UK: In Fashion Fundraising: Clothing Collection Bags

Last Updated: 25 April 2012
Article by Ben Brice

Ben Brice highlights how compliance with the commercial participation regulations can help manage donor expectations and avoid reputational damage in a legitimate form of fundraising that has recently attracted controversy.

As the gloom surrounding the national and international economy refuses to lift and with government and local authority funding slashed, many charities are rightly looking to diversify their methods of fundraising. Recent statistics published by the Charities Aid Foundation and the National Council for Voluntary Organisations show that, as compared to 2010, approximately 1.1 million more individuals are giving, but the average amount people are giving has dropped, so that the total amount given has remained static in real terms. So, whilst there is a slightly wider pool of donors to solicit, the pool is shallower. The result is increased competition amongst charities for the same funds. This jostling for position, if not handled carefully, can take casualties along the way and impact adversely on a charity's reputation. A good example of this is the press attention and regulatory intervention that charity clothing collection bags attracted during the latter half of 2011.

It was not long ago that, if you wanted to donate second hand clothes to charity, it would be necessary to bundle them up and take them along in person to the charity shop of your choosing. In an effort to make giving more convenient and accessible, first clothing collection bins were introduced, often found alongside bottle banks and recycling bins, and now the collectors have come to your home, leaving bags for you to fill and leave on your doorstep for collection.

From the clothing donor's perspective, it is not unreasonable to infer that clothes left in bins and bags might end up for sale in the charity shops to which they used to deliver these unwanted items. However, in many instances, this has turned out not to be the case. According to research undertaken by the British Heart Foundation, in 70% of cases the clothes are collected by commercial middle- men who sell the clothes abroad, with only a percentage of the proceeds being donated to the charity identified on the collection bags. In late August, on the back of their research, the BHF called for greater transparency on clothing collection bags with regard to both what would happen to the clothes and what proportion of the proceeds would go to the charity. This plea was framed in the context of collection bags being a 'huge problem for charities with high-street shops' and the promotion of a campaign for donations towards the BHF's own stores. Public feedback to this news appeared to indicate a feeling of having been duped - if the bags are marked with a charity's logo, why are the clothes not going to be on sale in that charity's shops?

The BHF's analysis accepts that clothing collection bags are a legitimate way of raising money, and it is true that, whether selling delivered second hand clothes in a charity shop, or having them collected for sale abroad, the purpose behind each method is
the same for the charities involved: to raise funds for their cause. Both mechanisms have their own overheads which will eat into the amount of money available to the charitable causes themselves. Clearly, not all charities have the resources to establish their own chains of charity stores; those that do often find it hard to turn a profit as it is. For charities without significant resources, an arrangement with a licensed clothing collector will therefore be an attractive fundraising option.

The BHF story has not been the only collection bag publicity to hit the press. Since then, there have been reports of the Charity Commission intervening in the agreements between charities and the collectors, suggestions that the public is confused by the variety of bags they receive, and details of the Fundraising Standards Board's new campaign, warning against fraudulent clothing collectors. Whilst at first sight it is encouraging that the two regulators are taking an active interest in the activity, the fact that they have deemed it necessary to do so might suggest that there is a higher level of risk associated with it, whether in terms of financial or reputational impact.

What was not always clear from the press coverage is that there is already a legal framework with which charities and commercial clothing collectors must comply and which requires that donors are provided with sufficiently clear information explaining how the charity will benefit. The requirements of Part 2 of the Charities Act 1992 and the Charitable Institutions (Fund- Raising) Regulations 1994 (both as amended) establish that clothing collectors would be considered 'commercial participators' and that any charity dealing with them must enter into a written agreement containing certain minimum legal requirements (including the principal objectives of the arrangement, what proportion of proceeds are to be applied to the charity, and what remuneration the commercial participator will receive, if any).

Additionally, the commercial participator is under a duty to ensure that, where they represent that charitable contributions are to be made, that representation must be accompanied by a solicitation statement, which indicates to potential donors which charity or charities will benefit and either the known or estimated amount the charity will receive. In the case of clothing collections, this would usually involve explaining that the charity in question will receive ŁX per tonne of clothing collected and also including an estimated total sum, as the precise amount could not be known at the outset. It is open to the parties to agree a more detailed statement, which may be appropriate if, as the response to the BHF research indicates, there is any suggestion that donors might otherwise become confused as to what will happen to the clothes and the proceeds of sale.

In looking to diversify their income streams, charities should be wary of rushing into new arrangements (clothing collection or otherwise). The idea of making a quick buck is appealing, but if it is made at the expense of reputational detriment, it could adversely impact the charity's income in the longer term. Proper planning, including undertaking due diligence of the collection agencies available, compliance with the commercial participation regulations and management of donors' expectations, through ensuring a clear message on the bags or supporting paperwork, will all help minimise such risk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Law Practice Management
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.