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Recycling Company Faces State Fines

Posted at 6:30 PM, Jul 22, 2015
and last updated 2015-09-11 12:31:23-04

NASHVILLE, Tenn. -- A recent NewsChannel 5 Investigation exposed the small amount of money charities get when you put your old clothing in those donation bins in store parking lots.

But we didn't stop digging.

Now NewsChannel 5 Investigates has discovered that one of the companies behind those bins is in trouble with the state.

State regulators say the company has refused to turn over financial records that are required by law.

So why should this matter to you? Well, it means you're not getting a true or clear picture of how much of a difference your donation is making.

Our recent investigation exposed how most charities get only pennies on the dollar from what you give to these recycling bins. The bins are, in most cases, owned and run by for-profit companies that essentially pay the non-profits to use their name on the bins.

Most charities revealed to us how little they get out of these deals.

For example, The ARC of Davidson County gets 13 cents out of every dollar the bin operator collects.

We asked The ARC's CEO, Sheila Moore, "It doesn't sound like very much money?"

"No, it doesn't," she conceded.

But to this day, we still do not know exactly how much Mothers Against Drunk Driving, or MADD, is paid for what's put into the hundreds of orange bins like this around Tennessee.

That's because the company operating the bins, American Textile Recycling Services (ATRS), refuses to reveal specifics of its financial arrangement with MADD to either us or the state of Tennessee.

We asked Secretary of State Tre Hargett, "So when a company refuses to turn this over, how serious is it to you?"

"We take it very seriously," Hargett replied.

Hargett said companies that raise money for non-profits are required by law to register with the Tennessee's Charitable Solicitations Division every year. They must report how much they collect and specifically how much they pay the non-profit.

In a series of emails, ATRS repeatedly told NewsChannel 5 Investigates that they are following the law.

But the state says otherwise.

Again, we asked Hargett, "ATRS insists they have turned in their financial records and are good with the state?"

"I don't have them in my possession," Hargett answered. "Our department does not have them in their possession. Surely, we welcome receiving those tomorrow after they see your story."

Last November, the state notified ATRS that it had violated Tennessee law by failing to register three years in a row and repeatedly failing to turn in the required financial documents.

The state has fined the company $313,500.

The company did eventually register, but has yet to turn over any of the other required paperwork.

NewsChannel 5 repeatedly contacted MADD, and both the local and national offices refused to give specifics about how the non-profit benefits from these bins, saying that "MADD doesn't disclose contractual financial information."

ATRS would only say that  "MADD receives fair market value for every item, every garment and every pound received."

The company did claim that it's paid the Nashville office of MADD a total of $50,000 in the last three and a half years. That's about $14,000 a year.

But $14,000 out of what?

Published reports on ATRS's own website indicate the company's revenue last year topped $30 million dollars from its bins in 11 states.

"Really, ultimately, it's about transparency for donors," Hargett said.

He explained that's why it's so important for companies like ATRS to follow the law and turn in what's required, adding, "We want people to have the data they need to make good decisions with their charitable dollars. That's what it boils down to."

ATRS is based in Houston, Texas.

They are now appealing the state's fine. And they refused to provide anyone on camera to answers our questions about their case in Tennessee.

Meanwhile, the company has repeatedly insisted to us and on social media that its bins are in compliance with the new law that requires more extensive and transparent labeling on the bins.

But we did not find a single bin of theirs that has been updated to meet the new requirements.

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