Rags & Riches – the Ethics of Charity
There’s a wonderful ethics case study in the press today – a rag trade dealer has made £10m since 2008 from running the Salvation Army’s clothing donations ‘business’. The Guardian ran the story on its front page, contrasting the dealer’s £1m mansion with pictures of virtuous souls pushing bin bags of old clothes into recycling banks.
What you have to read on to discover is that the charity made £16m out of the deal – more than 60% of the turnover. Just to put that in perspective, the best charity Christmas cards donate about 20% of the retail price to charity (and the worst a miserly 4%). So in a sane world, the headline should be “recycling clothing is three times more cost effective for charities than selling Christmas cards”.
So why the fuss?
In a word, trust. The charity sector has a long record of misleading the public. In my youth I once “sponsored” a child with a major charity only to find afterwards that the money went to projects in “the surrounding area”, rather than to the welfare of the child herself. In the meantime the charity would send me a monthly letter full of pictures of other starving children with pleas for more money. The child was just being exploited as bait and I felt cheated. A few years ago, a charity executive defended this sort of sharp practice in the press saying the public was not so naive to think that a small donation could make a difference. That’s not only disingenuous but illogical – if the public isn’t fooled, then why are they letting themselves be fooled?
Compared to this, I think the Salvation Army are angels. I am in no doubt that they are getting a good deal in keeping 60+% of the proceeds of the clothing collections. No one could argue that a process of this size shouldn’t involve for-profit organisations – there isn’t a vast web of not-for-profit logistics companies out there. Their problem is transparency – to maintain trust and protect their brand, they need to be much more open. If every recycling bank had a statement that 40% of proceeds get absorbed by commercial partners, then no one has the right to complain, not even the media on a slow news day.
Skeletons in cupboards are hostages to fortunes. It is always better to throw them out than wait for the press to start sniffing around for a story.