Competition for donated used clothes and unwanted household items has become so vicious across the Valley that local charities report their collection bins are being bolted shut, vandalized and even towed away.
An intensifying turf war between non-profits and for-profit clothing resellers is taking a big bite out of contributions to charities like Valley Big Brothers and Big Sisters, Swift Charities for Children and Goodwill, officials from those groups say. “There’s a river of revenue that runs through this Valley, and it’s made of people’s secondhand clothes and household items. People don’t realize how valuable this stuff is,” said Jim Stone, director of Swift Charities.
He and other non-profit leaders say for-profit collectors are increasingly siphoning millions from this lucrative revenue stream with misleading collection boxes, aggressive tactics and tiny donations to charities that make people think they’re giving to a good cause. The inner workings of this massive industry are little known to most. Members of the public see donation sites in retail parking lots and thrift stores. They feel good about giving last year’s fashions to a good cause or enjoy bargain hunting at thrift stores.
But for-profit collectors sell tons of used clothing and shoes on the global marketplace in Latin America, Africa and Asia, and Stone and Jim Kaiser, donation director for Valley Big Brothers, said these firms donate very little of the proceeds to charities in whose names they are collecting. Shopping-center owners are getting so fed up with the rivalry that some are giving all collection bins the heave-ho.
Walmart banned donation bins last year, said spokeswoman Delia Garcia, because so many for-profits moved in. Parking lots became cluttered, and the public had no clear indication where donations were going, she said. As part of its charitable programs, the discount retailer continues to give money to local non-profits – $10.6 million in Arizona last year, she said.
Michael Pollack, who owns more than 40 Valley shopping centers and is a big supporter of local charities, said he doesn’t allow bins in his parking lots but regularly has to evict for-profits who drop off their bins anyway. “They have a lot of nerve to drop off a bin in one of my parking lots without consent,” Pollack said. Occasionally, he catches them in the act, but when he confronts them, “they say they have permission from the owner.”
When Pollack tells them he is the owner, some continue to argue. “I’ve gotten into shouting matches in my own parking lots,” he said.
Charities like Goodwill collect the items only at individual stores where they are sorted for resale with donated household appliances, office supplies, toys and furniture. What doesn’t sell to the public is packaged and sold to recyclers, said Tim O’Neal, CEO of Goodwill of Central Arizona. The operation brings in $80 million a year statewide, he said, and 90 percent of that goes for the charity’s programs, which focus on job training and employment. But donations have gone down with the influx of the for-profit bins, O’Neal said.
Non-profits such as Valley Big Brothers and Big Sisters and Swift Charities for Children place collection bins in shopping-center parking lots. Both say their donations are sold to for-profit operations like Savers, a chain of retail thrift stores. Kaiser, of Valley Big Brothers, said Savers pays his organization about $3.5 million a year for collections from 140 bins, about 25 cents a pound.
Proceeds go to support volunteer screening, matching about 2,400 children with adult mentors and monitoring the relationships. Swift Charities uses proceeds from its collection bins to subsidize several local organizations, including the YMCA, Boys and Girls Clubs and child-crisis centers.
Stone, the Swift Charities director, said donations in 150 bins across the Valley have plummeted since for-profit competition started growing in 2006 and 2007. That’s reducing what they contribute to charities from nearly $1 million a year in 2006 to less than $150,000 a year today. Stone and Kaiser blame the for-profit competitors for increasing incidents of bin theft and vandalism, but there is no direct link and no charges have been filed. Both said that feces and dead animals are thrown into boxes, lids are bolted shut to keep out donations and boxes are commonly towed away.
Richard Polanco, manager of Alliance Towing in Phoenix, confirmed his company had been called to tow away charity bins but said he since stopped taking those calls because “there were too many disputes.”
Two competing for-profit collection operations – American Textiles Recycling Services Arizona and Tiedemann Globe Inc., which touts its international marketing of used clothing on the company website – declined to disclose revenues. However, Robert “Skip” Miller of ATRS said his company has 300 donation bins in the Valley, double the number reported by Valley Big Brothers.
ATRS, which has common ownership with a company by the same name in Houston, posts on its boxes that it collects for Weldon House, a residential program in Phoenix for women and children associated with the National Council on Alcoholism and Drug Dependence. Miller said ATRS gives Weldon House about $100,000 a year from the proceeds of the bins, sends company volunteers to the facility and hosts special events for the resident families.
Thelma Ross, CEO for Weldon House, declined to disclose how much ATRS contributes but said the amount is a small fraction of the facility’s operating costs, which are mostly funded by the state and United Way. Miller also is listed on Arizona Corporation Commission records as the principal for Alpha Maintenance, a company that he admits has posted bin-removal notices on several competing charity boxes, including one that was bolted shut with the notice and others that were towed.
Miller said he formed the company in part to deal with bins that were placed in parking lots where ATRS had permission and the others did not. Phoenix-based Tiedemann Globe’s bins promote collections for Loved Ones Lost, a charity started by Anthony Tiedemann in 2006 that provides funds for various veterans organizations, according to its website. Tiedemann declined to disclose how many donation bins he has, how much he receives from the sale of donated items or how much of that goes to the charity.
In an e-mail, Tiedemann said, “Loved Ones Lost is not profitable.” Cash donations, which are separate from the bin collections, go to several local veterans charities, and that amounted to more than $30,000 last year, he said. The Loved Ones Lost website said the charity has given $5,600 to nine veterans groups so far this year. In 2008, when Tiedemann was named Small Business Exporter of the Year by the U.S. Small Business Administration, he told The Arizona Republic that he expected annual revenue of $12 million that year, up from $9.5 million in 2007.
Last year, an Arizona non-profit coalition that included Big Brothers and Goodwill backed state legislation that took effect in January and requires more disclosure on donation boxes. The for-profit or non-profit status of companies that place the boxes must be included. However, the disclosures aren’t easy to decipher, and it is unclear who is enforcing the law, if anyone.
The disclosure on one of the ATRS boxes in Chandler reads, “This collection site is owned by American Textile Recycling Services, Az, a for profit company. Donated items received at this location will be sold by American Textile Recycling Services with a portion of the proceeds benefiting Wendon House and (NCADD) a non-profit organization.” The charity leaders agree that more laws may be necessary but that the best solution to the problem for now is educated residents who check out charity boxes before they open the lids.
“More than ever, charities need the community to support us,” Goodwill’s O’Neal said. “There are about a half-dozen really good large charities that are desperate for donations now because so much is being put into (for profit) boxes and going somewhere else.”