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ABC1 (a charity) and XYZ1 Ltd (a clothing collection company)

Headings on this page :

  • Introduction
  • The leaflets and bags
  • Some questions and answers
    • Q - Are the collections commercial or charitable?
    • Q - Is the charity genuine?
    • Q - Is the name of the charity being used by the commercial collection company with its permission?
    • Q - Is the agreement between the charity and its commercial partner acceptable?
    • Q - Are their collections legal?
    • Q - Would the company/charity be granted a collection licence?
    • Q - Was the company acting in accordance with their agreement with the charity?
  • A positive note
  • Further information

Introduction

Note : We've anonymised the details :

This page concerns house-to-house collections of clothing etc which have been carried out by a particular company, using the name of a small registered charity since November 2001 (or earlier).  The company and charity are based in the same English county.  This investigation was carried out in late 2002.

The collections provide an insight into one type of clothing collection - a type which we feel provides poor value for the charities concerned.

We think the step-by-step question-and-answer approach below gives a useful model for examining collection where you're not sure if it's genuine.  Alas, in this case the answer is not straightforward.  Compare this case with collections by "Gotham", where the answer is simple.

The collection leaflets and bags

The leaflets delivered to households were headed :

ABC1 - A BRITISH CHARITY - Reg. No. 9999999

In much smaller print at the foot of the leaflets accompanying the bags it says :

XYZ1 Ltd are collecting in aid of 'ABC1'.
For every tonne collected 'ABC1' receives £30

The plastic bags accompanying the leaflets were printed with the following message :

ABC1 - A BRITISH CHARITY - Reg. No. 9999999

Tel: 01999 999999

The telephone number given turns out to be the collection company's, not the charity's - which we feel is misleading.

Overall, the labelling on the bags may give the incorrect impression that :

However, we understand the true position is as follows :

Some questions and answers

Question - Are the collections commercial or charitable?

Answer - Charitable.

Although the collections are done by a commercial company, they're definitely "charitable" - the wording on both the leaflets and bags is clear - they're asking for donations to help a charitable purpose.  The overwhelming emphasis of the leaflet is on the charity/charitable purpose, not on the commercial collection company.

Because the collections are charitable, they're controlled by the House to House Collections Act 1939 (administered by local councils) - in other words they need a licence.

Q - Is the charity genuine?

Yes.

The charity referred to is registered with the Charity Commission for England and Wales.  You can check this out by searching the Commission's website by the name of the charity (or by its registered number), or by calling the Commission's telephone helpline.

The charity has its own website (listed on the leaflet).  This gives helpful information on the charity.

Q - Is the name of the charity being used by the commercial collection company with its permission?

Yes.  The charity has confirmed that they do have an agreement with the collection company, allowing the company to collect clothes etc using the name of the charity, in return for receiving £30 per tonne of collected bags.

So far, so good.

Q - Is the agreement between the charity and its commercial partner acceptable?

It seems not, for two reasons.

1. Informality of the agreement - The agreement may not be sufficiently formal and watertight to satisfy the requirements of the Charity Commission or local council licensing departments.

Lady in red dress - modela6

2. Royalty per tonne xStatistics: - £30 per tonne may sound satisfactory, but it raises far less money for charity than if you take your unwanted items to a charity shop.  For details of the calculations, see the royalty collections section of the 'Donations and types of house-to-house collections' page.

The charity is very small (turnover currently under £50,000 a year) and says it's not practical for it to run its own charity shop(s).  We have some sympathy with this view.

The arrangement between the charity and the collection company benefits both of them :

So who loses out? - Answer :

Q - Are their collections legal?

No - because they had no collection licence.

In 2002, collections were made by the company in one district of the Midlands.  They had collected in the same area a year before, using the same design of leaflets.

They hadn't applied to the local licensing authority (the district council) for a charitable collection licence (and they didn't have a National Exemption Order).  So the collections were illegal, and they were told to stop collecting immediately.  The council has since written to both the charity and the collection company pointing out the need for a licence.

Our understanding of the law is that if the company/charity carry out further collections anywhere in England (without a licence), they would be liable to prosecution by the licensing authority for that area.  They could no longer argue in mitigation that they didn't know a licence was required.

Q - Would the company/charity be granted a collection licence?

Maybe not.  The proportion of profits going to the good cause appears to be too low.  These collections may not satisfy the criteria used by the Charity Commission, police and local council licensing departments in respect of the proportion going to the good cause.  Therefore the company/charity might not get a collection licence.

Q - Was the company acting in accordance with their agreement with the charity?

It seems not.  The charity says the company had not sought approval from the charity for the wording of their leaflet.  The leaflet includes requests for high-value goods such as CDs, videos and even jewellery.  The charity says that they don't approve of such items being collected in their name.

Wristwatch

xStatistics:We agree with the charity - for example a donated watch would raise only around 1/10th of a penny for the charity at £30 per tonne - that's only 1/2,000th (!) of the net proceeds raised by a watch in an average charity shop.  For more on this, see the charity shops page and the donations and types of house-to-house collections page.

Meanwhile we assume the collection company would sell the watch at a handsome profit, more or less legitimately under their current agreement.

A positive note

We have no wish to offend either the charity or the collection company concerned.

The charity

We understand they're carrying out worthwhile charitable work and we wish them well.

We would encourage people to give cash donations to the charity.
For example they accept donations by credit card online via their website.

So, help them by all means, but we would advise them to abandon raising small amounts of money through the clothing collections described above - and instead let other charities raise more money from the same goods - by routeing them to charity shops.

The charity has said that the proportion of its income coming from these clothing collections is small.  We understand that most of its revenue is from cash donations and grants.  So, abandoning the clothing collections won't have a major effect on the charity.

An alternative strategy could be for the charity to help form a consortium or co-operative of small charities to open charity shop(s) and share the profits.  A consortium approach has already been used successfully with charity Christmas cards.

The collection company

We assume they're reputable and we welcome their efforts to get unwanted clothes re-used.

However, we suggest they either :

Further information

There are several other pages on the website which give information on house-to-house collections - types of collection, the law, economics of collections etc.  For example, see :

Charity shops versus house-to-house collections page