Used clothing bins not all for charity TheStar

How cast-offs fuel global profitsUsed clothing bins not all for charity75 local companies part of $1.2B trade
PETER GORRIEFEATURE WRITERAt the edge of a Richmond Hill parking lot, Sami Jo Small hauls four well-stuffed garbage bags from her aging compact car and shoves them into a blue wooden bin.
The green bags are full of used clothes. "I'm hoping they're going to the less fortunate, someone that can use them," Small says.
The truth is far from Small's altruistic hopes. Much of the donated clothing never gets to local needy families. Increasingly, it makes its way to markets in the Third World, generating huge profits. And Toronto, home to more than 75 companies that sort and ship these cast-offs, is the capital of the $1.2-billion global trade.
Small had good reason to believe her donation will help needy people or will, in some way, support a worthy cause. Signs on two sides of the bin state: "Used clothing donations." Another, under the deposit chute, reads: "Thank you for your support in helping clothe the less fortunate through local non-profit organizations."
The bin is owned by Environmental Recyclers of Canada Inc. It's one of hundreds of blue or green boxes the company is said to operate in the GTA.
Environmental Recyclers is a registered Ontario business corporation. It is not a registered charity.
People in the used-clothing industry say Environmental Recyclers is a for-profit operation, and a big one, handling more donated clothing than any other collector in the GTA. They complain that the company — whose sole director, according to its Ontario corporate report, is Frank G. Genovese — undercuts a lucrative source of income for charities.
Industry insiders estimate that each week, donors stuff about 135,000 kilograms of clothes into the company's bins. Based on that assumption, they say, and after taking expenses into account, the operation could net roughly $24,000.
Small, a goaltender with Canada's Olympic women's hockey team, is surprised to hear that. She expected, she says, ``at a minimum, what's written on the sign. I assumed it was helping local people and local industry.
"It saddens me that I went to the time and effort to do what I thought was a good deed ... I'll just go to a different bin next time."
She'll have plenty of choice.
At least 12 organizations operate a total of more than 1,500 donation bins in the GTA. These drop-boxes are not regulated and competition is fierce.
Three years ago, Toronto Councillor Howard Moscoe — with backing from now-mayor David Miller — unsuccessfully proposed a bylaw that would require bins to be licensed. Moscoe hopes to revive the proposal next month.
Exact figures aren't known. But it's estimated that each week, across Ontario, 8,000 bins take in 1.8 million kilograms of donations — mostly clothes, along with furniture, books and small appliances.
The collections are part of a continent-wide phenomenon. The bins, along with door-to-door collections, raise tens of millions of dollars each year for charities.
As in almost every city across North America, some of the clothes donated in Toronto are put up for sale in charity thrift shops. Others are sold by the kilogram to for-profit stores.
Most, however, are sold to "graders" — businesses that sort and pack donated cast-offs for sale in Third World countries, or resell them to companies here that chop them into industrial wiping cloths.
This part of the trade is entirely for-profit. But it creates thousands of jobs here and, in poor countries, generates at least survival income for millions of people and is a source of cheap clothing for people who without it might dress in rags. Used clothing is Canada's leading export to 13 nations.
Toronto graders, operating in obscurity in scattered industrial parks, take in clothes from around the GTA and up to 2,000 truck-trailer loads each week from the United States.
Part of the income from the majority of bins does go to charities, through a variety of financial deals.
Some simply allow their name to be painted on bins provided and managed by a for-profit company.
The company sells the clothing to graders. The charity gets a small monthly payment for each bin or a portion — industry insiders say it's usually less than 5 per cent — of the proceeds. That's the arrangement between a company called KB Textiles and the Juvenile Diabetes Foundation Canada.
The foundation's name is on 60 bins, and it gets "not more than $100,000" a year from the arrangement, says foundation spokesperson Zaheer Molu. "We're happy to have as many boxes out as possible. These things don't cost us any money and bring in revenue."
Other charities run their own bins and sell the clothes they receive to Value Village or, occasionally, directly to graders.
Value Village is owned by Seattle-based Savers Inc. The company, which began 51 years ago, operates strictly for profit.
`Competition has increased dramatically in the past five years. Everybody wants to get in the business.'
Dewayne Fry,
Salvation Army
Each of its 200 stores contracts a single charity to supply donated clothing. In Toronto, its biggest charity partners are the Canadian Diabetes Association (not related to the juvenile diabetes foundation) as well as the Ontario Federation for Cerebral Palsy and Community Living Ontario.
Value Village stores buy whatever comes in, unseen and unsorted, for 55 to 75 cents a kilogram — at least 20 cents more than other buyers pay.
The best items are put up for sale. Those that don't move within a few weeks, and lower-quality garments, go to graders for a few cents per kilogram
Since it's privately owned, Savers Inc. isn't required to reveal its financial statements. The company is believed to be very profitable.
Charities say they're happy with their portions. Value Village pays more for clothes than they'd get from graders.
And, they note, they get their cut even if donors deliver garments directly to a store.
In this complex landscape, Environmental Recyclers appears to be unique.
The company is listed in Yellow.ca, the online business phone directory, under "Foundations: educational, philanthropic and research." But it is registered in Ontario as a for-profit business and does not appear on listings of foundations or non-profit organizations.
"The charities would love to expose this guy but they fear it could put a bad taste in peoples' mouths," says John Luison, of Rangeview Fabricating, a Dundas, Ont. company that manufacturers donation bins. "They don't want to stir the pot, so they take it. The last thing they want is to start a war and nobody wins."
Toronto Councillor Moscoe is not so constrained.
For-profit bins are "a significant racket that really ought to be closed down," says Moscoe (Ward 15, Eglinton-Lawrence).
"Environmental Recyclers are the most blatant and aggressive."
He says for-profit operations "play on people's desire to be helpful. The business should be restricted to legitimate charities."
In 2002, Moscoe proposed a bylaw that would have required licences for all bins. They'd only be issued to bins operated by registered charities and with written permission from the property owner.
City staff blocked the proposal, Moscoe says, claiming it would be outside the city's jurisdiction. He disagrees and, backed by Councillor Doug Holyday (Ward 3, Etobicoke Centre), has tabled a notice of motion to revisit it when council meets next month.
Several calls over the past two months to Environmental Recyclers' phone numbers, and to Genovese and his accountant, were not returned. Genovese also didn't respond to a written message left with the operator of a yard near Bolton, northwest of Toronto, where Environmental Recyclers rents space for its trailers.
For-profit collections are widespread across North America, says Ed Stubin, who runs a New York grading house and heads the used clothing section of the Baltimore-based Secondary Materials & Recycled Textiles Association.
"Today we have so many collectors in the business who don't represent legitimate charities. The public is led to believe they are legitimate."
While it's lucrative, managing bins can be a major headache.
"Competition has increased dramatically in the past five years," says Dewayne Fry, regional director of the Salvation Army's Central Ontario recycling centre, in Oakville. "Everybody wants to get in the business."
It's getting difficult to find good sites. Donations dropped outside create a mess and, when it rains, become worthless.
"In the last year, (operators) have gone through hell," Luison says. "People use bins as dumping grounds because the municipalities are tightening on the amount of garbage you can put out on the curb, or the increased cost of taking garbage to a landfill."
One of the original collectors, Goodwill Industries, waved the white flag about three years ago and now accepts donations mainly at their stores or supervised trucks and trailers.
Another old-timer, the Society of St. Vincent de Paul, abandoned bins in the late 1980s. Instead, it has six trucks that set up for collections at churches each weekend.
"We had a lot of problems with contamination of merchandise and, in some cases, dumping," says Louise Coutu, executive-director of the society's central council.
Sales of bins, which cost about $600 each, have been quiet for about a year, says manufacturer Luison. "People are recouping their money, keeping an eye on things.''
Still, most groups say they plan to put out more.