even in clothing donations, which in 2008 were down 20 percent from 2007.

"The whole economic picture is impacting operations heavily. Right when donations are down, you want to have more exposure, and yet the means of getting that material is through the truck pick-ups when gas was over $4 a gallon," said Maj. Hood. "So, you are strapped. How much can you put into operations when donations aren’t coming in and you have to handle the burden of all the overhead costs to keep the program operating? It’s been a real battle and nothing has let up."

The operating expenses include maintaining truck fleets and buildings, with all the same challenges a retail store faces, and the vocational training that the stores provide for rehabilitation center participants are an important part to The Salvation Army mission. The Salvation Army tries to sell and recycle as much material as possible, but still has to spend $6 million annually taking unusable clothing, furniture and other materials to the area dumps, a cost that Maj. Hood said the organization would love to eliminate but is just part of the operation. The organization is taking steps to cut down on donation waste, such as no longer accepting donations of analog televisions, which won’t be able to receive a signal beginning Feb. 17, once all television stations broadcast in digital format as required by federal law. Right now, the competition for used clothing competition is steep, with nonprofits competing with consignment shops and for-profit thrift stores.

The Salvation Army is trying to tinker with the thrift store branding to increase customers and keep them coming. "Part of the strategy that our guys are looking at is the transition from a thrift store to a family store, trying to create a whole new image and environment for used clothing and furniture because of the competition," said Maj. Hood. The changes would include higher-quality used items. Newly-opened stores will be branded as Family Stores, but there are no plans as of yet to make sweeping changes across all of The Salvation Army thrift stores.

Don’t expect clothing donation partnerships to slow down on the for-profit side. "They are always clamoring for more. They could always use more material," said Mayberry. NPT

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