Action 9

Spring cleaning? Not all charity boxes are helping who you think

ORLANDO, Fla. — There's a popular Netflix show that's inspiring folks to declutter their homes and that's triggering big donations to local used clothing charities.

But an Action 9 investigation found many clothing charities use for-profit companies to collect the donations.

Consumer investigator Todd Ulrich uncovered well-known charities using private firms that keep a lot of the profits.

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“We have seen the volume pick up. And it's coming from those who want to do the right thing,” Kathy Baldwin said.

Baldwin is the president of Mustard Seed of Central Florida. The charity processes donated clothes and provides them to folks in need.  The clothes are offered to clients at modest fees.

“There's no price tags on anything in here,” Baldwin said.

Items that can't be used are sold in bulk to fund operations.

But not all clothing donations are the same.

Most consumers don't know it, but a lot of clothes donated to good causes are collected by for-profit thrift shops or recycling companies.

Chances are you've seen vans for AMVETS collecting donations. All the clothing is processed and sold at TSI Community Thrift shops. TSI is a for-profit company that doesn't disclose how much money it makes selling donated clothing compared to what it pays AMVETS.

“It's a huge concern,” Baldwin said. She thinks it hurts the image of all clothing drives. “That doesn't mean a for-profit person trying to make money on it,” she said.

Action 9 found that clothing donated to the National Children's Cancer Society is processed by City Thrift, a for-profit company with a store in Daytona Beach.

Clothes donated to the American Red Cross are processed and sold by a for-profit company called Charity Clothing Pickup.

These organizations’ profits, compared to what the charities get, are not disclosed.

Philanthropy expert Mark Brewer calls it a troubling trend. “What you never know for sure is how much the for-profit is earning and the more questions you can't answer, the less transparent you are,” Brewer said.

All three charities- AMVETS, the National Children’s Cancer Society and the American Red Cross- told Ulrich that clothing contracts fund significant programs for their causes.

Still, most people want to know how their donation is used.

“Most of it should be going to folks who need it. A lot of folks don't have anything,” said a local donor.

Mustard Seed, Goodwill Industries and The Salvation Army process their own clothing donations without using a for-profit company. These organizations claim donations pack a bigger punch for programs locally.

American Red Cross response:

The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity donors.

The donation bins managed by ClothingPickUpFLorida is one of the ways our community donates so Red Cross can fulfill its mission with a portion of the proceeds received by ClothingPickUpFLorida.

The funds received are fundamental to the various assistance and programs Red Cross is able to offer.  For instance, over the weekend our region responded to 12 separate home fires and the volunteers were able to provide comfort & immediate financial assistance to 21 households equating to 64 people. Last night in Orlando alone, volunteers were able to provide this immediate assistance to 18 more people, 13 were children. All these families can begin their long road to recovery with the support of Red Cross.

Another way these funds may be used is to help fund The Home Fire Campaign,  which includes teaching individuals and families fire safety at all ages. Under this campaign there are events & classes including Sound the Alarm. Save a Life home fire safety and smoke alarm installation events, where Red Cross partners with local fire departments and together, install free smoke alarms, teaches fire safety and helps create escape plans in at-risk neighborhoods; youth preparedness programs such as Pillowcase Project and Pedro the Penguin.  Red Cross volunteer presenters teach children grades 3-5 (Pillowcase Project) and children K-2nd grade (Pedro the Penguin)home fire & hurricane safety at age appropriate levels; and the Monster Guard: Prepare for Emergencies App is available to help save lives through gaming. Children between the ages of 7 and 11 learn ways to prepare and stay safe in home fires, hurricanes, tornadoes, floods and other disasters by role-playing as different monster characters.

These are merely a few examples and there are so many more services and training provided by Red Cross. To learn more about Red Cross please visit www.redcross.org/central-florida

AMVETS response:

TSI is a valued partner in our efforts to deliver free, personal claims assistance for military veterans with service-connected disabilities. VA disability and compensation applications are bureaucratic processes wrapped tightly in red tape. Our service officers, who are all professionally-trained disabled veterans themselves, help veterans cut through that red tape and guide them through. Unlike many attorneys, AMVETS never charges the veterans or their families a dime for this valuable assistance. This is AMVETS’ core mission as a Congressionally-chartered veterans service organization. I point out that we are Congressionally-chartered (since 1947) because that means we have a high-level of accountability as we must report to the United States Congress on a regular basis, reporting what services we are providing, who we are helping and how we are funding our programs. We do not receive government funds. Our national commander will be testifying March 7 before Congress.

TSI purchases unprocessed goods from us at fair market value by volume. The products they are buying from us are donated clothing, accessories, furniture and miscellaneous household items. Those who donate those goods to AMVETS are able to receive a tax-deduction for their donation. I am confident AMVETS is receiving fair market value for these goods from TSI and our other partners.

We have very similar business relationships with other thrift store operators throughout Florida and throughout the United States.

We do own and operate eight of our own thrift stores and three warehouses in other states. There are times when our own stores generate more net revenue for our programs, and there are times when selling our products to business partners nets a better return on our investments. In general, the two ways of doing business average out to be about equal for us. I presume that can vary depending on how a charity does business. Our organization has been at this for decades, so we have excellent efficiency. Owning and operating a store does require significant investment and comes with a lot more risk.

We know the more funds we are able to raise, the more veterans we are able to assist, so we are always looking at how we do business and looking for ways to improve.

We generally do not publicly disclose our business partners’ contracts because, as in most business dealings, their competition and ours could benefit by knowing the raw numbers. Our books are audited annually by an independent auditing firm. These business relationships are examined closely by that firm, by our board of trustees, by the IRS and by many states. We have presented our numbers to many municipality-governing bodies.

I can tell you the products are sold unsorted by the cart to our business partners in the communities the donations were received. Unsorted means there will be a percentage of those products that our partners will never be able to put on their selves. They assume that risk. It is no secret they could buy enough products from for-profit wholesalers overseas for less money to stock their shelves. We believe they buy from us because they want to help our charity, their customers want to shop at stores that are giving back and we offer high-quality products because our generous donors care. We do not ask what the business partners sells the products for or how much their stores net. Being that we own and operate our own stores, we have a general idea of the going rates. The profit margin per item is very small. Volume in sales and being as efficient as possible on overhead are the keys.

We do not advertise or in any way promote particular thrift stores or companies other than the stores we own ourselves. Stores owned by a business partner are allowed to mention in store that they contribute to AMVETS, as are other business, such as Bass Pro Shops, that contribute to our cause, but they do not brand themselves as an AMVETS store. It is important to us that we remain transparent as our donors’ trust is vital to ensuring another 75 years of service to all our veterans.

AMVETS is the most inclusive Congressionally-chartered veterans service organization in the nation. AMVETS has nine professionally staffed service offices in Florida. These offices are funded by the sale of these donated items. Without these business relationships, we would not be able to provide these vital services in Florida.

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