We've Bin Had

PREFACE

During a crushing economic downturn that has forced the City of Oakland to repeatedly slash services, lay off staff and desperately look for additional funding sources, one very select group has been getting a free ride. To make matters worse, these very same enterprises are putting a significant dent in the donation of goods that had traditionally gone to local non-profits and most significantly, to those non-profit groups that provide invaluable assistance to Oakland residents who are hungry, homeless and unemployed.

Currently, this select group includes three distinct entities: Campus California, USAgain and Reading Tree’s Books for Charity. If you’re out and about on the streets of Oakland, you’ve seen their presence incarnate in the form of over-sized donation bins. On a regular basis, they are filled to overflowing thanks to the kindness of strangers who are blissfully unaware of the true nature of these enterprises, and equally unaware of how virtually none of the proceeds benefit the City of Oakland or its populace.

In the following pages, I’d like to share details about all three groups including information that is not, strictly speaking, relevant to city planning or the legislative process but which should hopefully motivate concerned Oakland residents to become involved and lobby in support of appropriate regulations and/or legislation.

BOOKS FOR CHARITY?

The big blue donation bins that were prominently labeled “Books for Charity” were officially introduced to Oakland, in a big way, in June of last year with a highly orchestrated press conference at Brookfield Elementary School. The event was scheduled as an opportunity for Safeway stores to announce an agreement to initially host 150 Reading Tree book donation bins in Northern California with another 300 in the pipeline.

This was a feel-good occasion focused on collecting children’s books that Reading Tree would turn over to Reading Partners–a highly respected, San Francisco-based non-profit recognized nationally for its efforts (beginning in 1999) to provide one-on-one mentoring for children from low-income communities. They, in turn, were prepared to distribute those books to kids in local schools who lacked reading materials in their homes.

This is how Reading Partners’ press release from June 9, 2011 described the agreement:

This exciting partnership between Reading Partners, Safeway and Reading Tree will ensure that 100% of books that are donated through Safeway collection bins will be given to children in need in local communities or recycled. Books that are too advanced for Reading Partners students will be located (sic) to local libraries, shelters and other nonprofit organizations.

Unfortunately, virtually everyone involved in this in-school event should have been directed to write, one hundred times on the nearest blackboard, “Next time, I’ll do my homework”. A more appropriate punishment for the sole exception, the Regional Operations Director for Reading Tree, would have been a full year of after-school detention for his failure to disclose that his non-profit agency was responsible for the donation bins in name only.

A cursory web search would have revealed that the bins are instead owned and operated by Thrift Recycling Management (TRM) which has approximately 4,500 bins and 10 distribution centers strategically dispersed throughout the US. CEO Phil McMullin co-founded TRM in 2004 with his son, Jeff McMullin and the latter also serves as President of Reading Tree–TRM’s non-profit arm while Jeff’s wife manages the non-profit’s paperwork.

According to a TRM press release dated April 11, 2011:

• “Thrift Recycling is the leading distributor of used media online.”
• “Since they shipped their first book in 2004, Thrift Recycling has sold over 15 million books.”
• “The company closed its last fiscal year at $27M in revenue.”
• “TRM recycles about 24 million unusable books each year.”

When Northern California community activists (who had done their homework) started making phone calls and writing letters to the editor, the situation for TRM rapidly took an ugly turn. Perhaps, the most outspoken of those activists was Linda Landau, a volunteer for the Friends of the Orinda Library group who cited a host of online reports from library friends groups elsewhere that complained of a precipitous drop in donations when TRM bins were introduced in their respective communities.

As the complaints and critical news reports accumulated, TRM took decisive action. They scrubbed their website–removing all the now damning information that boasted of their profitability and their plans for continued expansion funded by an $8.5 million infusion of cash from a venture capital firm.

Safeway took action, as well, by initially insisting that, for at least the next six months, none of the books placed in bins on their property were to be sold. Shortly afterwards, recognizing that their partnership with TRM was a public relations nightmare, Safeway ordered all 150 bins removed from their properties.

TRM is now retrenching its efforts in Northern California and gradually relocating the bins that were removed from Safeway stores. Their website currently lists 35 bins in the Sacramento area but only four in the East Bay and only one of those is in Oakland. There are, however, at least four additional, unlisted TRM bins in Oakland including this one (paired with a Campus California bin) alongside a 7-11 store at 2350 Harrison Street.

More significantly, as reported in this March 9 article by Derek Moore in the Santa Rosa Press Democrat, Phil McMullin claims that TRM is in the midst of rebranding itself as “a for-profit company with a social mission” and they are “rolling out new signs for the bins in an effort to be more transparent”.

Despite McMullin’s pledge to be “more transparent”, his claims regarding the ratio of books sold to those donated remains highly problematic. TRM’s mantra is that for every book they sell, they donate another but their own press releases in the past year indicate that they had sold fifteen million books since 2004 and donations to schools totaled only six million. I’d also argue that while six million books sounds like a huge sum, it’s a drop in the bucket for an operation this huge. By comparison, the all-volunteer, East Bay Children’s Book Project (which is directed by my wife) has distributed 668,000 books since 2005.

I’d also want to question TRM’s environmental credentials. They claim that half the books they receive are “unusable” and they openly boast that they pulp 24 million books annually. Some reports posted online note that the actual percentage is closer to 75% which seems more likely when you crunch the above numbers. In addition (in order to cope with the huge volume of books that their distribution centers receive) TRM has installed computerized sorters that read ISBN numbers and discard at least some books based solely on the quantity currently in their online inventory.

If TRM is rebranding itself, they’re doing so out of necessity and, in the process, are following in the footsteps of the clothing donation operations that are represented in Oakland by Campus California and USAgain–two organizations I’ve dubbed the…

NON-IDENTICAL TVINDS

Although they’d like you to believe otherwise, Campus California TG and USAgain were both sired by Tvind or the Teachers Group–an organization that many observers have described as an international cult or criminal enterprise.

Tvind was founded in the 1970′s by Mogens Amdi Petersen. Petersen and several of his associates were acquitted in Denmark in 2006 on charges of tax fraud and embezzlement but before the case could be appealed to a higher court, most fled the country. While Petersen had earlier taken refuge in Zimbabwe, where the Teachers Group enjoyed the support of dictator, Robert Mugabe, he is now allegedly residing in a $10 million compound on the Baja California coast.

Clothing collection bins in the U.S. under the banners of Campus California, USAgain, Planet Aid and Gaia (plus similar programs in Europe) are the main income source that funds the lavish lifestyle enjoyed by members of the Teachers Group’s inner circle. Much of it ends up stashed in off-shore accounts or invested in property holdings throughout the world including plantations in Africa and Central America.

THE FOR-PROFIT TVIND

USAgain was founded in 1999 and its status as a for-profit business was originally not that clear-cut. As recently as 2010, USAgain bins stated “We are a commercial company” that “cooperates with schools, non-profits and city recycling programs”.

Based on the wording on their bins and the content of their website, the Washington State Attorney General’s office insisted that they register as a “Commercial Fundraiser”. Not wanting to publicly disclose their income flow, USAgain deferred and eventually reached an agreement that required them to relabel their bins to read, “USAGAIN is a for-profit clothes collection company. Donated items are not tax deductible.”

That’s the wording used on the 17 bins currently within the city limits in two main clusters–one heading easterly from the Fruitvale District and the second, in North Oakland, along the Telegraph and San Pablo corridors. Since USAgain is a privately held, for-profit company, there’s not a lot of information available to the public about their operations beyond what they or their partners choose to post online.

Nationally, USAgain claims to have over 10,000 bins in 17 states that accounted for donations of 60 million pounds of shoes and clothing in 2011. Garson & Shaw, a clothing broker in Atlanta, Georgia that’s part of the Tvind network, does list USAgain as one of their suppliers, along with Gaia and Planet Aid.

In addition, USAgain’s SF district office in Hayward reports that they’re collecting 275,000 pounds of clothing and shoes per month. Finally, a source at Tvind-Alert revealed that USAgain is 75% owned by TS Recycling, which they termed a “Tvind shell company” that raked in $29 million in 2009.

Theoretically, as a for-profit business, USAgain’s bay area operations should be paying City of Oakland business license fees for clothing deposited in their Oakland bins and subsequently sold. But that’s in theory only. When we learned last year that USAgain was included in the list of exhibitors for the city’s annual Earth Expo, I was one of several neighborhood activists who filed complaints. From what I understand, that invite was rescinded when city officials learned that USAgain was delinquent in their business taxes.

Even if that’s no longer the case, those fees are incredibly nominal–only assessed at 1/10 of 1% of gross sales. Since USAgain is wholesaling the donations to Garson & Shaw, they’re not paying any state sales taxes. As for California state income taxes, for which they are liable, a very small portion finds its way back to local municipalities such as Oakland.

THE NON-PROFIT TVIND

Campus California has been collecting clothing donations since 2003. For a comprehensive look at their history and operations, I’d highly recommend Your RAGS to their RICHES, an article by Matt Smith published by SF Weekly on June 8, 2011.

In this space, I’ll share a few of the key issues regarding Campus California and also fill in some additional details.

I first wrote about Campus California in a February 2007 article posted on the Grand Lake Guardian that was inspired by an investigative report on KCBS by Anna Werner. At the time, we called them the Green boxes of Gaia thanks to the large Gaia floral decals pasted on the side of their bins–300 of which were then distributed in Northern California.

A February 1, 2008 article in the Tribune by reporter Cecily Burt rekindled the discussion about Campus California and within a couple of weeks, then Deputy City Administrator William Zenoni had advised Campus California that any boxes in the public right of way would have to be removed or each would be subject to a $850-900 encroachment permit. Furthermore, the City required Campus California to provide written authorization from the owners of any private properties on which the boxes would be located.

Rather than pay the required fees, Campus California removed the last of the bins from city sidewalks and focused instead on finding private property hosts. In a month’s time, they managed to double the total number of bins within the city.

On March 4, in response to the Cecily Burt article, Jan Sako, the head of clothing collection operations for Campus California, emailed the City Administrator’s office and all the Oakland City Council members. In his letter, Sako thanked the city authorities for their cooperation and addressed many of the charges that had been leveled against his organization.

Sako’s letter included a number of glaring discrepancies regarding their Development Instructor Program. He claimed that their Etna training school had assigned 2000 volunteers to international projects but, in a subsequent phone call, he said that number was actually 200. In addition, he mentions that “volunteer program expenses are covered partially by tuition and fundraising but neglects to reveal that the tuition was then $3,600 with street-corner fundraising an essential component of the curriculum.

The Etna campus is now closed and, as justification for their non-profit status, Campus California is now directing its contributions to three Teachers Group programs–the Institutes for International Cooperation and Development in Michigan and Massachusetts and the Richmond Vale Academy (RVA) in St. Vincent.

An online search turned up this review by a student in the RVA program:

I went to RVA in 2008 and there is nothing that they offer to the volunteers. I will never recommend this organization to anybody. RVA cost is (in 2010) almost 6000 US $ (500 enroll fees + 3900 “training” + 1500 obligatory fundraising = 5.900 US$.

As a revealing aside, in 2008, Jan Sako informed Zenoni that Campus California was no longer affiliated with Gaia–maybe due to the Anna Werner and Cecily Burt reports but more likely as a result of the “F” grade that the American Institute of Philanthropy had repeatedly given Gaia. Zenoni said he was subsequently amused when Sako turned in authorization forms printed on Gaia letterheads.

Three years later, Matt Smith (the author of the SF Weekly story) told the identical story but with slightly different details. Sako was then insisting that Campus California was no longer associated with the Teachers Group but handed Smith his Teachers Group business card. In addition, when I went out last month to photograph donation bins in North Oakland, they’re still prominently displaying the “TG” tag attached to “Campus California” as was the case with this bin at Faith Presbyterian in the Temescal District.

While Sako is playing “word games”, Campus California has, in fact, made substantial changes in their operations including the closure of the training school in Etna; their relocation to a Richmond warehouse; and their expansion within the bay area and beyond into Phoenix and Bakersfield.

Currently, they have about 1,000 bins in the San Francisco Bay Area. The number in Oakland has increased nearly five-fold in the past year and their website locator now lists 70 bins within the city limits including 20 in public schools. In 2009, they reported 7 million pounds of clothing donations and reported to the IRS revenue totaling $1.8 million.

How much of that $1.8 million ends up in the City of Oakland’s coffers? In 2008, Campus California paid the city a $30 charity registration fee but apparently that amount has since doubled. Coincidentally, if you operate a business in Oakland and you earn at least $2,500, you’re liable for city business taxes and the absolute minimum is exactly what Campus California pays on its $1.8 million in sales. To rub salt in the wounds, when I talked to Jan Sako in 2008, he confirmed that they sold their baled clothing to a company with Tvind connections (presumably Garson & Shaw) for 25 cents per pound.

Subsequently, I spoke to the clothing collection manager at Oakland Goodwill, who noted that they, too, bale clothing for sale overseas for re-use or recycling and the price ranged from 23 to 30 cents per pound. The critical difference between the two operations is that Goodwill (like St. Vincent de Paul and the Salvation Army) cherry pick their donations and the best of the lot end up for sale in their thrift shops here in Oakland.

In his interview with KCBS’s Anna Werner in 2006, the Salvation Army’s Major Bill Heiselman noted that Garson & Shaw was getting a sweetheart deal since the actual value of Campus California’s unsorted bales was probably closer to $1 per pound.

MY TWO CENTS

In writing this article, I’ve bent over backwards to be factual, but it has never been my intention to give the “other side” an equal voice. I believe that donation bins (aside from a very few that belong to Salvation Army) are serving as a cash cow for outside entities providing precious little in the way of benefits to the City of Oakland’s treasury or to the people who live here.

The most persuasive argument in their favor is that the bins are more convenient and, if Jan Sako has his way, a Campus California donation bin will eventually be no more than five minutes from every Oakland resident. I’d maintain, however, that “doing the right thing” inevitably trumps “convenience” and I’m willing to bet Mitt Romney’s $10,000 that the overwhelming majority of Oakland’s citizenry agree. I’d also safely wager that a lot of folks reading this article (and knowing what they know now) are wishing they could have back the books that got sold (or more likely pulped) and the clothes that got baled, sold and shipped overseas for resale.

A related argument, that the bin operators are increasingly relying on, is that they are “environmentally friendly”–keeping recyclables out of landfills. This may be true to some extent but it’s mostly a specious argument. If the bins weren’t so readily available, most folks would hold onto their donations until they accumulated enough to drop them off at a local thrift shop or phone for a pick-up or hold a garage sale.

Another fly in the ointment regarding the claimed environmental benefits is the amount of energy expended transporting the donated goods. Every stitch of fabric donated to USAgain and Campus California is shipped long distances–including Africa, Eastern Europe and Central America and books donated to Reading Tree have to be trucked to the nearest distribution center–often hundreds of miles away.

In addition to the negative impact they’re having on legitimate local charities, the bins are a magnet for graffiti as evidenced by this photo of a Campus California bin at a gas station on San Pablo Avenue, or another at the 1/4 pound burger on Telegraph, or this one of a USAgain bin at 18th and International. I’d also note that at least 90% of the existing bins are confined to less affluent neighborhoods further complicating the lives of individuals and community groups doing their best to upgrade their neighborhoods by eliminating the blight generally associated with higher crime levels.

THE $393 SOLUTION?

Last year, prompted by a decline in donations to local non-profits including Goodwill and St. Vincent de Paul plus related concerns about the bin operators, several residents asked Councilmember Pat Kernighan to investigate mechanisms that could be used to regulate the donation bins. After a series of meetings, Councilmember Jane Brunner joined the effort as a co-sponsor and together, they asked Planning Department staff to recommend a regulatory process.

Staff returned with two options–both of which were based on existing Planning Code requirements. The first recommended that donation bins be classified under the same provisions that apply to signs and fences. Such projects require a Small Project Design Review and a one-time payment of a $393 fee. According to Council Aide, Joanne Karchmer, (who played a major role in the necessary research and outreach) the ancillary fees would bring the total to approximately $450.

The Planning Department also offered, as a second option, a higher Design Review classification, with fees slightly in excess of $1,000.

The report to the Community Economic and Development (CED) Committee that Kernighan and Brunner issued on March 15 ended up endorsing the lower fee structure largely due to concerns that the higher fee would negatively impact the Salvation Army which currently has two donation bins in areas accessible to the public. In addition, they feared that the higher fee could have undermined the chances that a resolution would gain the necessary three votes for passage.

The CED Committee report also spelled out some of the approaches to regulating donation bins that had been employed elsewhere in California. Berkeley (being Berkeley) took a unique approach–sending “notice of violation to all businesses which had allowed boxes on their property and also indicating that the property owner’s Use permit would be reopened and reviewed”, which proved to be a highly effective deterrent.

In 2007, San Rafael deemed donation bins to be “akin to hot dog or coffee carts” that would require Administrative Use Permits and Administrative Design Reviews with fees ranging from $1,200 to $1,500 per location–enough to convince Campus California to locate elsewhere.

The 2009 passage of amendments to California’s Welfare and Institutions code specifically authorized local municipalities to regulate donation bins and the City of Sacramento was amongst the first to pass legislation regulating donation bins and imposing an annual fee for each approved location.

WHAT TRANSPIRED THEREAFTER

In the twelve days between the publication of the report and the CED Committee meeting on March 27, community members backing regulations began to express concerns that the one-time $450 fee might be adequate to reimburse the city for staff time required during the application process but didn’t take into account the inevitability of ensuing blight complaints and most disconcerting, the likelihood that bins would be placed here without permits in open defiance of city regulations–as was the case last year in both San Rafael and Berkeley.

The bigger concern, however, was that the lower level, one-time fees would not be sufficient to, at the very least, winnow down the number of bins within the city limits. In his article in SF Weekly, Matt Smith quoted Jan Sako as saying that Campus California would be unwilling to pay any fees whatsoever and, originally, I personally took him at his word.

Just before the March 27 meeting, however, we learned from a Sacramento spokesperson that Gaia had, in fact, purchased five annual permits for $200 each. This info made it seem far more likely that any or all of the three major bin operators would be willing to invest the required $450 per bin as a one-time write off that would lock in the right to a specific location in perpetuity. As multi-million dollar businesses, USAgain and TRM both had the financial resources to do so. As for Campus California, Matt Smith, in his article in SF Weekly, noted that Campus California was receiving $50,000 annually from Faelleseje–banker for Tvind-linked entities. Smith went on to note that Sako said the money was used to fund expansion drives.

By the time the meeting arrived, community representatives were confident that a majority of the CED Committee members were in support of regulations and there were some indications that there was some movement in the direction of higher level fees. Speakers included representatives from Goodwill, St. Vincent de Paul, the Children’s Book Project, Valerie Winemiller from the Piedmont Avenue Improvement League and myself, representing Grand Lake Neighbors.

As the meeting progressed, it quickly became obvious that the three committee members present (Kernighan, Brunner and Nancy Nadel) were on board and willing to support a more intensive review process with higher fees. Possibly, the only sticking point was their concern that genuine, locally based charities not be affected–specifically, not the Salvation Army. Ultimately, Eric Angstadt (Director of Oakland’s Office of Planning & Neighborhood Preservation) offered to have his staff put together another set of options that would reflect the consensus of the committee members. According to Angstadt (who is about to become Berkeley’s Director of Planning) turnaround could be two months–possibly more, if the city ultimately decides on a legislative solution.

WHAT YOU CAN DO

Please keep attuned to future developments and be prepared to send emails and/or attend meetings when this issue again comes up for a vote.

Share a link to this article on neighborhood list-servs, Facebook and other social media.

As an alternative to the existing donation bins, please check out StopWaste.org’s “Recycling Wizard”. According to Jeff Becerra, Communications Manager at StopWaste, they are now fine-tuning an expanded and more easily navigated list of Alameda County recycling and donation options that should be introduced in about two months.

POSTSCRIPT

We’ve just learned that the Oakland Unified School District has ordered Campus California to remove all twenty of their donation bins currently on school grounds. Although Jan Sako has appealed to the School Board for a reversal of this policy decision, it’s quite unlikely that it will be granted. Authors note: An earlier version of this article was posted on Oakland Local with assistance from the Editor, Susan Mernit.