Where Do Your In-Kind Donations Really Go?

In-kind donations are a sort of win-win of feel good: You have stuff you don’t need, you give it to charity, and charities either use it or sell it to raise money for operations. Many charities would actually prefer your money to your goods, but they’ll take your goods if that’s what’s on offer. Yet, not all in-kind collection is on the up-and-up, and people who actually want their donations to go to charity need to be careful, because that’s not the only place these donations end up.

Book collection bins, for example, may route some funds through the sale of the books to charity, but the rest go to profit. This may be the result of an arrangement between a charity and a collection service; it agrees to pick up ┬ádonations and manage drop-off points, in exchange for being able to sell some of the goods for itself. Members of the public may not be aware of this agreement, however, and they could be upset to learn that some of the goods they’re dropping off ‘for charity’ are ending up nowhere of the sort.

Likewise with hair collection, and pretty much anything else you can imagine. Administering in-kind donations is expensive and can eat up a lot of resources. Consequently, it’s common for charities to want to contract out this work so they can focus on delivering needed services; otherwise, they’d be spending all their time processing donations, and this just isn’t an efficient use of resources. The amount of oversight when it comes to contractors varies considerably, and not all of them operate at high efficiency.

They, after all, are not charities, and don’t have a driving need to serve the charity’s population. Their primary concern is with turning a profit, and may involve handling goods for recycling and sale on behalf of a number of organisations. The terms of their contracts spell out some specifics, but often provide considerable leeway; which is why when you donate that hank of hair you cut off, it may not end up being recycled into a wig for a kid with cancer. It might not necessarily be sold to pay for a wig for a kid with cancer. It might be sold by a for-profit that sells hair and turns over some proceeds to charity.

Some people aren’t bothered by this. They respect that administering donations can generate some overhead costs, and one way of handling the issue is using contractors to process donations. This inevitably means that the contractors expect to be paid, and one way to pay them is to let them keep a percentage of the proceeds; instead of the charity cutting them a cheque for their services, they basically directly compensate themselves.

Others may be troubled to learn that their in-kind donations aren’t ending up where they think they are. Hair donation is a common example because it’s so personal, and some people might not be inclined to donate their hair if there’s no way to tell where it’s going to end up. It’s hard to feel warm and cuddly knowing your hair might be sold at a high price in a set of extensions for some rich lady, even if the sale of your hair funded a cancer charity indirectly by paying a contractor to handle charitable donations.

The confusion when it comes to how and where in-kind donations are used is a serious issue that charities need to be confronting; honest disclosure should be the name of the game here. Unfortunately, openly discussing what happens with in-kind donations will probably lead to a drop in donations, as many consumers don’t want to give away goods that someone else will be selling for profit. It puts charities in an awkward position; they can’t use or logistically sell all the goods given to them and thus may need to go through a contractor that can handle large volumes of stuff. Going through a contractor, though, means that their in-kind donations might not be used in ways that donors are comfortable with.

Donor education could make a significant difference in this case; teaching people about how contractors work and why they’re beneficial for charities might allow people to feel more comfortable with the practice. And would ensure that when charities did disclose the use of contractors and the possibility that in-kind donations might be sold for profit, consumers would understand exactly what is going on and might feel more confident in the charity’s reputation and reliability. If the charity is willing to disclose the truth about its donations, for example, it’s probably telling the truth about other things, like how its funds are used.

Meanwhile, donors with concerns about how their in-kind donations are used need to be comfortable when it comes to asking questions. Representatives of a charity should be able to explain how their donations are processed and what happens to them. If that person can’t answer questions, a referral to someone who can should be offered. Charities that refuse to disclose the fate of their in-kind donations should be viewed suspiciously, as they may be operating inefficiently; if a contract allows a for-profit to keep 80% of sale proceeds from in-kind donations, for example, the charity clearly has a bad deal, and members of the public would be better-served by donating to another organisation that offers more efficiently.

It’s also important to be aware that in-kind donations are not a dumping ground. Charities routinely get ‘donations’ of things like stained underwear, hopelessly damaged clothes, broken electronics, and so forth. Disposal costs for these goods can be high, and the charity doesn’t get anything out of them; ‘donors’ looking to use a charity as a waste disposal option are costly, and that’s one reason charities use contractors, as they are more able to absorb the costs of disposal.