Clothing bin donations don't always reach needy

• Many collection bins placed by for-profit recyclers
• Goodwill says trend creates confusion for donors
• Some localities starting to ban free-standing donation bins

Castoff clothing dropped off in parking lot donation bins doesn't always end up with charities devoted to helping the poor.

More and more, clothing collection bins are being operated by for-profit recycling firms or non-profits that give only a small portion of their proceeds to charity.

Goodwill officials said they can't measure the exact impact of the proliferation of bins, many of which "aren't labeled properly or mislead donors," spokeswoman Lauren Lawson-Zilai said.

But she said they have eaten into donations, which in turn hurts Goodwill's ability to fund its work. Goodwill provides job training and job-placement programs paid for largely through the retail sales at its network of thrift stores — a business that brought in $2.59 billion in 2011.

Lawson-Zilai said 82% of the revenue from sales of donated items went toward services that helped more than 4.2 million people last year.

"The charitable sector relies heavily upon the kindness of donors to help achieve their respective missions," ​she said.

In contrast, the most recent federal tax return from non-profit Planet Aid, which operates donation bins across the country, shows that just 28% of its $36.5 million in spending went to its international aid programs in 2011. The bulk of its spending went to collect and process clothes for recycling.

For-profit companies such as USAgain and non-profits such as Planet Aid make their money by bundling clothes and selling them in bulk to recycling companies that ship them overseas, where they are re-used as apparel, made into rags or reprocessed as furniture padding or insulation materials.

On its tax returns, Planet Aid said its largest mission was the "protection of natural habitat by collecting and recycling 50,000 tons of used textiles."

Spokesman Jonathan Franks touted the group's recycling mission.

"We view donation as an individual choice and believe that a variety of organizations with a variety of mission statements is a good thing," he said.

But the low percentage of money going to international aid programs earned Planet Aid an "F" from ratings organization CharityWatch, which examines how non-profits spend their money.

"It's more like Walmart claiming to be a charity because they help people stretch their budget because they have lower prices," CharityWatch founder Daniel Borochoff said.

CharityWatch gave an A to Goodwill Industries International, the organization that represents the country's 165 independently run Goodwill agencies and its 14 affiliates abroad.

Collections and wholesaling has skyrocketed for Planet Aid in recent years. In 2007, it sold roughly $7.5 million of donated clothing and household goods. In 2011, that figure was up to $31.4 million, according to its most recent tax return filed with the IRS.

USAgain, an Illinois company that also collects clothing through drop-off boxes, is a for-profit recycler, and states as much on the 10,000 bins it maintains in 17 states, spokesman Scott Burnham said. The company collected 60 million pounds of clothing donations in 2011, he added.

Clothing recyclers say they save clothing from ending up in landfills. The Council for Textile Recycling, a non-profit advocacy arm of the Secondary Materials and Recycled Textiles trade association, estimates that 85% of textiles are simply thrown away each year rather than re-used.

The trade association, which represents the $1 billion clothing-recycling industry, has urged organizations that use collection bins to clearly state where donated items will go. "Without transparency, it is likely that donations will eventually diminish," its website states, adding that its goal is to increase clothing recycling over the next two decades.

But the proliferation of donation boxes has led some towns to start passing laws to control them. Earlier this year, the village of Schaumburg, Ill., banned all collection boxes after several appeared in shopping plaza parking lots.

Property owners complained to village officials that no one had asked permission to put the boxes on their land, said senior planner Tom Farace. And organizations weren't picking up donations quickly, leaving some collection points overflowing, he added.

A staff report for the village zoning board said the increase in boxes was believed linked to growing demand for used clothing that can be sold to make rags, a "multimillion-dollar business." That played a "bit of a role" in the decision to ban the boxes, Farace said.

Similar situations have played out across the world in recent years. Other Illinois towns have also banned bins, and still others, such as St. Charles and Cicero, have regulated them, requiring organizations to get use permits and follow maintenance schedules.

In Southern California, the city of Corona banned donation boxes in May, citing many of the same concerns as Schaumburg officials. Palm Beach County, Fla., commissioners will consider donation bin regulations at a meeting on Jan. 3. And in Germany, officials asked Humana People to People to change the wording on collection bins to remove any indication that donated items would go to charity.

Borochoff said donors needed to be careful and do their research before dropping off items in a bin.

"Take that extra step and find a charity or non-profit that can really use it," Borochoff said. "Then you can feel good that what's given is being used."