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Clothing donation scams threaten charity shop income and trust

Fundraising | Celina Ribeiro | 29 Apr 2009

Charities which rely on clothing donations are being hit on both sides by unscrupulous companies posing as charities and by a growing number of commercial organisations taking goods as part of legitimate, but often exploitative, relationships with charities.

Trading Standards in South Devon has seized a truckload of leaflets from a now-dissolved company, W&W Help Ltd, claiming to be a charity collecting clothing for the poor of Eastern Europe, while the Rainbow Trust Children’s Charity is considering its options regarding Homeless Children Limited, a company which has distributed clothing appeal leaflets using the name ‘Children’s Rainbow Trust Limited’.

Rainbow Trust told Charity News Alert that it has been contacted by a significant number of people confused as to its association with the company, which has been distributing direct mail in a number of cities – including, but not limited to, Walsall, Stockport, Wakefield, Solihull, Leeds and Manchester.

Homeless Children had been forced to change its name from Children’s Rainbow Trust Limited last year following a complaint by the Rainbow Trust, but while the company agreed to destroy all printed material with the confusing name it appears to be continuing to use the leaflets to solicit clothing donations. The material cites a registered charity number which is, in fact, company number.

Adrian Radford, financial director of Rainbow Trust, told Charity News Alert that as a result, the charity has “again contacted the Charity Commission as CRTL state that they are a charity which they clearly are not.”

He added: “An option open to us is to take action in the courts about the breaches of the stated undertakings, but the cost of carrying out such action may not be recoverable from the company”.

Homeless Children Limited, which is late in its reporting to Companies House, could not be contacted at the time of going to press.

Charities “not benefiting fully”

Meanwhile, the Association of Charity Shops (ACS) is concerned that in addition to the illegal collections, charities are also suffering as a result of legitimate partnerships which result in charities receiving around 3 per cent of the value of items donated.

The ACS said that while the partnerships were legal, charities are receiving little benefit with companies making as much as 68 per cent profit on the collections sold on the international market. The rise in popularity of second hand clothes, the organisation argued, has seen an uplift in the number of companies getting involved in second hand clothes collection.

Lekha Klouda, outgoing director of the association, said that the trend could undermine faith in charities. “The public can lose its trust in charity collections when these involve commercial companies, and this is of grave concern to charity shops that rely on the public’s support,” she said.

The issue made it to parliament last week when Liberal Democrat MP Jo Swinson tabled an early day motion in parliament calling for a crack down on bogus charity collections, calling the practice “outright theft of charitable donations” in some cases. Eight MPs have signed on in support of the motion.

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