Role of commercial third parties in charity clothes recycling deal under scrutiny
February 2011
When the Association of Charity Shops rebranded on 4 November 2010 as the Charity Retail Association[i],
chief executive Warren Alexander explained: “Charity retail is developing at an astonishing rate, as it responds to the changing market place and consumer demand. The association must develop in the same way. This re-be-branding not only reflects these changes, it’s also an opportunity for the Association to become more effective in representing this changing sector”.
One of the issues facing the new-look trade association is how charities with trading subsidiaries work with consultants and third parties – whatever sector they are in – to raise the most funds for their beneficiaries. The recent complaint about The Salvation Army’s clothes recycling scheme to the Fundraising Standards Board (FRSB) and its referral to the Charity Commission for further investigation in response to the
Guardian’s recent report on 30 January 2011: Salvation Army under fire over tycoon’s profits bonanza
[ii] highlights the very real threat to
public trust and confidence if expertise is sourced inappropriately. The wrong sort of headlines can be highly destructive – something Tamsin Turk of Withers pointed out in her article, ‘Headline news’ in Caritas, issue 23, October 2009. [iii]
The FRSB believes that charities should ensure that they are open and transparent in all their fundraising efforts and across all public touch points, which includes solicitation statements placed on materials such as clothes collection banks and bags. Charities need to do all that they can to educate the public in how fundraising works. This includes the use of consultants or third parties in helping them raise much needed funds. Openness and transparency are vital for engendering public trust and confidence in charitable giving.
Alistair McLean, Chief Executive of the FRSB explains: “It’s not uncommon for charities to enter into arrangements with commercial trading companies that have required resources and expertise as it is often the most efficient and effective way for a charity to maximise the money it can raise for good causes. Such commercial arrangements are entirely a matter for the charity in question with the trustees of the charity having a responsibility and duty to ensure they secure the best possible rate of return.
“In the case of The Salvation Army, we have received an official public complaint about its clothes recycling scheme. The FRSB has passed this complaint onto The Salvation Army, in accordance with the FRSB Complaints Process. The charity is required to follow this up with the complainant as a Stage 1 complaint. If needed, we will impartially support both parties to satisfactorily resolve this complaint, again in line with the three-stage FRSB Complaints Process.”
Warren Alexander of the Charity Retail Association added:
“The Charity Retail Association has a robust code of practice[iv] that requires its members to be transparent about partnerships with companies and where they are in partnership with companies to ensure the charity receives the maximum possible financial benefit. Additionally, the code requires member charities to consider the reputational risk to their own charity and to the sector in general when entering into commercial partnerships. The code contains a clear requirement for members to include a remuneration statement detailing the benefits to both parties. “
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from Cass Business School. She has been one of the judges for the non-profit category of the Chartered Institute of Marketing's Excellence in Marketing Awards for the second year running.
She has also acted as clerk to the trustees of a small almshouses charity and as a member nominated trustee to a pension scheme of a multinational publishing company.
Click here for other articles written by Clarissa Dann
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