Peter Munro
20 Aug 2011

When Alan Wheeler says that 80% of all revenue generated by a door to door collection is eaten up by costs, is he talking about collection of goods or money ? For collection of goods, it seems ridiculously high, even if paying collection staff, for money it seems unreasonable.

When I collected furniture for a charity to resell or give to destitute families, we had no difficulty in getting volunteers to collect, and the costs were vehicle, fuel and insurance - no more than 15% of the income raised; when we collected books it was even lower.

I wonder if Alan Wheeler's 80% includes a huge profit margin for the company collecting on behalf of the charity. I accept that few companies are going to collect on a regular basis for charities for nothing however I wonder how much is their markup.

[Reply]

Alan Wheeler
National Liaison Manager
Textile Recycling Association
24 Aug 2011
Response to [Peter Munro]

In response to Peter Munro.

The 80% cost figure is very straight forward and I believe this is made clear in my original response.

Any charity or collector that collects used clothing will be able to sell their goods at the current market value, but they have to deduct their costs, which for used clothing typically accounts for 80% of the current value of the used clothing collected.

The profitability of used clothing collections has been eroded recently not only because of rising fuel costs and other overheads, but because of declining collection rates which can partly be explained by increased thefts.

Whilst collection costs of 15% for a furniture collection seems very laudable I would expect the collection costs for furniture collections to be relatively lower. I am also not sure how they can be compared to clothing collections? Some items of second hand furniture can be sold for tens if not hundreds of pounds and yet you may only have to go to a few houses in a day to pick up these goods. I also note that Mr Munro states that he collected (not collects) furniture and depending on when these collections took place this would have a notable impact on collection costs.

There is also the matter of scale to consider. Smaller clothing collections, operating in a handful of streets, should in theory be able to keep their costs down, but legitimate charitable clothing collections raise millions of pounds annually for charity and we know that a number of charities have received six figure annual incomes where they have teamed up commercial partners. In order for any collector (whether it is a charity itself or commercial partner) to generate such net profits, they have to invest substantially in collection infrastructure, make visits to thousands of households a day, every working day of the year and usually use paid staff. There are of course substantial costs but the net profit generated can be large because of the relatively large amounts of clothing that are still collected (despite declining returns).

Furthermore, the reason why clothing collectors are not making huge net profits and are not deliberately keeping the amount that they can pay to their charity partners artificially low, is because anybody could come along and offer substantially more money to charities than others to consolidate their market share? This has not been done, because profit margins are tight and it is only through volumes of collection that substantial net profits can be realised.

Readers may also be interested to know that the Textile Recycling Association has both the collection arms of charities and private businesses amongst its membership. One of our primary objectives is to increase the amount of clothing and textiles collected for re-use and recycling and we believe that both charities and commercial operators have a very important role to play and we endeavour to take an objective view on how this can be achieved.

[Reply]